The Railroad Question. THE RAILROAD QUESTION A HISTORICAL AND PRACTICAL TREATISE ON RAILROADS, AND REMEDIES FOR THEIR ABUSES BY WILLIAM LARRABEE, LATE GOVERNOR OF IOWA. _Salus populi suprema lex. _ NINTH EDITION. CHICAGO: THE SCHULTE PUBLISHING COMPANY. 1898. Copyright, 1893, BY WILLIAM LARRABEE. PREFACE. The people of the United States are engaged in the solution of therailroad problem. The main question to be determined is: Shall therailroads be owned and operated as public or as private property? Shallthese great arteries of commerce be owned and controlled by a fewpersons for their own private use and gain, or shall they be madehighways to be kept under strict government control and to be open forthe use of all for a fixed, equal and reasonable compensation? In a new and sparsely settled country which is rich in natural resourcesthere may be no great danger in pursuing a _laissez-faire_ policy ingovernmental affairs, but as the population of a commonwealth becomesdenser, the quickened strife for property and the growing complexity ofsocial and industrial interests make an extension of the functions ofthe state absolutely necessary to secure protection to property andfreedom to the individual. The American people have shown themselves capable of solving anypolitical question yet presented to them, and the author has no doubtthat with full information upon the subject they will find the propersolution of the railroad problem. The masses have an honest purpose anda keen sense of right and wrong. With them a question is not settleduntil it is settled right. It must be conceded that of all the great inventions of modern timesnone has contributed as much to the prosperity and happiness of mankindas the railroad. Our age is under lasting obligations to Watt and Stephenson and manyother heroes of industry who have aided in bringing the railroad to itspresent state of perfection. Their genius is the product of ourcivilization, and their legacies should be shared by all the people tothe greatest extent possible. An earnest desire to aid in attaining thisend has prompted this contribution to the literature on the subject. The author is not an entire novice in railroad affairs. He has hadexperience as a shipper and as a railroad promoter, owner andstockholder, and has even had thrust upon him for a short time theresponsibility of a director, president and manager of a railroadcompany. He has, moreover, had every opportunity to familiarize himselfwith the various phases of the subject during his more than twentyyears' connection with active legislation. He came to the young State of Iowa before any railroad had reached theMississippi. Engaging early in manufacturing, he suffered all theinconveniences of pioneer transportation, and his experience instilledinto him liberal opinions concerning railroads and their promoters. Heextended to them from the beginning all the assistance in his power, making not only private donations to new roads, but advocating alsopublic aid upon the ground that railroads are public roads. As a member of the Iowa Senate he introduced and fathered the bill forthe act enabling townships, incorporated towns and cities to vote a fiveper cent. Tax in aid of railroad construction. He favored always suchlegislation as would most encourage the building of railroads, believingthat with an increase of competitive lines the common law andcompetition could be relied upon to correct abuses and solve the rateproblem. He has since become convinced of the falsity of this doctrine, and now realizes the truth of Stephenson's saying that wherecombination is possible competition is impossible. It is the object of this work to show that as long as the railroads arepermitted to be managed as private property and are used by theirmanagers for speculative purposes or other personal gain, or as longeven as they are used with regard only for the interest of stockholders, they are not performing their proper functions; and that they will notserve their real purpose until they become in fact what they are intheory, highways to be controlled by the government as thoroughly andeffectually as the common road, the turnpike and the ferry, or thepost-office and the custom-house. This book has been written at such odd hours as the author could snatchfrom his time, which is largely occupied with other business. He isunder obligations to many of our ministers and consuls abroad forstatistics and other valuable information concerning foreign railroads, as well as to a number of personal friends for other assistance, consisting chiefly in rendering the railroad literature of Europeaccessible to him. WILLIAM LARRABEE. _Clermont, Iowa, May, 1893. _ CONTENTS. I. HISTORY OF TRANSPORTATION 17 II. THE HISTORY OF RAILROADS 46 III. HISTORY OF RAILROADS IN THE UNITED STATES 76 IV. MONOPOLY IN TRANSPORTATION 90 V. RAILROAD ABUSES 124 VI. STOCK AND BOND INFLATION 163 VII. COMBINATIONS 189 VIII. RAILROADS IN POLITICS 205 IX. RAILROAD LITERATURE 231 X. RAILROAD LITERATURE--_Continued_ 273 XI. RAILROADS AND RAILROAD LEGISLATION IN IOWA 319 XII. THE INTERSTATE COMMERCE ACT 349 XIII. THE RATE QUESTION 370 XIV. REMEDIES 389 APPENDIX--TABLES AND STATISTICS 459 LIST OF AUTHORS AND WORKS CONSULTED AND QUOTED ACWORTH, W. M. The Railways of England ADAMS, C. F. , JR. Railroads, Their Origin and Problems ADAMS, H. C. Public Debts ADAMS, HENRY History of the United States ATKINSON, EDWARD The Distribution of Products BAGEHOT, WALTER The English Constitution BAKER, C. W. Monopolies and the People BEACH, CHARLES F. , JR. On Private Corporations BLACKSTONE, W. Commentaries on Laws of England BOISTED, C. A. The Interference Theory of Government BOLLES, ALBERT S. Bankers' Magazine BONHAM, JOHN M. Railway Secrecy and Trusts BRYCE, JAMES The American Commonwealth BUCKLE, H. T. History of Civilization of England CAREY, H. C. Principles of Social Science " " Unity of Law CARY, M. View of System of Pennsylvania Internal Improvements. CLOUD, D. C. Monopolies and the People CLEWS, HENRY Twenty-eight Years in Wall Street COOLEY, THOMAS M. Constitutional Limitations CONGRESSIONAL RECORD. COMPILATION OF ENGLISH LAWS UPON RAILWAYS. DABNEY W. D. The Public Regulation of Railways DILLON, SIDNEY North American Review DORN, ALEXANDER Aufgaben der Eisenbahnpolitik DRAPER, J. W. Intellectual Development of Europe ENCYCLOPEDIA, AMERICAN. ENCYCLOPEDIA BRITANNICA. ENCYCLOPÄDIE (RÖLL'S) DES EISENBAHNWESENS, 1892. FINDLAY, GEORGE Working and Management of English Railways. FINK, ALBERT Cost of Railroad Transportation, etc. FISHER, G. P. Outlines of Universal History FISK, JOHN American Political Ideas " " Critical Period of American History FOREIGN COMMERCE OF AMERICAN REPUBLICS AND COLONIES. GRAHAM, WM. Socialism Old and New GIBBON, EDWARD Decline and Fall of the Roman Empire GREEN, JOHN K. History of English People GILPIN, WM. The Cosmopolitan Railway GRINNELL, J. B. Men and Events of Forty Years GUNTON, GEORGE Wealth and Progress GUIZOT, M. History of Civilization HABOUR, THEODOR Geschichte des Eisenbahnwesens HADLEY, A. T. Railway Transportation HALL'S LIFE OF PRINCE BISMARCK. HUDSON, J. T. The Railways and the Republic JEANS, J. S. Railway Problems JERVIS, JOHN B. Railway Property JEVONS, W. S. Methods of Social Reform KENT, JAMES Commentaries on American Law KIRKMAN, M. M. Railway Rates and Government Control and other works. LECKEY, W. E. H. England in Eighteenth Century LIEBER, FRANCIS Political Ethics " " Civil Liberty and Self-Government " " Miscellaneous Essays LODGE, H. C. Life of General Washington MARTINEAU, HARRIET History of England MCMASTER, J. B. History of People of United States MACAULAY, T. B. History of England MOTLEY, J. L. The Dutch Republic " " The United Netherlands PAINE, CHARLES The Elements of Railroading PATTEN, J. H. Natural Resources of the United States PEFFER, W. A. The Farmer's Side POOR'S RAILWAY MANUAL. PORTER, HORACE North American Review RAWLINSON, GEORGE Seven Great Monarchies REDFIELD On Law of Railways RECORDS OF CENTRAL IOWA TRAFFIC ASSOCIATION, 1886-1887. RECORDS OF ASSOCIATION OF GENERAL FREIGHT AGENTS OF THE WEST. RECORDS OF JOINT WESTERN CLASSIFICATION COMMITTEES. REPORTS OF STATE BOARDS OF COMMISSIONERS. REPORT OF HEPBURN COMMITTEE. REPORTS OF UNITED STATES CENSUS. REPORT OF WINDOM COMMITTEE. REPORT OF BANKERS' ASSOCIATION, 1892. REPORT OF CULLOM COMMITTEE. ROEMER, JEAN Origin of English People, etc. REUBEAUX, F. Der Weltverkehr und seine Mittel RICHARDSON, D. N. A Girdle Round the Earth ROGERS, JAMES E. THOROLD Economic Interpretation of History. ROSCHER, WM. Political Economy SCHREIBER Die Preussischen Eisenbahnen SCHURZ, CARL Life of Henry Clay SMITH, ADAM Wealth of Nations SPELLING, T. CARL On Private Corporations SPENCER, HERBERT Synthetic Philosophy STERN, SIMON. Constitutional History and Political Development of the United States. STICKNEY, A. B. The Railroad Problem STATISTIQUES DES CHEMINS DE FER DE L'EUROPE, 1882. TAYLOR, HANNIS Origin and Growth of the English Constitution. THE AMERICAN RAILWAY. Published by Charles Scribner's Sons. VERSCHOYLE, REV. J. History of Ancient Civilization VON WEBER, M. M. Privat-, Staats- und Reichs-Bahnen " " " " Nationalität und Eisenbahn Politik VON DER LEGEN, ALFRED Die Nordamerikanischen Eisenbahnen. WALKER, ALDACE F. The Forum WEEDEN, W. B. Economic and Social History of New England. THE RAILROAD QUESTION. CHAPTER I. HISTORY of TRANSPORTATION. While the prosperity of a country depends largely upon itsproductiveness, the importance of proper facilities for the expeditioustransportation and ready exchange of its various products can scarcelybe overrated. The free circulation of commercial commodities is asessential to the welfare of a people as is the unimpaired circulation ofthe blood to the human organism. The interest taken by man in the improvement of the roads over which hemust travel is one of the chief indications of civilization, and itmight even be said that the condition of the roads of a country showsthe degree of enlightenment which its people have reached. The tracklessthough very fertile regions of Central Africa have for thousands ofyears remained the seat of savages; but no nation that established asystem of public thoroughfares through its dominion ever failed to makea distinguished figure in the theater of the world. There are someauthors who go even so far as to call the high roads of commerce thepioneers of enlightenment and political eminence. It is true that asroads and canals developed the commerce of Eastern Asia and Europe, theattention of their people was turned to those objects which distinguishcultured nations and lead to political consequence among the powers ofthe world. The systems of roads and canals which we find among thoseancients who achieved an advanced state of civilization might well putto shame the roads which disgraced not a few of the European states aslate as the eighteenth century. Among the early nations of Asia of whose internal affairs we have anyhistoric knowledge are the Hindoos, the Assyrians and Babylonians, thePhoenicians, the Persians and the Chinese. The wealth of India was proverbial long before the Christian era. Shesupplied Nineveh and Babylon, and later Greece and Rome, with steel, zinc, pearls, precious stones, cotton, silk, sugar-cane, ivory, indigo, pepper, cinnamon, incense and other commodities. If we accept thetestimony of the Vedas, the religious books of the ancient Hindoos, ahigh degree of culture must have prevailed on the shores of the Gangesmore than three thousand years ago. Highways were constructed by thestate and connected the interior of the realm with the sea and thecountries to the northeast and northwest. For this purpose forests werecleared, hills leveled, bridges built and tunnels dug. But the broadstatesmanship of the Hindoo did not pause here. To administer to theconvenience and comfort of the wayfaring public, and thus still moreencourage travel and the exchange of commodities, the state proceeded toline these public roads with shade trees, to set out mile-stones, and toestablish stations provided with shady seats of repose, and wells atwhich humane priests watered the thirsty beasts. At intervals along these routes were also found commodious andcleanly-kept inns to give shelter to the traveler at night. Buddha, thegreat religious reformer of the Hindoos, commended the roads andmountain passes of the country to the care of the pious, and the Greekgeographers speak with high praise of the excellence of the publichighways of Hindostan. Among the Babylonians and Assyrians agriculture, trade and commerceflourished at an almost equally remote period. The ancient inhabitantsof Mesopotamia cultivated the soil with the aid of dikes and canals, andwere experts in the manufacture of delicate fabrics, as linen, muslinand silk. To them is attributed the invention, or at least theperfection, of the cart, and the first use of domestic animals as beastsof burden. Their cities had well-built and commodious streets, and theroads which connected them with their dependencies aided to make themthe busy marts of Southeastern Asia. During the later Babylonian Empire immense lakes were dug for retainingthe water of the Euphrates, whence a net-work of canals distributed itover the plains to irrigate the land; and quays and breakwaters wereconstructed along the Persian Gulf for the encouragement of commerce. While highways among the Babylonians served the development ofagriculture and the exchange of industrial commodities, they wereconstructed chiefly for strategic purposes by the more warlikeAssyrians, whose many wars made a system of good roads a necessity. TheGreek geographer Pausanias was shown a well-kept military road uponwhich Memnon was said to have marched with an Assyrian army from Susa toTroy to rescue King Priam. Traces of this road, called by the natives"Itaki Atabeck, " may be seen to this day. The Phoenicians, who were the first of the great historic maritimenations of antiquity, occupied the narrow strip of territory between themountains of Northern Palestine and the Mediterranean Sea. From theirsituation they learned to rely upon the sea as their principal highway. They transported to the islands of the Mediterranean as well as thecoast of Northern Africa and Southern Europe heavy cargoes consisting ofthe product of their own skill and industry as well as of the manifoldexports of the east. They sailed even beyond the "Pillars of Hercules"into the Atlantic Ocean and the North Sea. Through their hands "passedthe gold and pearls of the east and the purple of Tyre, slaves, ivory, lion and panther skins from the interior of Africa, frankincense fromArabia, the linen of Egypt, the pottery and fine wares of Greece, thecopper of Cyprus, the silver of Spain, tin from England, and iron fromElba. " But while the Phoenicians for their commercial intercourse with othernations relied chiefly upon the sea, the great highway of nature, theyneglected by no means road-building at home. They connected their greatcities, Sidon and Tyre, by a coast road, which they extended in time asfar as the Isthmus of Suez. They also established great commercialroutes by which their merchants penetrated the interior of Europe andAsia. Caravan roads extended south to Arabia and east to Mesopotamia andArmenia, penetrating the whole Orient as far as India, and even thefrontiers of China. The Phoenicians thus became the traders ofantiquity, Tyre being the link between the east and the west. The Persian Empire, which under Darius stretched from east to west for adistance of 3, 000 miles and comprised no less than two million squaremiles, with a population of seventy or eighty millions, had, with theexception of the Romans, perhaps the best system of roads known toancient history. Indeed, it is doubtful whether without it such a vastempire, more than half as large as modern Europe, could have been heldtogether. Each satrap, or prefect of a province, was obliged to makeregular reports to the king, who was also kept informed by spies of whatwas taking place in every part of the empire. To aid the administrationof the government, postal communication for the exclusive use of theking and his trusted servants connected the capital with the distantprovinces. This postal service was, four or five centuries later, patterned after by the Romans. From Susa to Sardes led a royal roadalong which were erected caravansaries at certain intervals. Over thisroad, 1, 700 miles long, the couriers of the king rode in six or sevendays. Under Darius the roads of the empire were surveyed and distancesmarked by means of mile-stones, many of which are still found on theroad which led from Ecbatana to Babylon. These roads crossed the wildestregions of that great monarchy. They connected the cities of Ionia withSardes in Lydia, with Babylon and with the royal city of Susa; they ledfrom Syria into Mesopotamia, from Ecbatana to Persepolis, from Armeniainto Southern Persia, and thence to Bactria and India. The Chinese commenced road-building long before the Christian era. Theygraded the roadway and then covered the whole with hewn blocks of stone, carefully jointed and cemented together so that the entire surfacepresented a perfectly smooth plane. Such roads, although very costly tobuild, are almost indestructible by time. In China, as well as inseveral other countries of Asia, the executive power has always chargeditself with both the construction and maintenance of roads and navigablecanals. In the instructions which are given to the governors of thevarious provinces these objects, it is said, are constantly commanded tothem, and the judgment which the court forms of the conduct of each isvery much regulated by the attention which he appears to have paid tothis part of his instructions. This solicitude of the sovereign for theinternal thoroughfares is easily accounted for when it is consideredthat his revenue arises almost entirely from a land-tax, or rent, whichrises and falls with the increase and decrease of the annual produce ofthe land. The greatest interest of the sovereign, his revenue, istherefore directly connected with the cultivation of the land, with theextent of its produce and its value. But in order to render that produceas great and as valuable as possible, it is necessary to procure for itas extensive a market as possible, and, consequently, to establish thefreest, the easiest and the least expensive communication between allthe different parts of the country, which can be done only by means ofthe best roads and the best navigable canals. In Africa the Egyptians and Carthaginians are the only nations ofantiquity of which we have much historic knowledge. The former kept up avery active commerce not only with the south, but also with the tribesof Lydia on the west and with Palestine and the adjoining countries onthe east. To facilitate commerce, they constructed and maintained anumber of excellent highways leading in all directions. One of the mostimportant among these was the old royal road on the coast of theMediterranean Sea, or the "Road of the Philistines" of the Scriptures. This road crossed the Isthmus of Suez and led through the land of thePhilistines and Samaria to Tyre and Sidon. Another road led, in anorthwesterly direction, from Rameses to Pelusium. This, however, crossed marshes, lagoons and a whole system of canals, and was used onlyby travelers without baggage, while the Pharaohs, accompanied by theirhorses, chariots and troops, preferred the former road. A third roadled from Coptos, on the Nile, to Berenice, on the Red Sea. There werebetween these two cities ten stations, about twenty-five miles apartfrom each other, where travelers might rest with their camels each day, after traveling all night, to avoid the heat. Still another road ledfrom the town of Babylon, opposite Memphis, along the east bank of theNile, into Nubia. Much of the commerce of Egypt in ancient times, as inour day, was conducted on the Nile and its canals. The boatman and thehusbandman were, in fact, the founders of the gentle manners of thepeople who flourished four thousand years ago in the blessed valley ofthe Nile. There is one canal among the many which deserves specialmention. It flowed from the Bitter Lakes into the Red Sea near the cityof Arsinoe. It was first cut by Sesostris before the Trojan times, or, according to other writers, by the son of Psammitichus, who only beganthe work and then died. Darius I. Set about to complete it, but gave upthe undertaking when it was nearly finished, influenced by the erroneousopinion that the level of the Red Sea was higher than Egypt, and that ifthe whole of the intervening isthmus were cut through, the country wouldbe overflowed by the sea. The Ptolemaic kings, however, did cut itthrough and placed locks upon the canal. Carthage was a Phoenician colony. The city was remarkable for itssituation. It was surrounded by a very fertile territory and had aharbor deep enough for the anchorage of the largest vessels. Two longpiers reached out into the sea, forming a double harbor, the outer formerchant ships and the inner for the navy. This city early became thehead of a North African empire, and her fleets plied in all navigablewaters known to antiquity. Her navy was the largest in the world, andin the sea-fight with Regulus comprised three hundred and fifty vessels, carrying one hundred and fifty thousand men. Though we have but meageraccounts of the internal affairs of Carthage, there can be no doubt thatmuch attention was given, both at home and in the colonies, to theconstruction of highways, which were distinguished for their solidity. It is said that the Romans learned from the Carthaginians the art ofpaving roads. European history began in Greece, the civilization of whose peoplepassed to the Romans and from them to the other Aryan nations which haveplayed an important role in the great historical drama of modern times. The physical features of the Balkan Peninsula were an important factorin the formation of the character of its inhabitants. The coast has alarge number of well-protected bays, most of which form good harbors. Navigation and commerce were greatly stimulated in a country thusfavored by Nature. Nearly all the principal cities of Hellas could bereached by ships, and the need of internal thoroughfares was but littlefelt. Nevertheless, public highways connected all of the larger townswith the national sanctuaries and oracles, as Olympia, the Isthmus, Delphi and Dodona. Athens, after the Persian wars the metropolis ofGreece, was by the so-called Long Walls connected with the Piræus, itsharbor. This highway, protected by high walls built two hundred yardsapart, was over four miles long, and enabled the Athenians, as long asthey held the command of the sea, to bring supplies to their city, evenwhen it was surrounded by an enemy on the land. Rome is the connecting link between antiquity and mediævalism. The greatempire sprang from a single city, whose power and dominion grew untilit comprised every civilized nation living upon the three continentsthen known. Under the emperors, the Roman empire extended from theAtlantic to the Euphrates, a distance of more than three thousand miles, and from the Danube and the English Channel to the cataracts of the Nileand the Desert of Sahara. Its population was from eighty to one hundredand twenty millions. The empire was covered with a net-work of excellentroads, which stimulated, together with the safety and peace whichfollowed the civil wars, traffic and intercourse between the differentregions united under the imperial government. More than 50, 000 miles ofsolidly constructed highways connected the various provinces of thisvast realm. There was one great chain of communication of 4, 080 Romanmiles in length from the Wall of Antoninus in the northwest to Rome, andthence to Jerusalem, a southeastern point of the empire. There wereseveral thousand miles of road in Italy alone. Rome's highways wereconstructed for the purpose of facilitating military movements, but thebenefits which commerce derived from them cannot easily beoverestimated. These military roads were usually laid out in straightlines from one station to another. Natural obstacles were frequentlypassed by means of very extensive works, as excavations, bridges, and, in some instances, long tunnels. The resources of the Roman Empire werealmost inexhaustible, and no public expenditures were larger than thosemade on account of the construction of new roads. The fact that many ofthese roads have borne the traffic of almost two thousand years withoutmaterial injury is abundant proof of the unsurpassed solidity of theirconstruction. The Roman engineers always secured a firm bottom, whichwas done, when necessary, by ramming the ground with small stones, orfragments of brick. Upon this foundation was placed a pavement of largestones, which were firmly set in cement. These stones were sometimessquare, but more frequently irregular. They were, however, alwaysaccurately fitted to each other. Many varieties of stone were used, butthe preference was given to basalt. Where large blocks could not beconveniently obtained, small stones of hard quality were sometimescemented together with lime, forming a kind of concrete, of which massesextending to a depth of several feet are still in existence. Thestrength of the pavements is illustrated by the fact that the substrataof some have been so completely washed away by water, without disturbingthe surface, that a man may creep under the road from side to side whilecarriages pass over the pavement as over a bridge. The roads weregenerally raised above the ordinary surface of the ground. Theyfrequently had two wagon-tracks, which were separated by a raisedfoot-path in the center, and blocks of stone at intervals, to enabletravelers to mount on horseback. Furthermore, each mile was marked by anumbered post, the distance being counted from the gate of the wall ofServius. The mile-post was at first a roughly hewn stone, which in timewas exchanged for a monument, especially in the vicinity of Rome andother large cities. The most celebrated road of Italy, which has alwaysexcited the admiration of the student of antiquity, was the Via Appia, the remains of which are still an object of wonder. It was first builtfrom Rome to Capua by Appius Claudius Cæcus in the fourth century beforeChrist, and was afterwards continued as far as Brundisium. It was broadenough for two carriages to pass each other, and was built of solidstone. The stones were hewn sharp and smooth, and their corners fittedinto one another without the aid of any connecting material, so that, according to Procopius, the whole appeared to be one natural stone. Eachside of the street had a high border for foot-passengers, on which werealso placed alternately seats and mile-stones. In spite of its age andheavy traffic parts of this road are still in a good state ofpreservation. After the completion of the Via Appia similar roads wereconstructed, so that under the emperors seven great highways startedfrom Rome, viz. : the Via Appia and Latina to the south; two, Valeria andSalaria, to the Adriatic; two, Cassia and Aurelia, to the northwest; andthe Via Æmilia, serving for both banks of the Po. Nor were the provinces by any means neglected. During the last Punic wara paved road was constructed from Spain through Gaul to the Alps, andsimilar roads were afterwards built in every part of Spain and Gaul, through Illyricum, Macedonia and Thrace, to Constantinople, and alongthe Danube to its mouths on the Black Sea. So, likewise, were theislands of Sardinia, Corsica, Sicily and Great Britain crossed by them. It has justly been said that the roads of the Roman Empire, whose strongnet-work enlaced the known world, were the architectural glory of itspeople. These military roads caused in the various parts of the empire awonderful social and commercial revolution. They made it possible forcivilization to penetrate into the most remote retreats and to conquertheir inhabitants more completely than could Cæsar at the head of hislegions. The Romans also had an efficient postal service, which was firstinstituted by Augustus and greatly improved by Hadrian. The former, asGibbon states in his "Decline and Fall of the Roman Empire, " placedupon all roads leading away from the golden milestone of the Forum, atshort distances, relays of young men to serve as couriers, and laterprovided vehicles to hurry information from the provinces. These postsfacilitated communication through all parts of the empire, and whilethey were originally established in the interest of the government, theyproved serviceable to individuals as well, for there is no doubt, that, together with the official dispatches, every courier carried privateletters also. The expenses of the post were largely defrayed by the cities throughwhich it passed, these cities being obliged to provide the stationsestablished within their territories with the necessary stores. At theprincipal stations were found inns, where the proprietors were heldresponsible for injuries suffered by travelers while in their houses. The communication of the Roman Empire was scarcely less free and open bysea than it was by land. Italy has by nature few safe harbors, but theenergy and industry of the Romans corrected the deficiencies of natureby the construction of several artificial ports. After the downfall of the Roman Empire its roads were either destroyedby the people through whose territories they led or by the conquerors, to render more difficult the approach of an enemy. Civilization and commerce greatly suffered through the downfall of Rome, and did not again revive until after the struggles of the NorthernChristian races with the Southern and Eastern nations, which had becomeMohammedan. The sixth and seventh centuries were the darkest in thehistory of Europe. Charlemagne, toward the close of the eighth century, caused many of the old Roman roads to be repaired and new ones to beconstructed. He, as well as several of his immediate successors, madeuse of mounted messengers to send imperial mandates from one part of therealm to the other. The rulers of the succeeding centuries did notprofit, however, by this example, and the roads of the empire again fellinto decay. Moreover, the public safety was greatly impaired by robbersand feudal knights, whose depredations were so heavy a tax upon commerceas to greatly discourage it. Trade under these circumstances would havebeen entirely destroyed, had it not been for the merchants' unions whichwere formed by the larger cities for the protection of their interests. These organizations maintained the most important thoroughfares, andeven furnished armed escorts to wayfaring merchants. Commerce thusflourished in, and commercial relations were kept up among, the citiesimmediate between Venice and Genoa, as well as the cities on the Rhineand Danube. Florence, Verona, Milan, Strasbourg, Mayence, Augsburg, Ulm, Ratisbon, Vienna and Nuremberg were flourishing marts, and through themflowed the currents of trade between the north and the south. Out ofthese commercial unions grew in time the Hanseatic League, which fromthe thirteenth to the fifteenth century controlled the commerce of thenorthern part of Europe on both the water and the land. The object ofthis league, which at the height of its power included eighty-fivecities, was to protect its members against the feudal lords on the landand against pirates on the sea. Its power extended from Norway toBelgium and from England to Russia. In all the principal towns on thehighways of commerce the flag of the Hansa floated over its countinghouses. Wherever its influence reached, its members controlled roads, mines, agriculture and manufactures. It often dictated terms to kings, and almost succeeded in monopolizing the trade of Europe north ofItaly. It is characteristic of the social and political condition of this timethat the postal service was not carried on by the state, but was in thehands of the various municipalities, convents and universities. Duringthe fifteenth and sixteenth centuries national power and national lifemade themselves felt, and with a change in the political system thesystem of communication and transportation changed also. Louis XI. OfFrance took the first step toward making a nation of the French when hetransferred the postal service from the cities and other feudalauthorities to the state. Two or three centuries later, France obtaineda national system of roads and canals. The idea was largely due toColbert, the minister of Louis XIV. It was, however, not executed indetail until the middle of the last century. Many abuses grew up inconnection with it, but on the whole it was probably the soundest andmost efficient part of the French administration. A system of lines ofcommunication, radiating from Paris, was constructed by skilledengineers, and placed under the supervision of men of talent, especiallytrained for the purpose at the Ecôle des Fonts et Chaussées. The wholesystem was further improved by Napoleon, and has served as a basis forthe present system of railroad supervision. The first artificial waterway constructed in France was the LanguedocCanal, connecting the Bay of Biscay with the Mediterranean. Thisgigantic work, designed by Riquet, was commenced in 1666, and completedin 1681. The canal is 148 miles long and its summit level is 600 feetabove the sea, the works along its line embracing over one hundred locksand fifty aqueducts. A large number of canals have since beenconstructed, and France has at present over 4, 000 miles of artificialwaterways, or more than any other country of Europe. Nowhere else was the same completeness of organization possible. Theregular mail service of Germany dates back to the year of 1516, whenEmperor Maximilian established a postal route between Brussels andVienna and made Francis Count of Taxis Imperial Postmaster-General. Thepostal service of the empire greatly improved up to the time of theThirty Years' War, which completely demoralized it. After the war theindividual states and free cities, usurping imperial prerogatives, established postal routes of their own and thereby crippled the nationalservice. The same war also did great damage to the public thoroughfares, and the commercial and manufacturing interests of the German empire wereuntil the end of the eighteenth century in a deplorable condition. Frederick the Great, recognizing the fact that the industrial paralysisof Germany was owing chiefly to its defective means of communication, commenced to construct turnpikes and canals in Prussia, and the minorGerman princes one by one imitated his example, until the Napoleonicwars again put an end to internal improvements. The good work wasresumed, however, after the downfall of Napoleon, and in 1830 Germanywas intercrossed by from three to four thousand miles of turnpike. In the Netherlands canals were constructed as early as the twelfthcentury. Being particularly well adapted to the flat country of Holland, they were rapidly extended until they connected all the cities, townsand villages of the country, and to a large extent took the place ofroads. The largest canal of Holland is the one which connects the cityof Amsterdam with the North Sea. It was constructed between the yearsof 1819 and 1825 at an expense of more than four million dollars. Thecity of Amsterdam owes to this canal its present commercial prosperity. Public roads and the state postal service are of comparatively recentorigin in Great Britain. The first public postal route was establishedin 1635, during the reign of Charles I. In 1678 a public stage-coachroute was established between Edinburgh and Glasgow. The distance isonly forty-four miles, but the roads were so bad that, though the coachwas drawn by six able horses, the journey took three days. It wasconsidered a great improvement when in 1750 it could be completed inhalf the time originally required. In 1763 a mail-coach made onlymonthly trips between London and Edinburgh, eight long days beingrequired for the journey, which to-day is made in less than twelvehours. The number of stage passengers between these two capitalsaveraged about twenty-five a month, and rose to fifty on extraordinaryoccasions. In those days coaches were very heavy and without springs, and travelers not unfrequently cut short their journeys for want ofconveniences. Turnpikes in Great Britain do not even date as far back asstage-coaches. It is true the first turnpike act was passed as early as1653, but the system was not extensively adopted until a century later. Previous to that time the roads of England, such as they were, weremaintained by parish and statute labor. In the latter half of the lastcentury, under improved methods of construction, turnpike roadsmultiplied rapidly. Both roads and vehicles attained, previous to theadvent of the railroads, such a degree of perfection that thestage-coach made the journey between London and Manchester, 178 miles, in 19 hours; between London and Liverpool, 203 miles, in less than 21hours; and between London and Holyhead, 261 miles, in less than 27hours. In spite of these improved facilities, the transportation of merchandisecontinued to be very expensive. Goods had to be conveyed from town totown by heavy wagons, and the cost of land-carriage between Manchesterand Liverpool, a distance of thirty miles, was at times as high as fortyshillings per ton. The various disadvantages of land transportation directed, toward themiddle of the last century, the attention of the British people to theimportance of a system of canals. They realized that these waterhighways would open an easier and cheaper communication between distantparts of the country, thus enabling manufacturers to collect theirmaterials and fuel from remote districts with less labor and expense, and to convey their goods to a more distant and more profitable market. It would also facilitate the conveyance of farm produce to a greaterdistance and would thereby benefit both the producer and consumer. Thecanal era was formally inaugurated in 1761, when the Duke of Bridgewaterpresented to Parliament a petition for a bill to construct the canalwhich has since borne his name. The canal was commenced in 1767 and wascompleted in 1772. The next forty years were a period of great activityin canal building, but it was left to private enterprise, with verylittle aid from the government. Over a hundred canal acts were passed byParliament before the year 1800. The largest canal of the British Islesis the Caledonian, extending from Inverness to Fort William, a distanceof sixty-three miles. It was commenced in 1803 and completed in 1847, and cost £1, 256, 000. Other canals of importance are the Great Canal, which connects the North Sea with the Atlantic Ocean, and the GrandFunction Canal, which is over one hundred miles long and connects mostof the water-ways of central England with the Thames River. It isestimated that there were over 2, 200 miles of navigable canals in GreatBritain before the introduction of railroads. Canal-building in Spain dates back to the beginning of the sixteenthcentury, when Charles V. Built the Imperial Canal of Aragon, which isover sixty miles long. The political and commercial decline of thecountry during the seventeenth and eighteenth centuries, however, brought the development of her highways to a standstill, and, with theexception of Turkey, probably no European country has at the presenttime more deficient transportation facilities than Spain. The comparatively high state of civilization which existed in theItalian cities during the middle ages, their commercial and industrialthrift and the importance of Rome as the metropolis of the CatholicChurch combined to maintain many of the excellent ancient highways ofItaly. A number of canals were built in Northern Italy as early as thefifteenth century, and it is claimed by some writers that locks werefirst used on the Milanese canals in 1497. But while publicthoroughfares have always been well maintained in Northern Italy andeven as far south as Naples, they were during the past two or threecenturies permitted to greatly deteriorate in the southern part of thepeninsula, to the great detriment of both agriculture and commerce. Thecondition of the large Italian islands is still more lamentable, Sicilyand Sardinia being almost entirely devoid of roads. She that was thegranary of ancient Rome to-day scarcely produces enough grain to supplyher own people. Denmark and the Scandinavian peninsula had a good system of highwayslong before the railroad era. Among the many excellent canals of Swedenmay be mentioned the Göta Canal, which was commenced by Charles XII. Inthe early part of the last century, but was not entirely completed until1832. It is, inclusive of the lakes, 118 miles long, and itsconstruction cost $3, 750, 000, three-fifths of which was contributed bythe state. This canal connects the Baltic Sea with Lake Wener, as wellas, through the Göta-Elf, with the North Sea. Next to Turkey and Spain, no country of Europe has been as slow toappreciate the advantages of a system of highways as Russia. At thebeginning of the nineteenth century the vast empire of the Czar had buta few roads connecting its principal cities, and these were almostimpassable in the spring and fall. Much progress has, however, been madesince then, and at present Russia has over 75, 000 miles of wagon-roadand artificial waterway, and 19, 000 miles of railroad. A road has beenbuilt through Siberia, extending from the Ural Mountains to the city ofJakutsk on the Lena and sending out many branch roads north and south. The development of Russia's resources has kept pace with that of hersystem of highways, and the agricultural and mineral products of thatcountry are in the markets of the world constantly gaining ground intheir competition with the products of Western Europe and America. Passing now to the Western Hemisphere, we find that in ancient Peru theIncas built great roads, the remains of which still attest theirmagnificence. Probably the most remarkable were the two which extendedfrom Quito to Cuzco, and thence on toward Chile, one passing over thegreat Plateau, the other following the coast, Humboldt, in his "Aspectsof Nature, " says of this mountain road: "But what above all thingsrelieves the severe aspect of the deserts of the Cordilleras are theremains, as marvelous as unexpected, of a gigantic road, the work of theIncas. In the pass of the Andes between Mausi and Loja we found on theplain of Puttal much difficulty in making a way for the mules over amarshy piece of ground, while for more than a German mile our sightcontinually rested on the superb remains of a paved road of the Incas, twenty feet wide, which we marked resting on its deep foundations, andpaved with well-cut, dark porphyritic stone. This road was wonderful anddoes not fall behind the most imposing Roman ways which I have seen inFrance, Spain and Italy. By barometrical observation I found that thiscolossal work was at an elevation of 12, 440 feet. " The length of thisroad, of which only parts remain, is variously estimated at from 1, 500to 2, 000 miles. It was built of stone and was, in some parts at least, covered with a bituminous cement, which time had made harder than thestone itself. All the difficulties which a mountainous country presentsto the construction of roads were here overcome. Suspension bridges ledover mountain torrents, stairways cut in the rock made possible theclimbing of steep precipices, and mounds of solid masonry facilitatedthe crossing of ravines. Under the rule of the Spaniards the roads ofthe Incas went to ruin. In fact, throughout South America but little, ifanything, was done by the mother country to aid transportation. North America, or at least that part of it which was settled by theAnglo-Saxon race, fared much better in this respect. The great utilityof good roads was universally recognized even in the colonial times, butthe scarcity of capital, the great extent of territory as compared withthe population, and the want of harmonious action among the variouscolonies, delayed extensive road and canal building until after theestablishment of the Union. Mistaken local interests but too oftenwrecked well-advanced plans, and what road-building was done during thecolonial times was almost entirely left to individual exertion, withoutany direct aid from the government. The first American turnpike was built in Pennsylvania in 1790. Fromthere the system extended into New York and Southern New England. Up to1822 more than six million dollars had been expended in Pennsylvania forturnpikes, one-third of which sum, or over $1, 000 a mile, had beencontributed by the commonwealth. In 1800 three wagon-roads connected the Atlantic coast with the countrywest of the Alleghanies, one leading from Philadelphia to Pittsburgh, one from the Potomac to the Monongahela, and a third passed throughVirginia to Knoxville, in Tennessee. Much as was done during this periodfor the improvement of the roads, stage-coach travel remained for yearscomparatively slow. In 1792 Mr. Jefferson, then Secretary of State, wrote to the Postmaster-General to know if the post, which was thencarried at the rate of fifty miles a day, could not be expedited to onehundred. Even this latter rate was considered slow on the greatpost-roads forty years later. In the year 1800 one general mail-routewas extended from Maine to Georgia, the trip being made in twenty days. From Philadelphia a line went to Lexington in sixteen and to Nashvillein twenty-two days. The government of the United States, appreciatingthe importance, for military purposes, of good roads leading to thefrontiers, commenced the construction of national, or military, roads. A road was thus built from Baltimore through Cincinnati to St. Louis, and another from Bangor to Houlton, in Maine. In 1807 Albert Gallatin, Secretary of the Treasury, advocated the extensive construction ofpublic roads and canals by the general government. Mr. Gallatin took theground that the inconveniences, complaints, and perhaps dangers, resulting from a vast extent of territory cannot otherwise be radicallyremoved than by opening speedy and easy communications through all itsparts; that good roads and canals would shorten distances, facilitatecommercial and personal intercourse, and unite by a still more intimatecommunity of interests the most remote quarters of the United States, and that no other single operation within the power of the governmentcould more effectually tend to strengthen and perpetuate that unionwhich secured external independence, domestic peace and internalliberty. The principal improvements recommended by Mr. Gallatin were thefollowing: 1. Canals opening an inland navigation from Massachusetts to NorthCarolina. 2. Improvement of the navigation of the four great Atlantic rivers, including canals parallel to them. 3. Great inland navigation by canals from the North River to LakeOntario. 4. Inland navigation from the North River to Lake Champlain. 5. Canal around the Falls and Rapids of Niagara. 6. A great turnpike road from Maine to Georgia, along the whole extentof the Atlantic sea-coast. 7. Four turnpike roads from the four great Atlantic rivers across themountains to the four corresponding Western rivers. 8. Improvement of the roads to Detroit, St. Louis and New Orleans. Mr. Gallatin also recommended that a sufficient number of localimprovements, consisting either of roads or canals, be undertaken so asto do substantial justice to all parts of the country. The expenditurenecessary for these improvements was estimated at twenty milliondollars. Local jealousy and State rights prejudice practically defeatedthis movement, the Cumberland road, or National Pike, being the onlyresult of any importance. The failure of the government to provide thecountry with adequate roads left the construction of turnpike roads toprivate enterprise, and these roads, before the general introduction ofrailroads, often yielded much profit to capitalists. Great as were theconveniences afforded by the turnpike, they were entirely inadequate forthe development of the resources of the interior of the country. Theproducts of a forest or a mine could not be transported upon them to anygreat extent. The crossing of a single water-shed, owing to thenecessity for largely increased motive power, would often materiallydecrease the value of the goods to be transported. These drawbacks of land transportation directed, toward the close of thelast century, the attention of the people of the United States to thenecessity of providing for a system of canals that should bind togetherthe various parts of their extended country in the interest of commerce. General Washington was among the first to urge upon his countrymen theintroduction of this great highway of interstate traffic, although butlittle was done in this direction until after the War of 1812. Thepeople of New York had from an early period of the settlement of theirState been impressed with the importance of connecting the Hudson withthe Western lakes. In 1768 the provincial legislature discussed thissubject, but the political agitations of the times and the followingrevolutionary struggle arrested further proceedings. After the war theproject was frequently brought before the legislature, but nothing wasdone until 1808, when the assembly appointed a committee to investigatethe subject and to solicit the coöperation of the general government, ifthe project should be found practicable. The report of the committeeconcerning the practicability of the undertaking was in every respectfavorable, and in 1810 the legislature provided for a survey of theentire route from the Hudson River to Lake Erie. The survey was made, but, the expected aid from the national government not beingforthcoming, the matter rested until after the war with England. In 1816a new board of commissioners was appointed, and the following year anact was passed providing for a system of internal improvements in theState. On the 4th day of July next the excavation of the Erie Canal wascommenced, and on the 26th of October, 1825, the first boat passed fromLake Erie to the Hudson. The canal was 378 miles long and four feetdeep. It had a width of 40 feet at the surface and 28 feet on thebottom, and carried boats of 76 tons burden. Owing to the rapid increaseof trade, the capacity of the canal was found inadequate within tenyears after its opening, and in 1835 measures were taken to enlarge itto a width of 70 and 56 feet by a depth of seven feet, thus allowing thepassage of boats of 240 tons. The total length of the canal was, however, subsequently shortened 12-1/2 miles, making its present length365-1/2 miles. This enlargement was completed in 1862, and cost theState over $7, 000, 000, making the total cost of the canal about$50, 000, 000. New York has, inclusive of branches, some ten other canalsin operation, among them the Champlain Canal, extending from the head ofLake Champlain to its junction with the Erie Canal at Waterford; theOswego Canal, from Lake Ontario at the city of Oswego to the Erie Canalat Syracuse; the Black River Canal, from Rome to Lyon Falls; the Cayugaand Seneca canals, extending from the Erie Canal to the Seneca andCayuga lakes. The State has expended for the construction of canals notless than $70, 000, 000. Canal-building in the State of Pennsylvania commenced about the timethat the original Erie Canal was completed in New York. In 1824 thelegislature authorized the appointment of commissioners to explore canalroutes from Philadelphia to Pittsburgh and the West. A year latersurveys were authorized to be made from Philadelphia to Pittsburgh, fromAllegheny to Erie, from Philadelphia to the northern boundary of theState, and also south to the Potomac River. The construction of the mainlines of communication between the east and the west and the coal fieldsin the north was soon commenced. Large loans were repeatedly made, andthe work was vigorously prosecuted. In 1834 Pennsylvania had 589 milesof State canals, among them the Central Division Canal, 172 miles long, and the Western Division Canal, 104 miles long. Public opinion stronglyfavored an extended system of internal improvements, and it was believedthat these water-ways would soon become a source of revenue to theState. These expectations might have been realized had the State carriedon enterprises on a less extensive and more economical basis. In 1840the financial condition of the State had become such that canal-buildinghad to be abandoned. The amount expended by the State of Pennsylvaniafor canals, including the Columbia Railroad, was about $40, 000, 000, while the difference between net earnings and interest paid by the Stateup to that time is estimated at $30, 000, 000. In 1857 and 1858 theseworks were sold to the Pennsylvania Railroad Company and the Sunbury andErie Railway Company for $11, 375, 000, or about one-sixth of their costto the State. In Ohio the legislature authorized the survey of a canal from Lake Erieto the Ohio River. In 1825 an act was passed providing for theconstruction of the Ohio Canal and a number of feeders. In 1831 thecanal was in operation from Cleveland to Newark, a distance of 176miles, and the whole system was finished in 1833. The State of Illinois completed in 1848 the Illinois and Michigan Canal, connecting Chicago with La Salle on the Illinois River. This canal is102 miles long, 60 feet wide and six feet deep. The construction by thegeneral government of the Hennepin Ship Canal, connecting theMississippi with Lake Michigan, has long been agitated in the Northwest. Such a canal would be one of the most important channels of commerce inthe country, and it is to be hoped that this great project will becompleted at no distant day. We have besides in the United States a large number of canals that wereconstructed, and are still operated, by private companies, as theDelaware and Hudson in New York and Pennsylvania, the Schuylkill, Lehighand Union canals in Pennsylvania, the Morris Canal in New Jersey, theChesapeake and Ohio and Maryland, etc. A large number of canals, somepublic and others private property, have since the construction ofrailroads been abandoned. Thus in New York 356 miles of canals, costing$10, 235, 000; in Pennsylvania 477 miles, costing $12, 745, 000; in Ohio 205miles, costing $3, 000, 000; in Indiana 379 miles, costing $6, 325, 000, areno longer in use. All the canals that were ever built in New Englandhave likewise been abandoned for commercial purposes. Nor was Canada slow in realizing the advantages which a system of canalsconnecting the great lakes with the Atlantic Ocean promised to give her. The construction of the Welland and St. Lawrence canals made it possiblefor vessels to clear from Chicago direct for Liverpool, and this has toa considerable extent diverted grain shipments to Montreal, giving theCanadian dealers a decided advantage in this traffic. It is a strange fact that, at least in this country, the zenith of thecanal-building era is found in the decade following the invention of thesteam railroad. For many years it was not believed that under ordinarycircumstances the iron horse could ever compete with the canal boat inrates. The most sagacious business men had unlimited faith in thedestiny of the canal as a prime commercial factor and invested largelyin canal stocks. To many these investments proved a disappointment. Themarvelous improvements in locomotives and other rolling stock, theunprecedented reductions in the prices of iron and steel, and above allthe fact that in our climate canal carriage is unavailable during fivemonths of the year, gave the railroads a decided advantage in theircompetition with canal transportation. There can be no doubt, however, that the presence of this competition was one of the chief causes of thegreat reduction of railroad rates on through routes. In this respectalone the canals have accomplished a very important mission. In thetransportation of many of the raw products of the soil and the minecanals still compete successfully with the railroads, and it is still anopen question whether future inventions may not enable them to regainlost ground in the carriage of other goods. It would certainly be ashort-sighted policy for our people to discourage the construction ofnew canals. For the improvement of navigable rivers, appropriations have been madeby Congress ever since the establishment of our national government, andthese appropriations now amount to millions of dollars annually. Sincethe introduction of railroads the usefulness of these national highwaysof commerce has ceased to depend upon the tonnage carried upon them, butthe influence which they exert upon the cost of transportation is sogreat that it is not likely that the policy of making annualappropriations for the improvement of these water ways will be abandonedby the American people for many years to come. There has recently been a strong agitation in some portions of theUnited States in favor of extending government aid to the Nicaragua ShipCanal, and there seem to be indeed many arguments in favor of such apolicy. President Harrison said in his annual message to Congress inDecember, 1891: "The annual report of the Maritime Canal Company of Nicaragua shows that much costly and necessary preparatory work has been done during the past year in the construction of shops, railroad tracks and harbor piers and breakwaters, and that the work of canal construction has made some progress. I deem it to be a matter of the highest concern to the United States that this canal, connecting the waters of the Atlantic and Pacific oceans, and giving to us a short water communication between our ports upon those two great seas, should be speedily constructed, and at the smallest practical limit of cost. The gain in freights to the people and the direct saving to the government of the United States in the use of its naval vessels would pay the entire cost of the work within a short series of years. The report of the Secretary of the Navy shows the saving in our naval expenditures which would result. The Senator from Alabama, Mr. Morgan, in his argument upon this subject before the Senate of the last session, did not overestimate the importance of the work when he said that 'The canal is the most important subject now connected with the commercial growth and progress of the United States. '" And in his message of 1892 that: "It is impossible to overestimate the value from every standpoint of this great enterprise, and I hope that there will be time, even in this Congress, to give it an impetus that will insure the early completion of the canal and secure to the United States its proper relation to it when completed. " It is sincerely to be hoped that the people of the United States can beconvinced of the advisability of extending government aid to thisenterprise. It must be admitted that the experience of our governmentwith the Pacific railroads has created a strong prejudice among themasses against such subsidies as were granted to those corporations, butit is probable, with the people on the alert, that Congress would notagain permit great impositions to be practiced against the government. When the great advantages to be derived by the people of the UnitedStates from the use of this canal and the small outlay required areconsidered, it would seem to be a wise policy for our government at onceto take such steps as are necessary to secure the early completion andthe future control of this great international highway. CHAPTER II. THE HISTORY OF RAILROADS. In making inquiry into those inventions and improvements which were theprecursors of the modern railroad, we meet early the desire to renderthe movement of wagons easier by a smooth roadway. Traces of this may befound even in ancient times. The Romans constructed tracks consisting oftwo lines of cut stones, and in the older Italian cities stone tracksmay still be seen in the streets, corresponding to wagon tracks, andevidently designed for the purpose of rendering the movement of thewheels easier. The first rail tracks of which we have any knowledge were constructed atthe end of the sixteenth century. These rails, which were made of wood, appear to have been an invention of miners in the Hartz Mountains. Theywere the result of pressing necessity, for, as mines were usually sosituated that roads could only with great difficulty and expense havebeen built to them, some cheaper sort of communication with the highroad had to be contrived. After various experiments the wooden railway was adopted, and theproduct of the mine was carried upon them to the place of shipment bymeans of small cars. Queen Elizabeth had miners brought into England, todevelop the English mines, and through them the rail track wasintroduced into Great Britain. Later the wooden rail was covered with aniron strap to prevent the rapid wear of the wood, and about the year1768 cast-iron rails commenced to be used. At the end of the lastcentury wheels were constructed with flanges, to prevent derailing. More attention was also paid to the substructure, wood, iron and stonebeing used for this purpose. Wrought-iron rails were patented in 1820. The first authentic account of heat or steam engines is found in the"Pneumatica" of Hero of Alexandria, who lived in the second centurybefore Christ. Hero describes a number of contrivances by which steamwas utilized as a source of power. Although these contrivances were atthe time of very little practical value, they are interesting as theprototypes of the modern steam engine. The attempts to move wheels bysteam date back to the seventeenth century, when a number of experimentswere made, but their exact nature is not known, because they were allsoon abandoned, either on account of unsuccessful results or lack ofmeans. At the beginning of the eighteenth century Denis Papinconstructed a small steamboat, upon which he sailed in 1707 on the FuldaRiver from Cassel to Munden, a distance of about fifteen miles. The construction of locomotives engaged the attention of ingenious mindsa century and a half ago. It is claimed that Newton experimented with asteam motor in 1680. Dr. Robinson described in 1759, in his "MechanicalPhilosophy, " a steam vehicle. The Glasgow engineer James Watt devotedhimself from 1769 to 1785, with great energy, to the development of thesteam engine, and succeeded in inventing the system which became theparent of the modern engine. An American, Oliver Evans, constructed atthe beginning of the present century a carriage propelled by steam, andexhibited it, in 1804, in the streets of Philadelphia, before twentythousand spectators. While Evans' invention was never put to anypractical use, he prophesied that the time would come when steam carswould be considered the most perfect means of transportation. OnChristmas eve, 1801, Richard Trevithick exhibited at Camborne, England, a steam coach, and soon afterwards he and his cousin, A. Vivian, obtained an English patent on a "steam engine for propelling carriages. "Seven years later a Mr. Blinkensop, of Middleton Colliery, near Leeds, constructed another locomotive engine, upon which he obtained a patentin 1811. These and a number of other inventors of steam engines vainlyexpended great ingenuity in attempting to overcome a purely imaginarydifficulty. They believed that the adhesion between the face of thewheel and the surface of the road was so slight that a considerableportion of the propelling power would be lost by the slipping of thewheels. It was not until about the year 1813 that the important fact wasascertained that the friction of the wheels with the rails wassufficient to propel the locomotive and even drag after it a load ofconsiderable weight. On the other hand these inventors failed to providein their engines adequate heating-power for the production of steam. In1814 George Stephenson commenced to apply himself to the construction ofan improved locomotive. When, owing to his invention of the tubularboiler, he saw, after fifteen years of arduous toil, his labors crownedwith success, the civilized world entered upon a new era of social, industrial and commercial life. The first line upon which Stephenson'sinvention was used was the Liverpool and Manchester Railway. In the year1821, a number of Liverpool merchants formulated a plan for theconstruction of a tramway between their city and Manchester. Thequestion of motive power was left open as between horses and the steamengine, with which Mr. Stephenson was then experimenting. After muchopposition on the part of Parliament and the public a charter wasobtained in 1826. When the construction of the road was nearlycompleted, the directors of the company, after having determined uponthe use of steam engines, offered a prize of £500 for the bestlocomotive engine to run at a public trial on the Liverpool andManchester Railway. This proposal was announced in the spring of 1829, and the trial took place at Rainhill on the 6th of October of that year. The competing engines were the Rocket, constructed by Mr. Stephenson;the Sanspareil, by Hackworth; the Perseverance, by Burstall, and theNovelty, by Messrs. Braithwaite and Ericsson. Both Braithwaite andEricsson became subsequently residents of the United States, and thelatter achieved immortal fame as the inventor of the screw propeller andthe builder of the Monitor. The Rocket was the only engine thatperformed the complete journey proposed, and obtained the prize. It isclaimed by the biographers of John Ericsson that he had really built amuch faster locomotive than Stephenson, and that, although it had to beconstructed very hastily and therefore broke down during the trial, thesuperiority of the principle involved in it was universally recognizedby the engineers of that time. The Stephenson engines became the motivepower of the Liverpool and Manchester road, which was opened for publictraffic on the 16th of September, 1830. This line was, however, neitherthe first public railway nor even the first steam railway. The firstrailway or tramway act was passed in England in 1758, and in 1824 noless than thirty-three private railway or tramway companies had beenchartered. In 1824 a charter was granted by Parliament authorizing theconstruction of the Darlington and Stockton Railway, to be worked with"men and horses, or otherwise. " By a subsequent act the company wasempowered to work its railway with locomotive engines. The road wasopened in September, 1825, and was practically the first public carrierof goods and passengers. The Monklands Railway in Scotland, opened in1826, and several other small lines soon followed the example of theDarlington and Stockton line and adopted steam traction, but theLiverpool and Manchester Railway was the first to convince the worldthat a revolution in traveling had taken place. The road was from the very first successful, its traffic and incomegreatly exceeding the expectations of its managers. It should also benoted here that the cost of construction fell largely below theelaborate estimates made by several distinguished engineers. The companyhad expected to earn about £10, 000 a year from passenger traffic, andthe very first year the receipts from that source were £101, 829. Thegross annual receipts from freight had been estimated at £50, 000, butwere £80, 000 in 1833. From the first the stockholders obtained adividend of eight per cent. , which soon rose to nine and to ten percent. It has since been demonstrated that the revenues of new roadsalmost always exceed expectations. The success of this railway stimulated railway enterprise throughoutEurope and America. But while railroad projects created much enthusiasmon one side, they also met with bitter opposition on the other. Theprejudice of the short-sighted and the avarice of those whose interestswere threatened by a change in the mode of transportation used everyweapon in their power against the proposed innovation. The argumentsused were often most absurd. It was said that the smoke of the enginewas injurious to both man and beast, and that the sparks escaping fromit would set fire to the buildings along the line of road, the cowswould be scared and would cease to give their milk, that horses woulddepreciate in value, and that their race would finally become extinct. Nor did many of the European governments favor the new system oftransportation. Some openly opposed it as revolutionary and productiveof infinitely more evil than good. The Austrian court and statesmenespecially looked upon the new contrivance with undisguised distrust;and from their point of view this distrust was perhaps well founded. Therapid movement of the iron horse seemed to savor of dangerousradicalism, not to say revolution. When the Emperor finally, in 1836, concluded to sign a railroad charter, he based his action upon thedubious ground that "the thing cannot maintain itself, anyhow. " It maybe said that the history of the railroad is a conspicuous illustrationof human short-sightedness. The Prussian Postmaster-General Von Nagleropposed the construction of a railroad between Berlin and Potsdam uponthe ground that the passenger business between those two cities was notsufficient to keep even the stage-coach always full. It never occurredto the Postmaster-General, as it does not occur to many railroad men ofto-day, that new and cheaper means of transportation increase thetraffic. Even so wise a statesman as Thiers said when railroadconstruction was first agitated in France: "I do not see how railroadscan compete with our stage-coaches. " M. Thiers also opposed for yearsthe building of a railroad between Paris and Versailles, declaring thaton account of a railroad not one passenger more would make the journeybetween these two places. But railroads came whether monarchical governments liked them or not. The success of the Liverpool and Manchester Railroad stimulated railroadbuilding in England to a marvelous extent. Between 1830 and 1843 noless than seventy-one different companies were organized, representingabout 2, 100 miles. During the next four years 637 more roads, with anauthorized length of 9, 400 miles, were chartered. The construction ofeach new road required a special act of Parliament. These early roadsaveraged only fifteen to thirty miles in length. The competition whichensued soon led to the consolidation of roads, which continued until nowthe 14, 000 miles of railway in England and Wales are practically ownedby only a dozen companies. The total number of miles of railroad inGreat Britain and Ireland is at present over 20, 000. The news of the opening of the first steam railway in England spreadthrough Europe comparatively slowly. There were in those days but fewnewspapers printed on the continent, and these were read very sparingly. Railroad discussions were confined to merchants and manufacturers. Evenafter the success of the railroad was assured in England, a large numberof people would not believe that, except between the largest cities, railroads on the continent could ever be profitable. But few railroadshave ever been built which with honest, efficient and economicalmanagement would not pay a fair rate of interest on actual cost ofconstruction. But in spite of this we have to this day a large number ofotherwise well-informed people who question the financial success ofevery new railroad that is proposed. In those days it occurred only to the most sagacious minds that withincreased facilities commerce would expand. The missionaries of railroadenterprise found it therefore a difficult matter to interest capital intheir projects. Railroad committees were in time formed in all cities ofany importance, but, with capital cowardly, as usual, and governmentsdistrustful, their task was often a thankless one. Railroad projectsmatured very slowly, and, when matured, were often wrecked by jealousand short-sighted governments. After the formation of a company five andeven ten years would often pass away before a charter could be securedand the work of construction commenced. It is true, there were somelaudable exceptions to this rule. Thus the governments of France andBelgium led the people in railroad construction; but upon the whole itcan be said that the railroad forced itself by its intrinsic merit uponmonarchical governments. It soon became evident even to the most stupidof autocratic ministries that it was a choice between the new mode oftransportation and national atrophy. The first German line was built between the cities of Nuremberg andFurth in 1835. It was only about four miles long, but the success of theexperiment gave an impetus to railroad building in other parts ofGermany. The Leipzig and Dresden line followed in 1837, and theBerlin-Potsdam and Brunswick-Wolfenbuttel lines in 1838. At the end of1840 Germany had 360 miles of railroad. In that year Frederick WilliamIV. Succeeded to the throne of Prussia and inaugurated a new andexceedingly liberal railroad policy in his realm. In 1843 the Prussiangovernment concluded to guarantee certain railroad companies a dividendof 3-1/2 per cent. On the capital actually invested. The state alsosecured considerable influence in the administration of the roads aswell as in the right to assume the management of the various lines undercertain conditions. The governments of the states of Southern Germanynow commenced to build state roads, and their example was, chiefly forstrategic reasons, soon imitated by Prussia. The system has since grownto over 26, 000 miles, and no less than eighty-seven per cent. Of themileage is under state control. In all the states and provinces of theempire, except Bavaria, the rates for transportation of passengers andfreight on all lines are controlled absolutely by the government. In Austria, as has already been indicated, the building of railways wasgreatly discouraged by the government until 1836. In that year theEmperor rather reluctantly granted Baron Rothschild a charter for arailway from Vienna into the province of Galicia. Another charter wasgranted to a Baron Sina for a line from Vienna to Raab and Gloggnitz. The policy then adopted in Austria guaranteed to each railroad company amonopoly in its own district during the period for which the charter wasgranted. Soon after the state also commenced building lines, but thegrowth of the Austrian system was slow until after the war of 1866. Anera of railroad speculation was then inaugurated, which ended with thecrisis of 1873. The total length of the railroads of Austria-Hungary was10, 790 miles in 1875. At present that monarchy has nearly 16, 400 milesof railway, 8, 600 of which are owned by private companies. It has been the policy of Austria to reduce rates, and several roads, especially those built in mountainous districts, have a certain revenueguaranteed to them by the government. The zone system recently adopted in Hungary reduced both the passengerand freight rates of the government roads at least one-third, and thisreduction has, contrary to expectation, greatly increased their netrevenues. In France railroad agitation commenced in 1832. A few short lines wereopened, as those from Paris to St. Germain and to Versailles; but, owing to the conservatism of French capitalists, but little more wasdone until the state took the matter in hand. Thiers proposed a schemeby which the state was to furnish about half the cost while privatecompanies were to build the lines and operate them. The WesternRailroad, the first line of any great extent, was opened in 1837 betweenParis and Rouen, and the Eastern Railroad was opened two years later. There were in 1859 six large companies operating their lines withprofit, but, to induce them to build additional lines that were needed, the state guaranteed the interest on the capital required to make theirimprovements. In 1884 there were about 17, 000 miles of railroad inoperation. To bring about the construction of another 7, 000 miles ofroad, and to thus complete the railroad system of the country, thegovernment now guaranteed each company a dividend equal to the averageof recent years, but not to exceed seven per cent. It is doubtfulwhether this system of monopoly has in all respects been favorable tothe encouragement of enterprise in the railroad circles of France. Ingranting charters the state has, however, reserved valuable rights whichat a future period it will have an opportunity to assert for the publicbenefit. The railroad companies have generally a lease for ninety-nineyears, and their lines become the property of the state after theexpiration of that period. To extinguish the bonded debt and stock, asinking fund has been created, from which a certain portion of theshares and outstanding bonds is annually paid off and canceled. Thegovernment requires of the companies the free carriage of the mails andthe transportation of military and other employes at very low rates. Besides this the state levies upon the traffic of the railroads a dutyof ten per cent. Of their gross earnings from passengers and from allgoods carried by fast trains. These facts are usually overlooked by ourrailroad men when they indulge in making comparisons between therailroad rates of this country and those of France. The French Republichad 13, 400 miles of road in 1875, and 22, 600 in 1890. When all of theproposed lines are completed, the total mileage of that country will beover 25, 000. Belgium has the best-developed track system on the continent. The statecommenced the construction of railroads as early as 1834, and the firstline (Brussels Malines) was opened May 5th, 1835. Four great state lineswere constructed in different directions, and between these linesprivate roads were permitted to be built. Between 1850 and 1870 theprivate lines increased from 200 to 1, 400 miles, and competition betweenthem and the state lines became so active as to reduce rates to thelowest possible point. In 1870 the government decided to buy a largenumber of competing lines. In 1874 it had acquired more than half, andat present, with a few exceptions, they are all owned and controlled bythe state. The exceptions to this are a few short lines that were builtin the early days of railroad construction. The total mileage is now3, 210. Rates have, however, not been increased since this consolidation, and they are still lower than any other country in Europe. Thetransportation of mails is free, and troops, military materials andprison vans are carried at reduced rates. Railroads were originally built in Switzerland merely for theaccommodation of tourists and the local traffic. The first line, betweenZurich and Aarau, was completed in 1847, but general railroad enterprisedid not develop until after 1860. The St. Gothard route was thenprojected, which opened a direct through line between Italy andGermany. The roads are all owned by private companies, but are understrict government control. Great publicity of their affairs is required. The total mileage of Switzerland was 2, 043 in 1891. In Italy railroad enterprises have received attention since 1853. Thefirst roads were those of Lombardy, being commenced while that provincewas still under Austrian rule. The treaties of Zurich in 1859 and ofVienna in 1866 delivered these roads and the Venetian lines to thekingdom of Italy. Between 1860 and 1870 the systematic construction of arailroad net was commenced which connected the various lines with eachother and with Rome. Nearly all the railroads of Italy fell into thehands of the government, but in 1885 they were leased for a term ofsixty years to three companies, terminable at the end of twenty or fortyyears by either party upon two years' notice. Under the lease the statereceived two per cent. Of the gross receipts. The tariffs are fixed bythe state, are uniform and can be reduced by the state. A Council ofTariffs, composed of delegates for the government, for agriculture, commerce and industry, and for the railroad companies, all elected bytheir own boards, has been instituted to study the wants and bestinterests of the country. The total number of miles of railroad in Italywas 8, 110 in 1889. The first road in Spain was opened in 1848 between Barcelona and Mataro. The government greatly encouraged railroad construction by subsidies, and during the decade following 1855 the development of the railwaysystem of the country was rapid. More than thirty companies have beenformed, which have built about twenty main lines, aggregating 6, 200miles. In Portugal very little railroad building was done previous to 1863, when a little over three hundred miles of road was constructed. Thegovernment owns nearly half of the roads of the country, the remaininglines being the property of private companies. The total number of milesoperated in the kingdom in 1889 was 1, 280. The service and the financialcondition of the roads of Portugal are far from being satisfactory. In Denmark the first railroad was built on the island of Seeland in1847. Previous to 1880 the larger part of the roads of the kingdom wasowned by private companies. Since then several of the most importantprivate roads have been purchased by the state, which in 1889 owned 963miles, while only 251 miles remained in private control. Only aboutthirty miles more have since been constructed. The roads are wellmanaged, but their net earnings are less than two per cent. Of thecapital invested. On the Scandinavian Peninsula the railroad system has developed ratherslowly. Norway built the first line from Christiana to Eidsvold in 1854, and Sweden commenced railroad building two years later. The narrow-gaugesystem is fully developed here. While in Norway the greater part of thelines is owned by the state, the roads of Sweden are chiefly in thehands of private companies which on an average control but little morethan twenty-five miles each. The total mileage of Sweden is 5, 970, andthat of Norway 970. The first line of railroad in the Russian Empire was constructed fromSt. Petersburg, sixteen miles, to Tsarskoji-Sielo, in 1842. The St. Petersburg and Moscow line was opened in 1851. Railroad building thenstagnated until after the Crimean War, when a large number of lineswere constructed at once. The roads were surveyed by the government, butconstructed and operated by private companies. State aid was, however, freely given. During the past ten years theRussian government has directed its attention to the development of therailroad system in its Asiatic possessions. A railway between the Blackand Caspian seas was completed in 1883, and the Siberian railroad isextended as fast as the financial condition of the empire permits. Thereare now about 20, 000 miles of road in the Russian Empire operated byprivate companies. The construction of a large number of the Russianrailways was dictated by military rather than commercial considerations. Maximum rates are specified in charter, and every change of rates mustbe approved by the Minister of Finance. In the Balkan Peninsula railroad facilities are still ill provided for. A few lines have been built, but these are, as a rule, badly managed. Trains are slow, and rates often so high as to be prohibitory. Roumaniahas undoubtedly the best railroad system of any of the Balkan states, the government controlling 1, 000 miles of road. Greece is also makingsome progress and has at the present time 610 miles of railway. There isreason to believe that through communication will soon be established inthese countries on a larger scale. The introduction of the railway into Asia has been, except in theRussian and English possessions, a very difficult task. The conservatismor ignorance of the governments and the superstition of the peoplecombined to throw numberless obstacles before those who proposed to pavethe way for the iron horse. British India opened her first railway forpublic traffic between Bombay and Tannah on November 18, 1852. In 1855she had 841 miles of road, which increased to 6, 515 miles in 1875 and to15, 828 miles in 1889, of which 8, 423 miles were owned and operated bythe state. The total cost of these roads was $880, 000, 000. In Asiatic Turkey the first line was opened between Smyrna and Triandaon the 24th day of December, 1860. This line was in 1866 extended toAiden, and in 1882 to Sarakio. There are at present five lines with atotal extent of 446 miles, all owned by English companies. New lines, covering in all 3, 952 miles, have recently been projected. The first line in Persia, only seven miles long, and extending fromTeheran to Schah-Abdal-Azzim, was opened on the 25th day of June, 1888. Another line, from the Caspian Sea to Amol, is now in process ofconstruction. A line was opened last September between Joppa andJerusalem. It is 53 miles in length. Japan may be said to be already thoroughly familiar with the Europeansystem. The first and principal line was opened on the island of Napon, between Tokio and Yokohama, on the 14th of October, 1872. Two othershort lines followed in 1874 and 1876, when the total extent of theJapanese roads was about 135 miles. In 1883 the construction of theGrand Trunk Railroad, from Tokio to Kioto, was commenced, which line hasbeen in operation for the past five years. Other lines, aggregating over400 miles, will soon be opened for traffic. The total extent of road inoperation in 1888 was 580 miles, 310 of which were controlled by thestate, and the remainder by private companies. In 1890 the total numberof miles exceeded 900. The total average cost per mile was $58, 000. No nation has probably opposed the introduction of the railway asstubbornly as the Chinese. The first railroad, scarcely seven mileslong, was built by an English company near Kaiping to facilitate thetransportation of coal from the mines in that vicinity. In 1886 aChinese company purchased this line and has since extended it toTientsin, making its present length about eighty-four miles. The Chinesegovernment has recently authorized the further extension of this line toYangchou, a place but a few miles distant from Pekin. Of the Asiatic islands Java has the largest and oldest railroad system. On the 10th of August, 1867, the first line was opened between Samarangand Tangveng. Other coast lines have since been constructed, butcommunication is still sadly neglected in the interior. In 1889 therewere operated on the island nearly 800 miles of road, the greater partbeing the property of private companies. A road was opened upon the island of Ceylon between Colombo and Kandy in1867, to which several branch lines and extensions have since beenadded. The total system comprises at present about 180 miles. Short lines have also been built in Burmah (1889); in the MalayPeninsula (1885), in Sumatra (1876), and in Cochin China (1885). A linefrom Bangkok to Bianghsen, in Siam, is being projected at the presenttime. In Africa, if we except its northern coast, the construction ofrailroads has only kept pace with the slow development of the resourcesof that continent. Its European colonies are still but thinly inhabited, and their industrial and commercial life still resembles much that ofthe American colonies of the seventeenth century. There can be littledoubt, however, that with the increasing immigration the growing demandfor better transportation facilities will speedily be met by Europeancapital. The first railroad upon African soil was built by the Egyptiangovernment from Alexandria to Cairo, and from there through the desertto Suez. A part of this line, 130 miles long, was opened to traffic in1856, and the remaining ninety miles the year following. Nothing furtherwas done until after Ismail Pasha ascended the throne, in 1863. Therailroad system of Lower Egypt, between Alexandria in the west, Cairo inthe south, and Ismaila in the east, was then greatly extended and theservice materially improved. After the opening of the Suez Canal the line through the desert to Suezwas abandoned. The railroad system of Egypt comprises at present about1, 250 miles, all of which belongs to the government except two shortlines which are private property. The beginning of the railroad system of Algiers dates back to 1860, whenthe French government gave a charter to the Companie des Chemins de FerAlgérians, authorizing it to build a number of lines connecting theprincipal cities of the province with the Mediterranean. The line fromAlgiers to Blidah, thirty-two miles long, was opened on September 8, 1862. Further construction was then delayed until 1863, when the charterof the original company was transferred to the Paris, Lyons andMediterranean Railroad Company. The original plans were then in the maincarried out, until the disturbances caused by the Franco-Prussian waragain put an end to railroad enterprises. In 1874 three new companieswere chartered and railroad building was resumed. In 1888 the Algerianrailroad system comprised 1, 350 miles. The first road in Tunis was built in 1872 from the city of Tunis toBardo and Gouletta by English capitalists. It was, in 1880, sold to anItalian company to which the Italian government for political reasonshad seen fit to guarantee certain dividends. Other small lines havesince been constructed, and more important ones have been prospected. The number of miles at present in operation is 153. The French colony on the Senegal River has a number of short lines, ofwhich the first was opened in July, 1883. These lines aggregate atpresent about 200 miles. It is now contemplated to extend this system tothe upper Niger. This would necessitate the construction of 240additional miles of road. The Cape Colony has the largest mileage of any of the European coloniesin Africa, the absence of navigable rivers rendering railroads here morenecessary than elsewhere. The first line was opened on the 13th ofFebruary, 1862. It then extended from Cape Town to Earste River, but wasextended to Wellington the following year. The number of miles of roadin operation in 1875 was 906, and in 1891 it had increased to 2, 067. Allthe roads of the colony, excepting a line of 93 miles belonging to theCape Copper Mining Company, are operated by the colonial government. Their net revenue in 1886 was 2. 84 per cent. Of the capital actuallyinvested. Port Natal built her first railroad in 1860. It was only two miles longand extended from the city of Durban to its harbor. Since then severalinland lines, aggregating over four hundred miles, have been constructedat a cost of twenty-two million dollars. The roads are operated by thecolonial government and yielded in 1891 a net revenue of 4. 4 per cent. On the capital expended. Short lines have also been built on Mauritius and Reunion, and there isnow every indication that Portuguese Africa and the Congo State will beprovided with railroad facilities in the near future. The introduction of railroads into Australia dates back to the sixthdecade of the present century. The total number of miles of roadreported in 1889 by the several colonies was 8, 883. If we estimate thepopulation of the continent at 3, 000, 000 for that year it will be seenthat Australia has more miles of road per capita than any other granddivision of the globe, save North America. New South Wales, the mother colony of the Australian continent, openedits first road on September 26, 1855, between Sydney and Paramalta. Thisroad was built by a private company, but was soon after its completionpurchased by the colonial government, and was in 1869 extended toGoulbourn. In 1875 the colony had only 436 miles of road in operation. The mountains, however, which separated the wide plains of the interiorfrom the coast had been surmounted, and the government commenced to pushthe construction of new roads with great vigor. At the end of the year1886 New South Wales had no less than 1, 888 miles of road in operation, for which the colony had expended $113, 000, 000. The net revenue duringthat year was 2. 9 per cent. On the capital invested. The total number ofmiles of railroad in this colony was 2, 247 in 1889. Victoria, the smallest of the colonies, has made by far the greatestprogress in railroad building. The first road in the colony, and, infact, the first road upon the Australian continent, was built in 1854between the city of Melbourne and its port, a distance of two andone-half miles. Within the next five years four other lines wereconstructed, connecting Melbourne with Williamstown, St. Kilda, Brighton and Echuca, respectively. In 1870 there were in the colony 275miles of railroad, which had increased to 1, 198 miles in 1880, and to2, 283 miles in 1889. Several of the roads were originally owned byprivate companies, but all of them were in time acquired by the colonialgovernment, the last one in 1878. The total capital invested in 1887 was$125, 000, 000, which yielded a net revenue of $5, 800, 000. All lines areunder the control of a board so constituted as to be entirely removedfrom political influence. In South Australia a short line was built in 1856 from the city ofAdelaide to Port Adelaide. Another line was constructed in 1857 fromAdelaide to Salisbury, which three years later was extended to Kapunda. The colony had then forty miles of road. The increase during the nextdecade was only ninety-three miles. Since then the development has beenmuch more rapid, the whole system of railroads comprising 1, 752 miles in1889. All the roads save a few suburban lines are owned and operated bythe colony. Their total cost is not far from $60, 000, 000, and their netannual revenue is about two and one-half per cent. Of the capitalinvested. The colony of Queensland has only a system of narrow-gauge roads, withthe construction of which it commenced in 1865. Up to September, 1887, the colonial government had constructed 1, 641 miles of road at a totalcost of $47, 700, 000. The total number of miles has since been increasedto 2, 058. The net revenue of the roads was a little over one milliondollars in 1886. The transportation facilities of West Australia are still far behindthose of her sister colonies. The first line was opened in 1873, and thetotal number of miles of road operated in the colony in 1889 was only496. The government controls nearly all the railroads of the colony. Of the islands of Australasia, Tasmania and New Zealand are as yet theonly ones that have railroad communication. The former built its firstroad in 1870 and had at the end of the year 1890 about 1, 900 miles inoperation. New Zealand opened its first railroad between Christchurchand Lyttleton on December 1, 1863. The development of the system wasslow at first, there being but 25 miles of road in operation in 1870. In1891 the number of miles of road had increased to 1, 916, all but 92miles being operated by the colonial government. The total amountexpended by the government for railroads is $55, 000, 000. The net revenuein 1887 was about 2-1/2 per cent of the amount invested. In South America railroad building is of comparatively recent date. Thefirst road was built in 1851, but the line was short and remained theonly one for several years. With thirty million people the SouthAmerican states have at present but little more than 16, 000 miles ofrailroad, a condition which must at least in part be ascribed to thepeculiar conservatism of the Latin race. The United States of Colombia possesses less than 250 miles of road. Itsfirst line was the Panama Railroad, from Colon to Aspinwall. It connectsthe Pacific with the Atlantic ocean, is 48 miles long and wasconstructed in 1855. This, as well as the several other roads ofColombia, is the property of private companies. A number of new roadshave recently been surveyed. Venezuela opened in 1866 a road, 56 miles long, from Puerto Caballo toPalito, which in 1870 was extended to Aroa. A number of other shortroads, aggregating about 350 miles, have since been constructed. Thetotal extent of railroad in Venezuela was 432 miles in 1889, of whichthe greater part was operated by private companies. Several importantlines are in the process of construction, and will connect Caracas withCarabobo, San Carlos and the port of La Guayra. The Republic of Ecuador constructed in 1876 a road from Jaguachi toPuente de Chimbo, a distance of 43 miles. This line was recentlyextended to Siambe, and has now a total length of 94 miles. In 1886 acharter was granted to a North American company, authorizing theconstruction of a road from San Lorenzo to Esmeraldas and guaranteeingcertain dividends on the investment. At the close of the year 1889Ecuador had 167 miles of road. The first railroad in Peru was built in 1851, connecting the seaportCallao with the capital, Lima. After this but little was done for morethan twenty years. At the beginning of the seventies an extensiverailroad system was projected at the instigation of President Don ManuelPardo, and the construction of the principal road of the system fromMollendo on the Pacific Ocean to Santa Rosa was at once entered upon. This road ascends the Western Cordillera, crosses a number of prodigiousmountain passes, reaches Lake Titicaca, and then proceeds in anorthwesterly direction to Santa Rosa. It is over 300 miles long, andreaches near Puna an altitude of 14, 700 feet. An extension of this linefrom Santa Rosa to the old Inca city Cuzco was opened in 1875, but wassubsequently destroyed in the war with Chile, and has not been reopened. Another road, extending from Callao to San Mateo, was opened in 1876. Itis eighty-seven miles long, and reaches with its enormous grades aheight of over 13, 000 feet. It belongs, with the Santa Rosa road, to theboldest creations of railroad engineering. Since the war with Chilerailroad enterprise has been checked. The number of miles of road inoperation rose from 962 in 1875 to 1, 615 in 1880, but was, owing to theabandonment of certain lines, diminished to 813 in 1884. Since that timeabout 400 miles of new road have been opened. In the Republic of Bolivia the first railroad was built about twentyyears ago from Antofogasta to Solar. After the cession of the provinceof Antofogasta to Chile there remained but thirty-five miles of road inBolivia. More than 200 miles have since been added by the constructionof several short roads, chiefly the property of mining companies. The Republic of Chile was the first of the South American states toinitiate the construction of railways. The building of a line from theseaport Caldera to Copiapo was commenced in May, 1850, and was completedon January 2, 1852. This line was constructed and operated by a privatecompany. The first state road, extending from Valparaiso to Santiago, was opened on the 15th of September, 1865. To this road has since beenadded an extension to Talcahuana, as well as several branch lines. Thetotal amount that has been expended by the Chilean government for theconstruction of railroads is $43, 000, 000. The total number of miles ofroad operated in Chile in 1887 was 1, 674, of which 992 were the propertyof private companies and 682 miles were owned by the state. Two hundredand fifty miles of road have since been constructed, and theconstruction of 700 additional miles of railroad has been authorized bythe government. The Argentine Republic opened its first road, extending from BuenosAyres to Belgrano, in December, 1862. Several other lines soonfollowed, and in 1870 over 600 miles of road had been constructed. Thisnumber had increased to 1, 440 in 1880 and to 5, 100 in 1889. Since thenseveral new lines have been completed, aggregating over 600 miles. Amongthe principal lines of the Argentine Republic is the transcontinentalroad which connects the Atlantic with the Pacific Ocean. The whole lineis 880 miles long, of which 665 miles are in the Argentine Republic andthe remaining 115 miles in Chile. Of the 3, 705 miles of road which werein operation at the beginning of the year 1887 the republic owned 1, 148, the province of Buenos Ayres 572, the province of Santa Fe 102, andprivate companies 1, 888 miles. The total amount invested in railroadswas $154, 000, 000 in 1887, which yielded an average dividend of 3. 9 percent. The oldest railroad in Brazil is the Petropolis road. It was built by aprivate company and opened on December 16, 1856. In 1881 the totalnumber of miles in operation was 2, 422, and in 1889 it had increased to5, 766. Furthermore charters had been granted for the additionalconstruction of 2, 271 miles of road. Of the lines in operation about1, 200 miles are the property of the state, yielding a revenue of nearly3 per cent. On the capital invested. The state gives aid, besides, toseveral private roads. The most important road of Brazil is the stateroad Dom Pedro I. , which connects the three richest provinces of thecountry, Rio de Janeiro, Minas Gerals and Sao Paolo, with the nationalcapital. It was opened in 1883, and has a total extent of 544 miles. The principal roads of Uruguay were built between 1865 and 1875. In thelatter year the total number of miles in operation in Uruguay was 190, which in 1880 had increased to 230, and in 1889 to 469 miles. In the remaining political divisions of South America the railroadextended its dominion still more slowly. Paraguay opened as early as1863 a line 45 miles long from Asuncion to Itangua, and in 1892 herrailroad system had increased to 159 miles in extent. British Guianacompleted in 1866 a line from Georgetown to New Amsterdam, but not onemile of railroad has been built in that colony since. Of the islands ofSouth America Trinidad is the only one into which the railroad has beenintroduced. The island has at present 50 miles of road, to 16 in 1878. Central America has less than 600 miles of railway. The causes whichhave retarded the development of the railroad system in South Americaare also operative here. Of the five republics of Central America CostaRica has the largest number of miles of railroad, viz. : 161. It hasthree different lines, of which the Limon and Carillo line, seventymiles long, is the most important. This road, which connects with a NewYork line of steamers at Limon, has greatly furthered the cultivation ofbananas in the Santa Clara valley. Nicaragua completed its first road in 1880 between Corinto andChinandega, and has at present about 100 miles of railway in operation. The Nicaragua Canal Company is constructing a road from Juan del Norteto Ochoa, a distance of thirty-two miles, to be used in the constructionof the canal. Honduras opened in 1871 its only line, thirty-seven miles long, betweenPuerto Caballo and San Jago. In recent years an extension of nine mileshas been added to it. San Salvador has, besides a street-car line between the cities of SanSalvador and Santa Tecla, only one line of railroad between Acajutlaand Armea, which was constructed with public funds and opened fortraffic on July 15, 1882. Guatemala was the last of the Central American States to introduce therailroad. Its first road, seventy-four miles long, and extending fromSan Jose on the Pacific Ocean to the capital, Guatemala, was built by aSan Francisco company and opened on August 20, 1884. The state has atthe present time about 100 miles of road, with several short but quiteimportant lines under construction. The West Indies have between 1, 200 and 1, 400 miles of railway, of whichmore than 1, 000 are in Cuba. The first road upon this island, 179 mileslong and extending from Habana to Guanajay, was opened as early as 1837. The next ten years developed almost the whole of the railroad system ofthe western half of Cuba. A number of important roads have since beenopened in the central and eastern portions of the island, whose railroadmileage is at present larger per capita than that of any other politicaldivision of the Western Hemisphere save that of Canada and the UnitedStates. The second of the West India islands to construct a railroad wasJamaica. A line connecting Kingston and Spanishtown was opened on the21st of November, 1845. Two branch lines have since been added, makingthe total number of miles of road on this island seventy-six at thepresent time. About twenty-five miles more are now in the process ofconstruction. San Domingo and Hayti have also recently commenced tobuild railroads. In the former republic a line from Sanchez to LaVega, sixty-two and one-half miles long, is now open to traffic, and Hayti isconstructing a line from Gonaives, on the western coast, to Porte dePaix, on the eastern coast of the island. The Spanish government in1888 also granted a charter for the construction of a railroad on theisland of Porto Rica. Of our neighbors on the North American continent, Mexico and Canada, theformer has been by far the slower to avail herself of the advantages ofrailroad communication. The slow growth of the railroad system of Mexicomust be ascribed chiefly to the frequent political disturbances of thecountry as well as to the many topographical obstacles which presentedthemselves to the railroad engineer. The first Mexican railway, excepting tramways, was the one which connects the capital with the cityof Vera Cruz. It was constructed by an English company and was opened onthe first day of January, 1873. In 1875 the total number of miles ofroad in Mexico was 327, and five years later somewhat less than 700. Since then the development of the system has been much more rapid. In1880 several companies were formed for the purpose of building a systemof roads which would connect the Mexican capital with the United Statesas well as with the most important harbors of the gulfs of Mexico andCalifornia. The projectors of these lines, who were citizens of theUnited States, received the hearty coöperation of the Mexicangovernment, and the work was at once pushed very vigorously. At the endof the year 1885 more than 2, 500 miles of new road were open fortraffic, and a thousand miles more at the end of the following year. In1889 Mexico had 5, 332 miles of road. The principal one of the newlyconstructed roads is the Mexican Central, which connects Paso del Nortewith the City of Mexico. This line will also, when its branches arecompleted, form a through route between the Gulf of Mexico and thePacific Ocean. Another scarcely less important through line north andsouth is the National Mexican Railway, which is 722 miles long andconnects Laredo, on the Rio Grande, with the capital and the southernstates. Another line has recently been opened from Torreon to Durango. The number of miles of road at present in operation in the Republic ofMexico is about 6, 800, with a number of new lines rapidly nearingcompletion. The development of Mexico's resources has, during the pastdecade, kept pace with the rapid expansion of its railroad system. In the Dominion of Canada about fifteen miles of railroad line werebuilt as early as 1837, but only forty-three miles was added during thenext ten years. In 1852 there was still only 212 miles of railroad inall of the British possessions in North America. At that time theconstruction of the Grand Trunk system was commenced, the first sectionof the system, Portland-Montreal, being opened in 1853. After thisrailroads increased very rapidly in Canada, reaching an extent of 2, 087miles in 1860, 4, 826 miles in 1875, 6, 891 miles in 1880, and 10, 150miles in 1890. The majority of Canadian railroads are in the hands ofprivate companies, some of which have been very materially aided by thegovernment. One of the conditions upon which the union of the severalBritish provinces, except Newfoundland and Prince Edward Island, waseffected in 1867, was the construction of a railroad by the Dominiongovernment connecting the provinces of Ontario, Quebec, Nova Scotia andNew Brunswick. This road, the main line of which extends from PointLevis, opposite Quebec, to Halifax, was accordingly built, and is stilloperated by the Canadian government. Its cost was about 46, 000, 000. But the most important enterprise in which the government is interestedis the Canadian Pacific Railway. Like the intercolonial railway, thisline was a result of the political union of the colonies. Itsconstruction was commenced by the government, but was subsequentlyassigned to a private corporation, the Canadian Pacific Railway Company, all that had been done by the government being turned over to thecompany as a gift. It is estimated that the direct gifts of money, theland grant and other privileges conferred by the Dominion governmentupon the Pacific Railway Company exceed $100, 000, 000 in value, and that, with the amount of bonds and stock guaranteed by the government, the parvalue of its various aids amounts to $215, 000, 000, or $48, 000, 000 morethan the cost of the road, as will be shown by the following table, taken from the report of the Interstate Commerce Committee of the Senateof the Fifty-first Congress: Subsidy granted by the act of Parliament of February 13, 1881 $25, 000, 000 Seven hundred and fourteen miles of railroad constructed by the Dominion Government, original cost and interest 36, 760, 785 Capital stock guaranteed 65, 000, 000 Loan to the company authorized by Parliament of 1884, in part 29, 880, 912 Balance of above loan 15, 000 000 Bonds, interest guaranteed by the Dominion for 50 years at 3-1/2 per cent 15, 000, 000 Land grant bonds 25, 000, 000 Subsidy of $186, 000 a year, for 20 years 3, 720, 000 ------------ Total $215, 361, 697 Total cost of road, according to the company's balance sheet of December, 1888 $131, 350, 019 The Dominion Government owns and operates four railways, the cost ofwhich up to June 30, 1890, was $52, 800, 000. It has also granted torailroad companies cash subsidies which to June 30, 1889, amounted toover $46, 000, 000. The total number of miles of railroad in Canada was14, 004 in 1890. The people of Canada have, since the political union ofthe colonies, pursued an exceedingly liberal policy toward theirrailroads, but it appears that the great indulgence of the governmentonly bred license in railroad circles. The evil increased from year toyear, until the many complaints on the part of the public againstrailroad management caused Parliament in 1886 to appoint a commission toexamine into the alleged abuses and to report as to the advisability ofthe adoption of a general railroad law, and the appointment of a Boardof Railroad Commissioners. The committee reported to theGovernor-General of Canada on the 14th of January, 1888, and, actingupon its recommendation, Parliament passed the Railway Act of May 22, 1888. This act, containing 309 paragraphs, provides for the completeregulation of railroad affairs, and for this purpose creates a Board ofRailroad Commissioners, consisting of the Minister for Railroads andCanals, the Minister of Justice and two or more members of the PrivyCouncil. The act also repeals all former railroad laws. Though it hasbeen in force less than five years, its beneficial effects are alreadyextensively felt by the Canadian public. CHAPTER III. HISTORY OF RAILROADS IN THE UNITED STATES. In no country in the world has the growth of railroads been so rapid asin the United States. With a population less than one-fifth as large asthat of Europe this country has a larger number of miles of railroadthan that continent. While European countries generally opposed theintroduction of the new system of transportation, our people extended toit a hearty welcome. This difference of sentiment can easily beaccounted for. At the time of the invention of railroads Europe had asystem of turnpikes and canals which, at least for the time being, answered every purpose. It became necessary for the railroads to enterinto competition with these well-established agencies of transportation, which had the test of time, popular prejudice and governmental sanctionin their favor. Moreover, the railroad as a new and unknown quantitycaused a feeling of uneasiness in all conservative circles. It seemed tomake war against time-honored principles of statecraft and society, andthreatened to bring about a revolution the outcome of which no one couldforesee. The condition of things was entirely different in the United States. There were but few good roads and still fewer turnpikes and canals. Avast territory in the interior awaited cultivation. Excepting the coastand a few cities situated on the large navigable rivers, the East andthe West and the North and the South were practically without commercialrelations, and were only held together by a community of politicaltraditions and the artificial cement of a common constitution. Even hadthe country had a system of turnpikes and canals, the Mississippi Riverwould still have been a forty days', and the extreme Northwest a threemonths' journey distant from New York. It seems extremely doubtfulwhether the different sections of so large a realm, having so littlecommunity of commercial interests, could long be kept together under arepublican system of government. The settlement of the central portionof the country and the development of its resources seemed to be thetask of future centuries. The railroad under these circumstances madeits appearance at a most opportune time for America, and the Americanpeople were not slow to make the best of the opportunities presented tothem. In the United States, as in England, the railroad was preceded by thetram-road. The first tram-road in this country was opened in 1826. Itconnected the granite quarries of Quincy with the Neponset River, andwas operated by horsepower. The second road of this kind was the MauchChunk tramway, in Pennsylvania, opened in 1826, for the transportationof coal. The trains were drawn up an inclined plane by stationaryengines and were moved down by their own weight. During the same yearthe Delaware and Hudson Canal Company opened the Carbondale andHomesdale tramway, connecting their mines with the Delaware and HudsonCanal. It appears that an English locomotive was imported for use onthis line in 1828, but that it did not answer its purpose. During the same year was commenced the construction of the first line ofimportance in this country, the Baltimore and Ohio. The line was openedfor traffic in 1830, having then an extent of fourteen miles. In 1831 itwas extended sixty-one miles, and the year following sixty-seven miles. For a year the road was operated by horsepower, but in 1831 the companypurchased for its road an American locomotive. The first road upon which a locomotive engine of American manufacturewas used was the South Carolina Railroad, which was commenced in 1830. The engine was manufactured at West Point and was placed upon the roadin December of the same year. The line had then an extent of ten miles. In 1832 it had increased to sixty-two miles, and in 1833 to 136 miles. The construction of the Mohawk and Hudson was commenced in August, 1830, and the road was opened in September of the following year. Its firstlocomotive engine was also imported from England, but, being found tooheavy, was soon replaced by an American engine of half its weight. In1831 two other New York roads were commenced, the Saratoga and the NewYork and Harlem. A small portion of the latter was opened during thesame year, and the former in July, 1832. The Camden and Amboy Railroadin New Jersey was likewise commenced in 1831, but its completion was notreached till 1834. The New Castle and Frenchtown Railroad was completedin 1832, the Philadelphia and Trenton in 1833, and the New Jersey in1834. In 1835 the Washington branch of the Baltimore and Ohio wasopened, and the entire line had at the end of that year attained anextent of 115 miles. During the same year three Massachusetts roads, connecting Boston with Providence, Worcester and Lowell respectively, were opened. In 1836 the New York Central route was opened to Utica. In1837 the Richmond, Fredericksburg and Potomac Railroad was completedfrom Richmond to Fredericksburg. In 1838 the Richmond and Petersburg andthe Philadelphia, Wilmington and Baltimore railroads were opened. TheWilmington and Weldon Railroad was completed in 1840, and the Petersburgand Roanoke three years later. There was now a continuous line ofrailway from the Potomac to Wilmington, North Carolina. In 1842 thewhole line of the Boston and Albany road was completed, which thusbecame the first important through route in America. The construction of railroads in the United States was from the firstcarried on without a system. Railroads in an early day were purely localaffairs. Each locality operated its own road in its own interest andwithout any supervision from the State which had granted its charter. Acts of incorporation or charters were granted as a matter of course. Railroads were looked upon as the natural feeders of canals, and theirfuture importance was foreseen by very few men. The early roads were aheavy burden on the capital of the country. A number of small roads werebuilt that proved unprofitable and had to be abandoned. After thefinancial panic of 1837 there was, except in New England, a veryperceptible stagnation in railroad enterprise, which lasted until thediscovery of gold in California, in 1848. The average number of miles ofroad constructed per annum during the ten years preceding 1848 was 380, while it was nearly 1, 800 per annum during the seven years following. It may be said that with the discovery of gold in the West ends thefirst or formative period of railroad construction. From the firstopening of the Baltimore and Ohio to the beginning of the year 1848, aperiod of eighteen years, there were constructed in the United States5, 205 miles of railroad, or an average of 289 miles per annum. Thediscovery of gold on the Pacific gave a new impetus to railroadconstruction throughout the country. Railroads now ceased to be localworks and became interstate or national thoroughfares. Extensive newlines were built and through routes were formed by the coalition oflocal roads. It was during this period that railroad companies firstbecame conscious of the importance of their mission and that theycommenced to compete with river and canal carriers. In 1848 a throughroute was completed between Cincinnati and Lake Erie. A more directline, the Cleveland, Columbus and Cincinnati road, was opened in 1851. During the same year the Erie Railroad reached Lake Erie and connectedthe lake with the Hudson, and a year later Chicago received railroadconnection with the East by the completion of the Michigan Central andMichigan Southern. In 1854 the Chicago and Rock Island reached theMississippi River, and in 1855 the Chicago and Galena was opened. Oneyear later the Illinois Central reached the Mississippi at Cairo, andthe Chicago, Burlington and Quincy Railroad was opened to Quincy. TheOhio and Mississippi, between Cincinnati and St. Louis, was completed atabout the same time. The Pittsburgh, Fort Wayne and Chicago, anextension of the Pennsylvania road, was completed to Chicago in 1858. Atthe beginning of 1859 the Hannibal and St. Joseph Railroad reached theMissouri River, and eight years later the Cedar Rapids and Missouri wascompleted to the Missouri at Council Bluffs. To encourage the extension of railroads into new and thinly settledterritories, and to thus hasten their settlement and the development oftheir resources, the people of the United States began at thecommencement of this period to favor the policy of land grants. Suchgrants had repeatedly been made to roads and canals prior to the crisisof 1837. The first railroad that received a land grant was the IllinoisCentral. The scheme was proposed as early as 1836, but the act makingthe grant was not passed until September 20, 1850. Other grants followedin 1852 in Missouri, in 1853 in Arkansas, in 1856 in Michigan, Wisconsin, Iowa, Florida and Louisiana. As a rule these lands weregranted by the National Government to the States, and by them to therailroads. The land grants made during President Fillmore'sadministration amounted to eight million, and those made during Pierce'sadministration to nineteen million acres. The financial crisis of 1857and the War of the Rebellion again checked railroad building, but thisperiod developed a new phase of railroad enterprise as well as of theland grant policy. In those times of national trial a railroad to thePacific Coast seemed a political necessity. The project of connectingthe Atlantic and Pacific oceans by a line of railroads was first broughtprominently before the American people by Asa Whitney of New York. At ameeting held under his auspices in Philadelphia on the 23d day ofDecember, 1846, a movement was inaugurated for the purpose ofinteresting the people in this enterprise and securing the aid of thegovernment for its accomplishment. Various plans were urged, and earnestdiscussions followed, in which the ablest minds of the nationparticipated. The continual agitation of the subject finally led, on the1st of July, 1862, to the passage by Congress of an act incorporatingthe Union Pacific Railway Company and the adoption of the central route. The Union and the Central Pacific companies received a virtual moneysubsidy of $30, 000, 000 and a land grant aggregating nearly twenty-threemillion acres, a domain almost equal to the State of Indiana. Otherdirect grants of territorial lands soon followed. The Northern Pacificreceived, just before the close of the war, a grant of forty-sevenmillion acres of land. In the Southwest public lands were also freelygiven to new Pacific lines. The various grants made to railroadscomprise no less than 300, 000 square miles, equal to four and a halftimes the area of New England, or six times that of the State of NewYork, or equal to the total area of Iowa, Wisconsin, Illinois, Indiana, Michigan and Ohio. Where these grants were not deemed sufficientinducement for the construction of roads, counties, cities and townsfreely voted subsidies, while private citizens made donations to orsubscribed for the securities of the new railroads. As has already been stated, the consolidation of connecting lines andtheir transformation into a few large through routes was one of thecharacteristic features of this period. As through traffic, andparticularly through freight, grew in importance, it became more andmore apparent that frequent transhipment was an expense to the railroadsas well as a burden to the public. The system of railroad ownership andmanagement soon adapted itself to the necessities of business. Thechange seems to have been inevitable, for it occurred in all parts ofthe world at about the same time. Sagacious men early recognized theimportance of railroads as national lines of communication. This idea nodoubt controlled the projectors of the Baltimore and Ohio, of the Erie, and of the Boston and Albany roads. The first consolidation of anyimportance took place in 1853, when eleven different roads betweenAlbany and Buffalo were united to form the New York Central. Five branchroads were added to the system between 1855 and 1858. In 1864 CorneliusVanderbilt secured control of the Hudson River road, and in 1867 of theNew York Central, which lines he consolidated in 1869. By gaining soonafterward control of the Lake Shore and Michigan Central and SouthernCanadian roads, he united under one management over 4, 000 miles ofrailroad between New York and Chicago, and thus created the firstthrough line between the East and the West. As has already been stated, the Pennsylvania road gained control of thePittsburgh, Fort Wayne and Chicago in 1858 and thus extended its systemas far as Chicago. Through the absorption of other lines it reached anextent of over 7, 000 miles. The creation of this through route waschiefly the work of Thomas A. Scott, at that time vice-president, andlater president, of the Pennsylvania railroad. In 1874 the Baltimore and Ohio, under the management of John W. Garrett, extended its system to Chicago, and became a competitor of the two olderlines in the transportation of through freight. At about the same timetwo other parallel trunk lines were developed, the Grand Trunk on thenorth, and the Erie, between the Lake Shore and Pennsylvania lines. There were, therefore, in 1874 five rival trunk lines competing for thebusiness between the West and the seaboard. During the same period large rival lines developed west of Chicago andSt. Louis. From the former city radiate the St. Paul and Northwesternsystems, each with from 6, 000 to 8, 000 miles; the Atchison, Topeka andSanta Fe with over 9, 000 miles; then the Rock Island, the Chicago, Burlington and Quincy, the Illinois Central, the Chicago Great-Western, and the Chicago and Alton, their systems ranging from 1, 000 to 6, 000miles in extent. From St. Louis radiate the various branches of theMissouri Pacific and the closely allied Wabash system, controllingtogether some 10, 000 miles of road. This process of consolidation also went on in the Southern States, though to a less extent. Their systems do not run parallel, like thetrunk lines, nor do they radiate from a common center, like the roads ofthe Northwest, but they radiate from the principal ports of the Atlanticand the Gulf of Mexico toward the interior. We now enter upon the third period of the history of American railroads, the period of combinations. During the time of great activity inrailroad construction following the War of the Rebellion many abuses inrailroad management had been developed, which caused general complaintand led to what is known as the Granger movement. Laws were demanded, especially in the agricultural States of the West, which should regulatethe rates, methods of operation, and the political relations of therailroads. The friends of this movement were successful in the politicalcontests that followed, and Granger legislatures were elected in theStates of Illinois, Wisconsin, Iowa and Minnesota. Laws were passedfixing the rates on different classes of roads and providing penaltiesfor their violation. The companies contested these acts in the courts, but were defeated at every step, until in 1877 the Supreme Court of theUnited States sustained the constitutionality of the Granger laws. Inthe meantime railroad managers tried their utmost to render, by shrewdmanipulation, these laws obnoxious, and they finally succeeded in havingthem repealed or so amended as to render them largely ineffectual. It was the principal object of the Granger movement to do away with themany discriminating tariffs which so injuriously affected local points. It is true, discriminations between individuals were practiced atbusiness centers, but rates upon the whole were low at such points ascompared with those which obtained at local stations. While the Grangercontest was still going on in the West, a new evil developed in theEast, which became characteristic of the period and finally grew intoone of the most intolerable abuses of railroad management. Railroad menhad gradually learned that it was in their power to maintain high ratesat competitive as well as at non-competitive points, provided all theroads centering at such points could be induced to coöperate, or ratherto conspire for that purpose. The final solution of the problem was, after some experimentation, found in the device to control the prices oftransportation generally known as the pool. It is doubtful whether anycontrivance connected with railroad management ever threatened tosubvert long-established principles of the common law more completelythan this. Within a few years it extended its dominion over the wholecountry, exacting a heavy tribute from its commerce, until the people'spatience finally became exhausted and their determined demand forrailroad reform led to the enactment of the Interstate Commerce Act in1887. When this act passed, dire results were predicted by nearly everyrailroad man in the country. Prophecies were freely made that it wouldruin half of the roads and seriously cripple and sadly interfere withthe usefulness of the other half, that it would derange the business ofthe country, greatly depreciate all railroad securities and put an endto railroad construction. Nearly seven years have passed since theadoption of the law, but not one of these prophecies has come to pass. There are at present probably less bankrupt roads in the United Statesthan there have been at any time for twenty years, our businessinterests have been improved, the securities of honestly managed roadsare in better repute than they were previous to the passage of the law, and the railroad mileage of the country is increasing at the rate ofabout 6, 000 miles a year. If any branch of business has suffered inconsequence of the enactment of the law, it is the branch monopolized byWall Street. Since 1885, the time when the Interstate Commerce Bill wasfirst seriously agitated, the aggregate of railroad securities hasincreased nearly $2, 500, 000, 000, or about one-third. This certainly doesnot look as if capital had been seriously frightened by the InterstateCommerce Act. There are other proofs of railroad prosperity. In 1885 thegross earnings of the railroads of the United States were $772, 568, 833, or 9. 9 per cent. On their reported capital. In 1886 their gross earningswere $829, 940, 836, or 10. 2 per cent. On the reported railroad capital. In 1890 the gross earnings had increased to $1, 097, 847, 428, and equaled10. 8 per cent. On the reported capital. This includes even thecapitalization of new lines and others not reporting operations. Mr. Poor gives the reported cost of the lines actually operated as$8, 519, 670, 421, against $10, 122, 635, 900 reported cost of all therailroads built. Omitting from the computation the lines not reportingoperations, the gross earnings of the roads actually operated equaled12. 7 per cent. And their net earnings 4 per cent. On the actual cost ofthe lines which reported. The gross earnings for 1891 were$1, 138, 024, 459, and for the year ending June 30, 1892, $1, 222, 711, 698. The gross earnings per mile have increased from $6, 265 in 1885, and$6, 570 in 1886, to $6, 946 in 1890, and $7, 409 in 1892. In 1885 thecapitalization per mile of road was $55, 059 and the net earnings permile were $2, 185. In 1890 the capitalization per mile had decreased to$53, 783, while the net earnings per mile increased to $2, 195. Therailroad mileage of the country has grown from 128, 361 in 1885 to166, 817 in 1890, to 170, 601 in 1891, and to 175, 000 in 1892. The railroad system of the United States has had a phenomenal growth, especially since 1870, since which time nearly 120, 000 miles of road, ormore than two-thirds of the total mileage, have been constructed. Thetable below shows the number of miles of railroad constructed and inoperation, by quinquennial periods from 1830 to the close of 1890, inclusive: YEAR. MILES IN OPERATION. INCREASE. 1830 23 1835 1, 098 1, 075 1840 2, 818 1, 720 1845 4, 633 1, 815 1850 9, 021 4, 388 1855 18, 374 9, 353 1860 30, 626 12, 252 1865 35, 085 4, 459 1870 52, 922 17, 837 1875 74, 096 21, 174 1880 93, 296 19, 200 1885 128, 361 35, 065 1890 166, 817 38, 456 It will be noticed that in the sixty years covered by the above tablethere are but two quinquennial periods which show a falling-off in therate of growth, viz. : 1860-65 and 1875-80. During the former periodrailroad construction was partially checked by the War of the Rebellion, during the latter by the general financial depression following thepanic of 1873. The length of railroads in the world has grown from 206 miles in 1830 toabout 400, 000 miles in 1892. The following table shows the growth ofrailroad mileage by quinquennial periods: YEAR. MILES. 1830 206 1835 1, 502 1840 5, 335 1845 10, 825 1850 23, 625 1855 42, 340 1860 66, 413 1865 90, 280 1870 131, 638 1875 182, 927 1880 231, 190 1885 303, 172 1890 385, 000 From this table it is seen that the railroad mileage of the world hasdoubled during the past fifteen years, and that its average annualincrease is at present not far from 17, 000 miles. There is no doubt thatthe extent of railroad construction has everywhere exceeded allanticipations. So fast has the railroad system expanded in the mosthighly civilized countries that it soon outgrew in nearly all of themthe laws originally adopted for railroad control. In time an almostuniversal demand arose for reform, and the most progressive governmentswere not slow in heeding it. For the past fifteen years there has been adecided drift on the European continent toward state ownership ofrailroads, or to such strict control of the transportation business asvirtually deprives the operating companies of the power to do injusticeto the public. The railroad is assuming more and more the character of an internationalhighway. A movement is on foot to connect the railroad systems of theUnited States with those of South America by an intercontinental or"Pan-American" railroad. Appropriations have been made by the UnitedStates and several of the South American republics for a preliminarysurvey of the proposed line. Three different surveying parties are inthe field, one in Central America and the other two in the United Statesof Colombia and Ecuador. The progress so far reported by them isencouraging, and there is now some hope that before the close of thenineteenth century one may be able to travel by railroad from New Yorkto Valparaiso without even a change of cars. It has also been proposed to span Behring Strait and connect NorthAmerica with Asia and Europe by an international railway. This line, ifconstructed, would be simply an extension of the proposed Pan-Americanrailroad and would follow the western coast of the United States as faras Behring Strait, then cross over into Asia, traverse Siberia andfinally reach London via St. Petersburg, Berlin and Paris. It is veryquestionable whether such a line is at present feasible either from atechnical or financial point of view, but the time will probably comewhen the railroad track will connect New York and London. CHAPTER IV. MONOPOLY IN TRANSPORTATION. From time immemorial efforts have been made by designing men to controleither commerce or its avenues, the highways on the land and on the sea, by a power which law, custom, ingenuity, artifice or some other agencyhad placed into their hands. The ancient Phoenicians early aimed at and finally obtained the empireof the sea by making themselves masters of the most commodious harborsof the Mediterranean Sea and the Arabian Gulf. They established aregular intercourse with the countries bordering on the Mediterranean aswell as with India and the eastern coast of Africa. From these lattercountries they imported many valuable commodities which were not knownto the people of other parts of the world, and during a long period theyheld this lucrative branch of commerce without a rival. The characterand the situation of the Phoenicians aided them greatly in acquiringthis mastery of commerce. Neither their manners and customs nor theirinstitutions showed any marked national peculiarity; they had nounsocial prejudices and they mingled with the people of other countrieswithout the least scruple or repugnance. As their native country wassmall and quite barren, they early learned to rely upon commerce as thebest source of riches and power. Like the other Semitic tribes, thePhoenicians were noted for their energy and acumen, and while theywere not a literary people in the strict sense of the word, ancientcivilization received probably a more powerful impetus through theircommercial supremacy than through any other agency. During the reign of King Solomon the Jews made an attempt to wrest fromthe Phoenicians at least a part of the world's trade. Solomon builtships and imported Phoenician sailors for his fleet. For a time itseemed as if the Israelites might become the rivals of their teachers inthe art of navigation and in the mysteries of trade; but their peculiarreligious customs in that early day proved a serious impediment tocommercial ascendancy, as it rendered them incapable of that unreservedintercourse with strangers so essential in commerce. The monopoly of the sea, at least of the Mediterranean, passed to theCarthaginians, their descendants. The latter extended their navigationtoward the west and north. They planted colonies and opened new harbors, and up to the time of the Punic wars kept almost the entire trade of thecountries bordering on the Mediterranean in their hands. After the downfall of Carthage the control of the commerce of SouthernEurope and Northern Africa descended to the Romans. When Rome became thecapital of the world, it gathered the wealth and valuable productions ofall its provinces. Under the consuls and the earlier emperors thevigilance of the Roman magistrates and the spirit of the Romangovernment gave every possible security to commerce and prevented for atime the rise of monopoly. Nowhere was national union so complete orcommercial intercourse so perfect as in the Roman empire. Theintelligence and the power of Rome stimulated and regulated the industryof her people and permitted them to enjoy the fruits of their effortswithout public or private restrictions. We have seen that the intercourse of Rome and her provinces wasfacilitated by the construction of roads and the establishment ofimperial posts. During the decline of the empire the maintenance ofthese posts led, however, to a grave abuse. We are informed by Gibbon inhis "Decline and Fall of the Roman Empire": "But these beneficial establishments were accidentally connected with apernicious and intolerable abuse. Two or three hundred agents ormessengers were employed, under the jurisdiction of the master of theoffices, to announce the names of the annual consuls and the edicts orvictories of the emperors. They insensibly assumed the license ofreporting whatever they could observe of the conduct either of themagistrates or private citizens, and were soon considered as the eyes ofthe monarch and the scourge of the people. Under the warm influence of afeeble reign they multiplied to the incredible number of ten thousand, disdained the mild though frequent admonitions of the laws, andexercised in the profitable management of the posts a rapacious andinsolent oppression. These official spies, who regularly correspondedwith the palace, were encouraged by favor and reward anxiously to watchthe progress of every treasonable design, from the faint and latentsymptoms of disaffection to the actual preparation of an open revolt. Their careless or criminal violation of truth was covered by theconsecrated mask of zeal; and they might securely aim their poisonedarrows at the breast either of the guilty or the innocent, who hadprovoked their resentment. " After the downfall of the Romans, commerce remained paralyzed during theperiod of Gothic ignorance and barbarism. The crusades for the recoveryof the Holy Land from the Saracens, in the eleventh and followingcenturies, opened again communication between the east and the west byleading multitudes from every European country into Asia; and though theobject of these expeditions was conquest, and not commerce, theircommercial effects were both beneficial and permanent. The crusades wereespecially favorable to the commercial pursuits of the Italian states. The vast armies which marched from all parts of Europe toward Asia gaveencouragement to the shipping of Venice, Genoa, and Pisa, whichsometimes transported them, and always supplied them with provisions andmilitary stores. Besides the immense sums which these states received onthis account, they obtained commercial privileges of great consequencein the settlements which the crusaders made in the East. All thecommodities which they imported or exported were exempted from everyimposition, the property of entire suburbs in some of the maritimetowns, and of large streets in others, was vested in them, and allquestions arising among persons residing within their precincts, or whotraded under their protection, were decided by their own laws and byjudges of their own appointment. When the crusaders took Constantinople, the Venetians did not neglect to secure to themselves many advantagesfrom that event. Nearly all the branches of commerce were in timetransferred from Constantinople to their city. At the end of the crusadeperiod Venice had monopolized nearly all the foreign trade of Europe. She supplied the people of Italy, France and Germany with thosecommodities with which the crusaders by their intercourse with morerefined nations had become acquainted. The possession of many Easternports and the maintenance of a powerful navy made it possible for theVenetians to retain their monopoly for several centuries. The growth of commerce in Central Europe was but slow, owing to thedangers to which it was exposed in those days of feudalism. The mountainfastnesses of robber knights, which controlled every road and navigableriver, were so many toll-gates at which the wayfaring merchant wasstopped to pay tribute. In time this system of plunder grew to such anextent that hundreds of feudal lords relied upon it for their support. Such a tax upon commerce greatly enhanced the value of all commodities, and this deplorable state of things lasted until the cities made theirpower felt by forming alliances for mutual protection. One of thesealliances, the Rhenish League, comprised in time seventy towns, and theruins of the strong castles destroyed by its forces still exist alongthe Rhine, picturesque memorials of these lawless times. Perhaps the most powerful commercial union of the middle ages was theHanseatic League. To protect their commerce, the cities of Hamburg andLubeck formed about the middle of the thirteenth century an alliance formutual defense. The advantages derived from this union attracted othertowns to the confederacy. In a short time about eighty of the largestcities lying between the Baltic and the Rhine joined this famous league, which in time became so formidable that its alliance was courted and itsenmity was dreaded by the greatest monarchs. The League divided itsterritory into several districts. Its members, like railway associationsof the present day, made their own laws, and met for this purpose atregular intervals in the city of Lubeck. The original object of theLeague, mutual assistance against outside attacks, was soon lost sightof, and its constantly growing power was used to obtain still greatercommercial privileges in the adjoining countries, and even to forcetheir rulers to concede to its members a commercial monopoly. In 1361 acontroversy arose between the League and the King of Denmark, which ledto a long and bitter war between them. This war was participated in byno less than seventy-seven cities on the part of the League. Itterminated in 1370, leaving the Hansa master of the situation. For manyyears after this the League exerted its power in Denmark, Sweden andNorway, and the rulers of these countries were compelled to respect thewishes and even submit to the orders of these proud merchants. Thecountries bordering on the Baltic Sea remained the domain of the Leaguefor several centuries. They gathered there immense quantities of rawmaterial, which they sold in the various ports of Europe. The influenceof the League even reached as far as Novgorod in the east and London inthe west. In both cities the League had its quarters, and within them itvirtually exercised the right of sovereignty. Its main market was atBruges in Flanders, which was then a bee-hive of industry and thrift. There the Italian traders came with the products of the east, such asspices, perfumes, oil, sugar, cotton and silk, to exchange them for theraw materials of the north. While taxes and imposts everywhere elseharassed merchants, commerce was free in the cities of Flanders, owingto the liberality, or rather shrewdness, of her rulers. In Bruges themembers of the Hansa met the merchants of Venice on equal terms, and theexchange of the products of the north for those of the east and southcould be effected there to the greatest advantage of both. While it must be admitted that the Hanseatic League developed theresources of Northern Europe, and that, even at the time of its greatestpower, there was always competition among its own members, the factremains that it abused its power by the suppression of all outsidecompetition, and that it usurped rights which belong only to the state, thus often producing abuses as great as those which it was organized toremedy. Its final downfall was caused by the development of nationalpower in the northern kingdoms and the growth of commerce andnavigation in Great Britain. A stubborn assertion of antiquatedprivileges on the part of the Hansa involved it in a feud with theillustrious and lion-hearted Queen Elizabeth of England. In 1589 theQueen caused sixty of their vessels to be captured on the Tagus, andlater even took possession of their hall and wharves in London. Afterthis the League's decline was very rapid, though its organization waskept up till 1669, when its delegates held their last session. Contemporary with the decline of the Hanseatic commerce in the north wasthat of the Italian cities, especially Venice, in the south. They hadprospered by their commerce with the Levant until Vasco de Gamadiscovered the sea route to East India in 1497. His countrymen, thePortuguese, soon utilized this discovery. They took possession of thecoast of India and of the islands to the south of it. They alsosucceeded in excluding the Arabs from the commerce with that country, ofwhich up to that time they had had exclusive control. For this purposethey built fortresses and factories on the west coast of Hindostan, tookpossession of the island of Socotra in the Arabian, and of Ormus in thePersian Gulf, and forced the Indian princes to grant them the exclusiveprivilege of trading with their subjects. They also captured the city ofMalacca, where the trade between China, Japan, the Philippine Islands, the Moluccas and India had concentrated itself. In this way they got ina comparatively short time control of the commerce of India, Arabia, andeven Egypt. By forcing the Venetians and their commercial allies out ofthose markets, they secured for themselves a monopoly of the commercebetween Europe and the east. The political ascendancy of the Turks inthe islands situated in, and in the countries bordering on, the EasternMediterranean, caused the loss of Cyprus, Crete (Candia) and Morea tothe Venetians and greatly aided the Portuguese in establishing theircommercial supremacy. Less profitable for the latter was the possessionof their American colonies. They, as well as the Spaniards, adopted herea policy which ultimately brought commercial and industrial ruin uponboth. Entirely neglecting agriculture and relying on the mineralresources of their transatlantic colonies, which were believed to beinexhaustible, they strove to amass riches by reserving for themselvesthe exclusive privilege of supplying them with the manufactures ofEurope in exchange for American gold. Neglecting home industries, theybought their supplies as well as those of their colonies in France, Holland and England. A spirit of speculation and adventure enervatedtheir people, and led in time to commercial bankruptcy and politicaldisaster. Spain also drained her treasury by her wars with her Dutch dependencies, and the loss of her northern provinces was a serious blow to hercommerce. Antwerp, which had become the successor of Bruges as thecommercial emporium of the north, began to decline, and Amsterdam, themetropolis of the new Dutch republic, became heir to its glory and itsriches. The young republic at once commenced to compete in the carryingtrade with Spain and Portugal, and to make inroads into the easterncommerce of the latter. The Dutch East India Company, which was organized in 1602, sent a fleetof fourteen vessels into the Indian Archipelago to found colonies inJava, Sumatra and the Moluccas. In a short time they had monopolized theentire spice trade, which immediately became a source of great wealth. A cargo of five vessels, which returned to Amsterdam in 1603, consistedof over two million pounds of spices. This cargo was purchased for588, 874 florins and was sold for 2, 000, 000 florins. It is under thesecircumstances not surprising that the dividends of the company'sstockholders often amounted to 75 per cent. , and never went below 12-1/2per cent. Previous to 1720. Holland's colonial trade made Amsterdam thecommercial metropolis of Europe. It became the grain market from whichSpain, Italy and other countries drew their supplies. All the productsof the world found purchasers here, and a well-developed banking systemgreatly facilitated the exchange. The rapid accumulation of fortunes bythe Dutch merchants and bankers was without precedent in Europe. Besidesthis, the progress which Holland made in ship-building and navigationand the advantages which she derived from her colonial trade placed herin a position to outstrip all other nations in the carrying trade ofEurope. During the first half of the seventeenth century the Dutch werejustly called the freighters of Europe. But the injury which theirpolicy did to the commercial and manufacturing interests of otherEuropean nations led both England and France to adopt measures wellcalculated to accomplish, in a short time, their commercialemancipation. Louis XIV. , in order to build up French shipping, collected a tonnage from every foreign ship which entered a Frenchharbor. England went still further. In 1651 Oliver Cromwell promulgatedthe Navigation Act, by which foreign ships were prohibited fromimporting into England any goods except such as were produced ormanufactured in their own countries. This was a heavy blow at the Dutch, who were thus deprived of the privilege of effecting the exchange ofcommercial commodities between England and her colonies as well as thecontinent. The war which the Dutch Republic waged against England, toforce her to revoke this act, resulted in favor of the latter and endedthe commercial supremacy of the Dutch in Europe. England, which before this time had played but a secondary role as acommercial power, rose fast to prominence after her successful strugglewith the Dutch. She commenced to strengthen her industries by theadoption of a high tariff policy, and her merchants were encouraged toenter into commercial relations with colonists and foreigners. Theprivileges which had been given to foreign tradesmen were revoked, whileship-building and navigation were greatly favored by the government. AsEngland gained greater strength as a naval power, her foreign policybecame more aggressive. In 1600 the "Company of Merchants of London Trading to the East Indies"obtained a charter, and, in spite of Dutch and Portuguese opposition, soon gained a foothold on the Moluccas and the coast of Malabar, whenceit extended in time its dominion to Surat, Bombay, Madras and Calcutta. Here they built forts and established their commerce. From these placesthe company pushed into the interior, until finally, after repeatedstruggles with the natives and European rivals, the whole of Hindostancame under English dominion. As its power increased, the companycommenced to abuse shamefully the monopoly which it had been granted, byinaugurating a system of plunder and oppression which is perhaps withoutits equal in the annals of history. These growing abuses led to frequentrevolts and seriously imperiled England's dominion in these territories. To remedy these evils, Parliament at the close of the seventeenthcentury annulled the charter of the company and declared the commercewith the East Indies open to all of the King's subjects. A number ofsmall companies were formed, but in 1702 they all combined and organizedthe East India Company. Monopoly was again established, but the patienceof the natives was exhausted, and England's interests in Hindostan werein a critical condition. At this juncture the East India Company adopteda policy of moderation, and this, together with the aid which thegovernment gave to the company, enabled it to strengthen again itsweakened commercial relations and to further enlarge its territory. Butthe temptation to abuse its power was too great for this strongcorporation to be long resisted. Abuses again crept into its managementand continued to grow until its charter was finally repealed. The policy adopted by Great Britain for the government of her Americancolonies during the eighteenth century was less rapacious, but scarcelymore just than that pursued in her eastern possessions. To retain thosecolonies as commercial no less than as political dependencies, Parliament enacted laws compelling their people to trade with the mothercountry exclusively and laying restraint on their manufactures. But theAmerican pioneers felt that they had brought with them across the oceanthe rights of Englishmen; they objected to taxation withoutrepresentation, and the men who for opinion's sake had left comfortablehomes to brave upon a distant shore the dangers of frontier life wereprepared, if necessary, to emphasize their objection by armedresistance. England, intent upon maintaining her barbaric system ofdiscriminative duties and commercial monopolies, blindly attemptedcoercion, but the war which resulted wrested from the English crown itsbrightest jewel, and the War of 1812 established upon American soil theprinciple of industrial and commercial liberty. It must not be supposed, however, that America and the United States inparticular have been free from monopolies growing out of thetransportation business. Nothing would be farther from the truth. Thereis no law so stringent but that it will be violated; there is nogovernment so vigilant but that it will at times be imposed upon. It istrue, our government sanctions no monopoly, but the very liberty ofaction which exists here among corporations as well as individualsoffers to organized wealth and power a wide field for abuses. We have seen in the foregoing that almost from time immemorial effortshave been made to monopolize transportation and trade, and that theseefforts were successful whenever either from ignorance or weakness themasses fell into political apathy. There is a natural tendency among mento utilize commercial advantages to the detriment of others. In moderntimes the opportunities for building up large monopolies have greatlyincreased and have been turned to the most profitable account bydesigning men. Great and even unbearable abuses have always followedwhere the greed and ambition of such men have not been checked bygovernmental agencies. In this respect the people of the United Stateshave had about the same experience as the rest of mankind. Ever sincethe introduction of railroads into this country there has been awell-marked drift toward monopolizing the transportation business. As long as the dangers of monopoly remained unknown to the Americanpeople, legislation for the control of railroads and other publiccarriers was both scarce and crude, and shrewd railroad men were notslow in taking advantage of the situation. It is foreign to the designof this treatise to give a complete history of railroad monopoly in theUnited States. The author will therefore confine himself to showing thattransportation companies will, like the great commercial organizationsof the past, when left to follow their instincts, invariably use theirpower to oppress the public by exacting excessive charges for theirservices, or to discriminate against the many by extending specialprivileges to the few. Hundreds of cases might be given to illustratethe above rule, but a history of two of these corporations will sufficeto show to what extent corporate abuses can be carried, and to serve asa warning against the adoption of any "_laissez faire_" policy in therailroad legislation of the future. The corporations selected for thispurpose are the Camden and Amboy Railroad and the Standard OilCompanies, both typical representatives of the Rob Roy policy whichorganized wealth has pursued since the dawn of civilization, when notprevented by the wisdom and strength of a good government. THE CAMDEN AND AMBOY RAILROAD COMPANY. For almost forty years the Camden and Amboy Railroad was the only directroute between the cities of New York and Philadelphia. It is doubtfulwhether previous to the war a more important or a more remunerative roadexisted in the United States, for, besides connecting the two largestcities in the Union, it formed part of the direct land route from theEast to the South. The efforts to open a direct through route between New York andPhiladelphia date back to the year 1812, when the construction of acanal between the Hudson and the Delaware was proposed, but anill-advised jealousy of the State of Pennsylvania delayed for many yearsthe realization of the project. When this obstacle was finally overcome, a change of sentiment had taken place in New Jersey. Railroads had justmade their appearance in the United States, and a large number of thepeople of New Jersey preferred a railroad to a canal. The matter was finally compromised in the legislature of New Jersey, which on the 4th of February, 1830, simultaneously granted charters tothe Delaware and Raritan Canal Company and the Camden and AmboyTransportation Company, fixing the capital stock of each company at$1, 000, 000, with the right to increase it to $1, 500, 000. The charterfurther stipulated what taxes should be paid to the State, and alsocontained the provision that within five miles of the starting-point andwithin three miles of the terminus of each line no other railroad orcanal should be built. It was believed the existence of both a water anda land route would be sufficient to maintain competition on thisimportant thoroughfare of interstate traffic. The construction of therailroad, which had been surveyed in almost a straight line between itstermini, was at once commenced. A number of well-to-do and practical mentook hold of the enterprise, among them one John Stevens, who togetherwith his three sons took one-half of the capital stock. The canalproject did not do so well at first. At the middle of the year 1830 onlyabout one-twelfth of its capital stock had been sold, and there wasgreat danger that the company might forfeit its charter, as the timeallowed for the subscription of its stock was nearing its end. At thisjuncture Robert Field Stockton, a young man of ability, enthusiasm andwealth, came to the rescue of the canal company. He not only bought forhimself a goodly share of the canal stock, but also prevailed on hisrich father-in-law, Mr. John Porter, to invest $400, 000 in theenterprise. The financial difficulties of the company were thus removed. At the next session of the legislature Mr. Stockton secured an amendmentto their charter which apparently only authorized the enlargement of thecanal, but in reality empowered the canal company to construct a secondrailway. It was from the beginning Mr. Stockton's object to share with therailroad company the advantages which their line promised to give them. The enlargement of his company's franchise placed him in a position todictate terms to the Camden and Amboy Transportation Company. The latterwas given the choice, to prepare for competition with a rival railroadline, or to consolidate with the Delaware and Raritan Canal Company. Itchose the latter alternative, and on the 15th day of February, 1831, thetwo companies became one. The consolidation still required the sanctionof the legislature. This was obtained in consideration of the transferof 2, 000 shares of the capital stock of the company to the State. It wasfurther stipulated that the new company should pay to the State a tax of10 cents for each passenger and of 15 cents for each ton of freightcarried over its line through the State, as well as an annual tax of$30, 000, and that the State in return should protect the company againstany and all competition in the direct passenger and freight trafficbetween the cities of New York and Philadelphia. Serious doubts were atthe time entertained by many, whether the State of New Jersey under theFederal Constitution possessed the right to thus create a monopoly intransportation facilities, and to regulate arbitrarily the commercebetween sister States. Five days after it had granted this charter to the Camden and AmboyCompany, the legislature granted another charter authorizing theconstruction of a railroad from Jersey City to New Brunswick on theRaritan River. On the 23d of February of the same year a charter hadbeen granted by the legislature of the State of Pennsylvania to acompany which had been formed for the purpose of constructing a railroadfrom Philadelphia to Trenton. This company had likewise been authorizedby its charter to buy the right of way for a railroad from Trenton toNew York, which it proceeded at once to do. It was evident that as soonas the two new roads would meet at New Brunswick, an understanding wouldbe reached between them, by which another through line would be createdbetween New York and Philadelphia, which would have the advantage overthe Camden and Amboy road that it touched the capital of New Jersey andcould thus make itself serviceable to members of the legislature, officers of State and influential politicians. The Camden and Amboy Freight Company soon arrived at the conclusion thatit could not permit such rivalry. It appealed to the legislature forprotection. Resolutions were passed in its favor, but the Philadelphiaand Trenton Railroad Company paid no attention to those resolutions, butquietly continued to lay its track. Mr. Stockton and his friends did notdare to invoke the aid of the courts, because a judicial investigationmight have resulted in the destruction of their own charter. Thesituation was critical, but Mr. Stockton was equal to the occasion. Hebought quietly a sufficient number of shares to control the managementof the Philadelphia and Trenton road, and, in April, 1836, secured theconsolidation of the Philadelphia and Trenton and the Camden and Amboyrailroad companies. The canal of the company was not completed until 1838. It had consumed asum of money largely in excess of the original estimate. To connect thetwo lines of the consolidated company, a branch road was constructedfrom Trenton to Bordentown. Later the road from Trenton to Brunswick wascompleted and an agreement entered into with the Jersey City company fora division of the traffic of the two roads. The large cost of theseimprovements suggested to the company the advisability of increasing itsrevenues and of decreasing its expenditures. Its charter provided for apayment to the State of 10 cents for each through passenger. By anartifice the company avoided the payment of this tax. It compelled itsthrough passengers to walk over the bridge at Trenton and then continuetheir journey by rail via Bordentown to Jersey City. The company's charter also stipulated, that the fare between New Yorkand Philadelphia should not exceed $3 per passenger. Its officersinterpreted this stipulation to apply only to the intermediate trafficand proceeded to collect $2. 50 for the trip from New York to Trenton, and $1. 50 from there to Philadelphia, thus increasing the fare for theentire journey to $4. 00, one dollar above the maximum allowed by law. One Jacob Ridgway, who was the owner of a ferry-boat at Camden, saw herean opportunity for starting a lucrative business. He bought a steamerand carried passengers from Philadelphia to Trenton for one-third of thefare demanded by the railroad. After the Camden and Amboy Company hadmade several unsuccessful attempts to intimidate Mr. Ridgway and hisforce, one of which even brought Mr. Stockton in contact with thecriminal courts, it purchased the boat with all terminal facilities atPhiladelphia and Trenton. The attention of the legislature of NewJersey was repeatedly called to the company's failure to comply with theprovisions of its charter, but these appeals were on the whole of noavail. In 1842, after a long discussion, a resolution was carrieddeclaring the charge of $4 for the through journey illegal, but thecompany entirely ignored this legislative reminder and continued its oldtariff. The company's charter also reserved for the State the right to acquirethe Camden and Amboy road under certain conditions upon the payment of areasonable compensation. In 1844, through Mr. Stockton's engineering, the constitution of New Jersey was so amended as to practically deprivethe State of the power to acquire the company's property. During the first few years of the existence of the Camden and AmboyTransportation Company its business was managed in the interest of itsowners, but soon a few of its leading stockholders managed to turn itsenormous profits into their own pockets. The Stevens and Stocktonfamilies, together with two other directors of the Camden and AmboyCompany, had come into possession of a line of steamers that plied onthe Raritan, between New Brunswick and New York. The enterprise, inspite of its largely watered capital, had been made to pay dividendsranging from 30 to 40 per cent. Its owners saw an opportunity for alarger field of usefulness and larger dividends. In 1834 a majority ofthe board of directors of the Camden and Amboy Company proposed that thecompany rid itself of the responsibility connected with thetransportation business and lease its railroad and canal. Mr. Stevens, as representative of the Camden and Amboy Company, then negotiated withMr. Stevens, the representative of the Napoleon Steamer Company, and thenegotiations soon resulted in an agreement between the two companies bywhich the latter leased the railroad and canal lines of the former andagreed to pay it a fixed toll of $7. 64 per ton upon all freights carriedby rail, and one-quarter of all its revenues derived from the canal. Soon afterward the Napoleon Company entered into a similar contract withthe Camden Ferry Company and now had a complete monopoly of thetransportation business between New York and Philadelphia. It at oncecommenced to develop a system of organized plunder. Instead of themaximum charter tariff of 8 cents per ton per mile, it charged 10, 12, and even 15 cents. The through rates charged were several times as highas those fixed by the charter. Canal rates were raised to such an extentas to make them prohibitory and to compel the public to ship by rail. Itis difficult even to estimate the total annual profits of thedirectorial syndicate. Their accounts, if any were kept, were notaccessible, and surmises can only be based upon such data asoccasionally found their way to the public. In 1845 the share of thecanal tolls paid to the company's stockholders was $359, 000. Thedirectors' share under the terms of their lease is thus found not tohave been less than $1, 077, 000. Another item of $170, 000, tollscollected for the transportation of 27, 000 tons of freight, was sodivided that the Camden Ferry Company, or its other self, thedirectorial syndicate, received $32, 000 for one mile, while the Camdenand Amboy Railroad Company received $63, 000, or less than twice as much, for ninety-two miles. The directors under their lease were entitled tothe remaining $75, 000. The service of the company was as bad as it was expensive; its trainswere slow and irregular, and its employes arrogant. The syndicate whichcontrolled the company defied its stockholders, the public and thecourts alike. When one of the stockholders, a Trenton merchant by thename of Hagar, applied to the courts for an order to compel thedirectors to produce their books and render an account, the syndicatebought Mr. Hagar's shares, for which he had paid $125 a share, at theprice of $1, 456 a share. The suit was then withdrawn and the matterhushed up. In 1848 a number of articles appeared in a paper published atBurlington, Pa. , which were signed by "A Citizen of Burlington" andcontained much surprising information concerning the Camden and AmboyTransportation Company. It was charged that the directors had defraudedboth the State and the company's stockholders of large sums of money, that they had grossly violated their charter by charging illegal andextortionate rates, oppressive to both commerce and travel. It was shownthat while the average rate per ton per mile of thirty-five neighboringroads was 2. 85 cents, that of the Camden and Amboy Company was 4. 54cents. It was also shown that neither the stockholders nor the State hadreceived the share of the company's revenues to which they wereentitled. These articles were extensively reprinted and caused a greatcommotion wherever they appeared. After the first storm had subsided thedirectors issued an address to the people of New Jersey, in which theybitterly complained of the people's loss of confidence in theirintegrity, and declared that the charges preferred against them werefounded on falsehoods. The "Citizen of Burlington" replied by accusing the directors ofdefalcation and falsifying their books. He charged that from 1840 to1847 no account had been rendered of the receipt of no less than$5, 266, 431, on which $493, 066 was due to the State. As soon as thelegislature convened, a resolution was introduced that a commission beappointed to investigate the charges preferred against the Camden andAmboy Transportation Company. The resolution was adopted, but it wasvirtually left to the accused to select the members of the commission. That the directors had a guilty conscience appeared from the fact thatthe last annual report of the company, which had just been printed, waswithdrawn and destroyed. To silence their unknown accuser, theythreatened him with criminal prosecution. He now gave his name. It wasHenry C. Carey, the noted writer and authority on political economy. Mr. Carey did not give up the contest. He proceeded to show how the policyof the managers of the Camden and Amboy Transportation Company depressedcommerce, manufactures and agriculture alike. He showed how the companyas a public carrier discriminated in favor of industries which theycarried on as private individuals. He claimed that the company hadforfeited its charter, and that it was the duty of the State toauthorize the construction of another road. In the meantime, early in1849, the legislative investigation committee submitted its report. Itwas perhaps as shameless a document as was ever placed before alegislative assembly. It lauded the directors, to whose influence themembers of the commission owed their selection, and whitewashed theirpast management of the company's affairs. But the people of New Jersey were far from being satisfied with thisreport and demanded the appointment of another committee. Anotherinvestigation was ordered, and this time the company, or rather itsdirectors, found it impossible to control the selection of its members. Soon after their appointment the committee asked Mr. Carey to lend themhis assistance in their labors, and he readily consented. During thesummer of 1849 the members of the committee had occasion to go toBordentown, to inspect the company's books. From that time on awonderful change seemed to have come over the committee. They found theycould dispense with Mr. Carey's further services. What had previouslyappeared to them a ring of rapacious monopolists seemed now anassociation of worthy philanthropical gentlemen. In their report to thelegislature they completely exonerated the company's managers. Theyadmitted that the State had not been paid all that was due to it, butthey asserted that this difference in the company's accounts was duesolely to clerical errors, for which the management were in no wiseresponsible. The report was accepted, although not even the annexedtestimony supported it, and thus the matter was dropped. This was a great victory for Mr. Stockton and his friends. Itdemonstrated the success of their methods of dealing with publicservants. Mr. Carey repeated his charges, but the directors failed toprosecute him for libel as they had threatened. He asked that he bepermitted to inspect the company's books, but was met with a peremptoryrefusal. Public opinion was defied, and the old methods were continued. The extortionate and discriminating tariff of the only through route ofNew Jersey affected seriously the agricultural as well as the commercialinterests of that State. The Camden and Amboy monopoly kept the State ofNew Jersey for many years far behind the New England States in railroadfacilities. In 1860 New Jersey had only one mile of railroad for every17. 6 square miles of territory, while the proportion of miles ofrailroad to square miles of territory for the same year was 1 to 7. 9 inConnecticut, 1 to 7. 6 in Rhode Island, and 1 to 6 in Massachusetts. Atpresent New Jersey has one mile of railroad to every 3. 79 square miles, and therefore leads all the States in the Union in density of railroadtrack. The question may be asked how the Camden and Amboy TransportationCompany, or rather the syndicate which controlled it, contrived tomaintain its power for so many years, to the great detriment of industryand commerce. The only answer that can be given is that the men for whomthe maintenance of the monopoly was a source of great wealth wereconstantly using a part of this wealth for the corruption of those whowere in a position to influence public opinion or to direct the policyof the State. Prominent politicians were favored with passes, attorneyswere retained by the company as local solicitors, corrupt and servilelegislators were bribed by money or the promise of lucrative positions, and newspapers were given large subsidies. In addition to this publicmen were constantly made to realize the political power of the company, whose many employes had always been trained to do the bidding of theirmasters. If the opposition, in spite of this, was ever successful atlegislative elections, the company's managers found it less expensive togain the good will of a few members of the legislature after electionthan it would have been to gain the good will of their constituentsbefore election. Dissatisfied stockholders who threatened with judicialinvestigation were quietly bought out or impressed with the danger ofinviting public discussion in regard to the validity of the company'scharter, as it might lead to its annihilation. The good people of NewJersey made several attempts to rid the State of the despotism of thecompany by making the question a political issue, but they were eachtime defeated through the lavish and scandalous expenditure of thecompany's money. The original charter of the Camden and Amboy Railroad Company wasgranted for a period of twenty years, and should have expired in 1853, but its managers succeeded in having it extended to January 1, 1859. In1854 another extension was asked for, and after a long and bitter debatethe company was again triumphant. An act was passed on the 16th ofMarch, 1854, making it illegal to build previous to the first day ofJanuary, 1869, without the consent of the Camden and AmboyTransportation Company, a railroad in the State of New Jersey for thetransportation of passengers and freight between New York andPhiladelphia. At the end of this period even a third extension wasgranted, and the company, though after January 1, 1867, under a newname, maintained its monopoly until it consolidated, in 1871, with thePennsylvania Railroad Company. That the spirit of the past is still at work was shown by the recent actof the legislature of New Jersey legalizing the consolidation of thecoal roads. The coal barons found the legislature as servile as themanagers of the Camden and Amboy Railroad Company had found them ofyore, and their well-planned scheme would probably have been successfulhad it not been for Governor Abbot's courageous veto of the disgracefulact, and it is more than probable that they will yet succeed. They have, in fact, during the last year advanced the price of coal about onedollar per ton. THE STANDARD OIL MONOPOLY. The Standard Oil monopoly may be said to be the crowning monument ofcorporation conspiracy. It is, indeed, doubtful whether the combinedbrotherhoods of mediæval knights ever were guilty of such acts ofplunder and oppression as the Standard Oil Company and its railroadallies stand convicted of before the American people. The facts thathave been unearthed by official investigations show a frightfulprevalence of corporate lawlessness and official corruption, and therecan be no doubt that, could certain high railroad dignitaries have beencompelled to testify, and could the truth have been fathomed, it wouldhave been found that not only the public, but railroad stockholders aswell, were victimized by those transactions. The founder of the Standard Oil monopoly was some twenty years ago partowner of a petroleum refinery at Cleveland, Ohio. His fertile brainconceived the thought that with the coöperation of the railroadcompanies a few men of means could control the petroleum business of theUnited States. With this end in view he approached the managers of theNew York Central, the Erie and the Pennsylvania Central railroadcompanies, and on January 18, 1872, entered with them into a secretcompact by which they agreed to coöperate with the South ImprovementCompany (an organization formed by that gentleman to aid in theaccomplishment of his designs) to grant to said companies certainrebates and to secure it against loss or injury by competition. TheSouth Improvement Company, in consideration of these favors, guaranteedto the railroad companies a fair division of its freights. The existenceof this contract soon became known and caused a violent protest amongthe oil-producers. An indignation meeting was held and a committee wasappointed to wait on the railroad managers and demand fair treatment forall. The railroad companies yielded and promised to give equal rates to allshippers and to grant to no person either rebates or any other advantagewhatever. New rates were fixed for the transportation of both crude andrefined oil, and it was agreed on the part of the railroad companiesthat at least ninety days' notice should be given of any change thatmight be made in the rates. Steps were also taken to have the charter ofthe South Improvement Company canceled because it had been found that itwas neither the owner of a refinery nor of an oil well, and couldtherefore not comply with the legal requirements concerning theorganization of stock companies. While the South Improvement Companythus came to a sudden and rather inglorious end, its founders sooncontrived other means to carry out their ingenious plans. They bought arefinery, reorganized by taking the prepossessing title of Standard OilCompany, and were now prepared to resume their operations under theguise of legal authority. The railroad companies seemed to have relished their novel businessconnections, for, without paying the least attention to the agreementinto which they had entered with the other producers and refiners ofoil, they extended the privileges of the defunct South ImprovementCompany to its successors. The new company received secret rebatesranging from 50 cents to $1. 32 per barrel. The agreement also containedthe stipulation that if lower rates should ever be granted to theircompetitors, an additional rebate should be given to the Standard OilCompany. Endowed with these privileges, the favored company proceeded tounite under its banner, by consolidation, purchase or lease, theleading refineries of Cleveland. The effect of the discriminations practiced against independentrefineries soon became apparent. In less than two years there wereclosed in Pittsburgh twenty-one refineries, that represented anaggregate capital of $2, 000, 000 and had given employment to over 3, 000people. A large number of the remaining refineries were forced toconsolidate with the Standard Oil Company. The next step toward the entire suppression of competition was an attackplanned against the independent pipe lines. The Standard had earlysecured control of the United Pipe Line. To exterminate competing lines, they again appealed to the railroad companies, and on the 9th day ofSeptember, 1874, J. H. Rutter, general freight agent of the New YorkCentral, issued a new oil tariff which discriminated greatly in favor ofthe oil brought by the United Pipe Line to the refineries. Up to thattime this company had done from 25 to 30 per cent. Of the total businessof the various pipe lines. Within one year after the adoption of the newtariff it did fully 80 per cent. Of the entire business. This forced theindependent lines either to sell out to the Standard or to suspendbusiness, for the latter's rebate was larger than their toll. The oiltariff of the Pennsylvania Central compelled the independent Pittsburghrefiners to ship their refined oil over that company's line, if theywould avail themselves of the rebate which it granted on the rates forthe transportation of crude oil to Pittsburgh. The evident purpose andthe effect of such a tariff was to prohibit oil shipments over theBaltimore and Ohio. Had this road made ever so reasonable a tariff, thecombined charges for the transportation of the crude petroleum from theoil regions to Pittsburgh by the Pennsylvania Central, and for that ofthe refined oil to the sea coast by the Baltimore and Ohio, would stillhave been prohibitive in competition with the special transit ratesgranted to the Standard Oil Company. As a remedy it was proposed toorganize a new pipe line, it being believed that the crude oil could bebrought to Pittsburgh by that line, refined there, shipped to theseaboard by the Baltimore and Ohio, and sold there at as good or even abetter profit than the product of the Standard, notwithstanding thefavors received by the latter from the allied trunk lines. This movementresulted in the creation of the Columbia Conduit Company, which at onceproceeded to lay its pipes from the oil wells to Pittsburgh. Under thelaws of the State of Pennsylvania it became necessary for this companyto obtain the permission of property-holders to lay the pipes throughtheir lands. Consent was everywhere readily given, and the pipes werelaid without hindrance until the track of the Pennsylvania Railroad wasreached, within a few miles of the Pittsburgh refineries. This companyperemptorily refused to let the pipes be laid under its track. The pipeline company after some delay contrived a way to obviate the difficulty. It laid its pipes on each side of the road as close to the track as itcould without trespassing against the legal rights of the PennsylvaniaCentral, and then conveyed the oil from one side of the track to theother by means of large oil tanks on wheels, which could not beprevented from passing over the railroad track at the public crossing. After several months the railroad company allowed the pipes to be laidunder its track, but it soon appeared that another combination had beeneffected to destroy the value of this concession. A railroad war hadgiven the three trunk lines an opportunity to force the Baltimore andOhio into the pool. A uniform rate of $1. 15 was established forshipments of refined petroleum from any point to the seaboard. Whilethis was in itself an unjust discrimination against Pittsburgh, which is250 miles nearer tidewater than Cleveland, the railroads in additiongranted the Standard secret rebates which enabled it to sell its oil onthe coast for less than the sum of its first cost at the refineries andthe open rate of transportation to the points of export. The independentrefiners of Pittsburgh found themselves again cut off from the market, but necessity soon made them discover another outlet. Shipping their oildown the Ohio River to Huntington, W. Va. , they had it taken by theChesapeake and Ohio Railroad to Richmond. In spite of the fact that thisroute was more than twice as long as the direct line from Pittsburgh tothe seaboard, and in spite of the further fact that it necessitated anexpensive transfer, a rate equal to about two-thirds of the trunk linerate for the direct shipment proved remunerative to the Chesapeake andOhio. The independent refiners kept up their competition for some time, but the great disadvantage of river travel and the insufficient exportfacilities of Richmond finally forced them to give up the contest. Until the year 1877 the Standard Oil Company had worked hand in handwith the railroads. It had obtained all its privileges by asking forthem and by holding out inducements to railroad managers to grant them. It now commenced to dictate terms to refractory railroad companies. The Pennsylvania road ventured to carry oil not the property of theStandard on terms which that company did not approve. The latter orderedthe road to refuse to carry the product of their competitors. This therailroad company declined to do, and the Standard at once withdrew itscustom. The Pennsylvania retaliated by carrying the oil of theindependent refineries at merely nominal rates and even went so far asto make its rates dependent upon the profits realized by the shippers. Afierce freight war was thus precipitated, in which the Erie and New YorkCentral supported the Standard Company. The Pennsylvania road was soonforced to surrender and sign an ignominious treaty. The Baltimore and Ohio, which had again commenced to carry the productof those Pittsburgh refineries which received their crude oil throughthe Columbia Conduit Company, was in a similar manner forced to rejecttheir freights. The pipe line, whose value was thus almost entirelydestroyed, was soon after sold to the Standard Oil Company. This companyhad now an almost complete monopoly of the oil business of the UnitedStates, and still it was not satisfied. It appears that some of theproducers of crude oil had been in the habit of shipping a part of theirproduct in spite of the advantages which the Standard had through itsrebates. To prevent even these shipments, or rather to exact anothertribute from railroad stockholders, the American Transfer Company, oneof the auxiliaries of the Standard Oil Trust, in 1878, demanded andreceived from the Pennsylvania road a "commission" of 20 cents a barrelon all shipments of petroleum _made by any_ shipper. It had been shownto the satisfaction of the Pennsylvania Railroad Company that similarcommissions, ranging from 20 to 35 cents a barrel, were being paid bythe New York Central and Erie roads. When, in 1879, an effort was made to establish a pipe line from the oilregions to the seaboard, nothing was left undone by the trunk lines tothwart the enterprise. The new company finally succeeded in makingconnection with a railway which had no part in the pool, and there wassome hope that under this arrangement competition might at least bemaintained at some points. The Standard Company again appealed to thetrunk lines to protect it against injury by competition and obtainedfrom them a special rate of 20 cents per barrel, which rate was evenreduced to 15 cents per barrel two months later. Against such a rate itwas impossible to compete, and after a short struggle the new line founditself compelled to sell its works to the Standard. To crown its monopoly, the Standard Oil Company finally bought of theNew York Central and Erie roads their terminal facilities for thetransportation of oil, and thereby made it virtually impossible for themto transport oil for any of its few remaining competitors. Mr. JosiahLombard, part owner of the New York refinery, stated in 1879 before theinvestigating committee of the legislature of New York that in 1878 hehad requested the Erie Company to transport for him 100 cars of crudeoil from Carrollton to New York; that he had called upon Mr. Vilas, thegeneral freight agent of the company, in person, but had never been ableto obtain the cars, though the oil had been held in Carrollton three orfour months ready to be loaded. This gentleman also testified that hehad found it impossible to obtain cars from the New York Central, andthat the company's general freight agent had informed him that the roaddid not own and could not furnish any oil cars. After the Standard Oil Company had secured control of the various pipelines of the oil regions, it frequently lowered the price of crude oilto such an extent as to make its production unprofitable. It evenrefused to buy oil, basing its refusal upon the ground that the railroadcompanies failed to furnish cars for its transportation. When thewell-owners had their tanks filled, they had the choice to let the oilrun away or to be at the expense of closing up their wells. In oneinstance, however, when their ruse threatened to cause a riot, severalhundred cars were brought to the wells within a few hours. The Standard Oil Trust, not satisfied with the monopoly of the wholesaletrade, even tried in places to control the retail trade by peddling oilat private houses. This method of destroying competition was chieflyresorted to where independent dealers obtained their supply by a waterroute. That many of the deeds of the Standard are dark is evident from the factthat its members, when summoned by the Hepburn committee, declined totestify, lest their testimony be used to convict them of crime. Officials of the trust have bribed or attempted to bribe employes ofrival firms, for the purpose of ruining their business. By its peculiarmethods the company has been successful in courts of justice andlegislative halls, and has enjoyed an impunity for its conspiracyagainst the public that is without precedent in America. It hasaccumulated a capital of more than $100, 000, 000, and it is even claimedthat for years its annual dividends have exceeded in amount the capitalactually invested. This is not at all strange when it is considered thatthey have levied upon the producers, consumers and transporters alike. Mr. Cassat testified before the New York investigating committee that ineighteen months the railroads had paid the Standard in rebates no lessthan $10, 000, 000. And the very payment of these enormous rebatesenabled the Standard to decrease the price of oil to the producer and toincrease it to the consumer. It is claimed by the defenders of the Standard monopoly that under thetrust the price of petroleum has been constantly decreased to theconsumer. That the price of kerosene is lower now than it was fifteenyears ago is undoubtedly true, but the reductions were brought about notby the trust, but in spite of the trust. The price now maintained is anunnatural one. The Standard Oil Company never lowered the price of itsoil except when compelled to do so by competition. The largely increasedoutput of crude oil, the improved methods of refining, the greatlylowered cost of transportation would have lowered the price of coal oilwithout the philanthropy of the Standard Oil Company. Iron, steel, calico, woolen goods and a thousand other commodities have within almostthe same period suffered much larger reductions than coal oil. But evenif the Standard monopoly had voluntarily lowered the price of itsproducts, the American people could never approve of its methods. Theycan never be made to believe that the end sanctifies the means, especially when those means are railroad favors, secret combinations, bribery, intimidation and lawless arrogance. Many other interesting cases might be given. The Southern PacificRailway Company, for instance, owns nearly all of the railways ofCalifornia, and enjoys at the present time almost a complete monopoly ofthe transportation business of that State and much more of the PacificCoast. Perhaps no set of managers would be more considerate of thepeople's rights in the absence of legal restraint than those in chargeof this company, yet there is not a business man on the Pacific Coastwho comes in contact with this company who does not realize and feelthe power of its iron hand, unless it be those who for various reasonsare recipients of its special favors. It has become notorious that thelegislature, Board of Railroad Commissioners and some of the judges ofthe courts of that State are as servile to the demands of this railwaycompany as are its own employes. The railway company is a closely organized body of shrewd, active men, while those who furnish business for it are not organized, and they willnever be able to properly protect their own interests until they controlthe machinery of their State government. CHAPTER V. RAILROAD ABUSES. As has already been shown, railroad enterprise met with comparativelylittle opposition in the United States, for, as compared with theinterests certain to be benefited by the introduction of the new mode oftransportation, those likely to be injured by it were insignificant. Itis true, the innate conservatism of man even here recorded itsobjections to the innovation. It viewed with distrust the new powerwhich threatened to revolutionize well-established systems oftransportation and time-honored customs and to force upon the peopleeconomic factors the exact nature and value of which could only beascertained by practical tests. But the progressive portion of thecommunity was so decidedly predominant that these protests were soondrowned in the general demand for improved facilities of transportation. The farmer who had to haul his produce a great distance to reach amarket appreciated the advantages to be derived from the location of arailroad station nearer home. The manufacturer who heretofore had, had avery limited territory for the sale of his products well realized thathe could with the aid of a railroad enlarge his territory and increasehis output, and with it his profits. The pioneer merchant found that hecould no longer compete with former rivals in adjoining towns, since theiron horse had reached them and lowered their freights, and he alsobecame a convert to the new order of things and clamored loud forrailroad facilities. Railroads seemed the panacea for industrial andcommercial ills, and every inducement was held out and every sacrificemade by communities to become participants of their blessings. So greatwas the estimate of the conveniences afforded by them and so stronglywas public opinion prejudiced in their favor that it is no exaggerationto say that railroad companies as a rule were permitted to prepare theirown charters, and that these charters almost invariably receivedlegislative sanction. To such an extent was the public mind prepossessed in favor of railroadsthat any legislator who would have been instrumental in delaying thegranting of a railroad charter for the purpose of perfecting it, toprotect the people against possible abuses, would have been denounced asa short-sighted stickler and obstructor of public improvements. Anxiousfor railroad facilities, the people were deaf to the warnings ofhistory. Their liberality knew no bounds. National, State and county aidwas freely extended to new railroad enterprises. Communities taxedthemselves heavily for their benefit, and municipalities and individualsvied with each other in donating money, rights of way and stationbuildings. This was especially true of the West, whose undevelopedresources had most to gain by railroad extension. So large were thepublic and private donations in several of the Western States that theirvalue was equal to one-fifth of the total cost of all the roadsconstructed. To still more encourage promoters of railroad enterprises, general incorporation laws were passed which permitted companies to beformed and roads to be built practically without State supervision. Intheir admiration for the bright side of the picture, the people entirelyoverlooked the shady side. Besides this, there was virtually an absence of all law regulating theoperation of railroads. It was, under these circumstances, not strangethat abuses early crept into railroad management which, long toleratedby the people and unchecked and even encouraged by public officers, finally assumed such proportions as to threaten the very foundation offree government. Great discoveries that add rapidly to the wealth of acountry tend to overthrow a settled condition of things, and organizedcapital and power, if not restrained by wholesome laws and publicwatchfulness, will ever take advantage of the unorganized masses. Thepeople of those regions which the railroad stimulus had caused to besettled thrived for years so well upon a virgin soil that they gladlydivided their surplus with the railroad companies. They looked upon therailroads as the source of their prosperity and upon railroad managersas high-minded philanthropists and public benefactors, with whom toquarrel would be an act of sordid ingratitude, and they paid but littleattention to the means employed by them to exact an undue share of theirearnings. Railroad men did whatever they could to foster through theiremissaries this misplaced adoration. They posed before the public as therightful heirs of the laurels of Watt and Stephenson, insisting thattheir genius, capital and enterprise had built up vast cities and openedfor settlement and civilization the boundless prairies of the West. These claims have been persistently repeated by railroad men, thoughthey are so preposterous that they scarcely deserve refutation. Therailroad, gradually developed by active minds of the past, and greatlyimproved by the inventions of hundreds of men in the humbler walks oflife, is the common inheritance of all mankind, though no class ofpeople have derived greater benefits from it than railroad constructors, managers and manipulators. Railroad managers are no more entitled tothe special gratitude of the public for dispensing railroadtransportation at much more than remunerative rates than is the WesternUnion monopoly for maintaining among us an expensive and inefficienttelegraph service. No one believes that the disbanding of the WesternUnion would leave us long without telegraphic communication. In likemanner railroads will be built whenever and wherever they promise to beprofitable. If one company does not take advantage of the opportunitiesoffered, another will. That large cities have been built up by therailroads is true, but it is equally true that these cities by theircommerce and manufactures administer to the prosperity of the railroadsas much as the railroads administer to theirs. Commercial centers indays gone by existed without railroads, but railroads could not longexist without the stimulating influence of these busy marts of trade. The same argument applies with still greater force to the agriculturalsections of our country, especially the great Northwest. The dry-goodsmerchant might as well boast of having clad the public as the railroadmanager of having built up farming communities by selling to themtransportation. And yet the American people have never ceased to be mindful of theconveniences afforded to them by this modern mode of transportation. Onthe contrary, they have been but too prone to credit railroad men withbeing benefactors, when they were but beneficiaries, and this liberalityof spirit made them overlook, or at least tolerate, the abuses whichgrew proportionately with the wealth and power of the companies. The first railroad acts of England had contemplated to make the roadshighways, like turnpikes and canals. These roads were established by thepower of eminent domain. Companies were empowered to build and maintainthem and to reimburse themselves by the collection of fixed tolls. Hadthe owners of the roads from the beginning been deprived of theprivilege of becoming carriers over their own lines, the system mighthave so adjusted itself as to become entirely practicable; but as theywere allowed to compete with other carriers in the transportation ofpassengers and merchandise, they were soon able to demonstrate, at leastto the satisfaction of Parliament, that the use of the track bydifferent carriers was impracticable and unsafe. A number ofcircumstances combined to aid the railroad companies in their efforts tomonopolize the trade on their lines. In the first place, when the earlyrailroad charters were granted, but few persons had any conception ofthe enormous growth of commerce which was destined to follow everywherethe introduction of railways. The tolls as fixed in the charters soonyielded an income out of proportion to the cost of the construction andmaintenance of the roads. Their large margins of profit enabled theowners of the roads to transport goods at lower rates than othercarriers and to thus compel the latter to abandon their business. Another defect of the original charters worked greatly to thedisadvantage of independent carriers. They contained no provision as tothe use of terminal facilities. The railroad companies claimed thatthese facilities were not affected by the public franchise and weretherefore their personal property. This placed independent carriers at agreat disadvantage and made in itself competition on a large scaleimpossible. These carriers were thus at the mercy of the railroadcompanies for the transportation of their cars, and the companies neverpermitted their business to become lucrative enough to induce many toengage in it. It soon became apparent that under the charters grantedto the railroad companies such competition as existed on turnpikes andcanals was out of the question on their roads. In England the greatabundance of water-ways exercised for many years a wholesome controlover the rates of railway companies, until these companies, greatlyannoyed by such restraint, absorbed many of the larger canals bypurchase and made them tributary to their systems. These companies havealso acquired complete control over many important harbors. In the United States the people depended from the beginning of therailroad era on free competition for the regulation of railroad charges. This desire to maintain free competition led to the adoption of generalincorporation acts, it being quite generally believed that suchcompetition as obtains between merchants, manufacturers and mechanicswas possible among railroads and would, when allowed to be operative, regulate prices and prevent abuses. The remedy was applied freelythroughout the country, but for once it did not prove successful. Stephenson's saying, that where combination was possible competition wasimpossible, was here fully verified. The great ingenuity of the class ofmen usually engaged in railroad enterprises succeeded in thwarting thispolicy of commercial freedom. The opportunities for those in control ofrailroads to operate them in their own interest, regardless of theinterests of their patrons or stockholders, were so great that men of aspeculative turn of mind were attracted to this business, which indeedsoon proved a most productive field for them. One road after anotherfell into the control of men who had learned rapidly the methodsemployed to make large fortunes in a short time. As the roads multiplied, transportation abuses increased. A considerablenumber of people early favored State control of railroads as the bestmeans of regulating transportation, but a majority looked upon theexisting abuses as being merely incidental to the formative period, andhoped that with a greater expansion of the railroad system they wouldcorrect themselves. And this doctrine was industriously disseminated byrailroad managers and their allies. They lost no opportunity to impressupon the people that State regulation was an undue interference withprivate business and that such a policy would soon react against thosewho hoped to profit by it, inasmuch as it would prevent the building ofnew roads and would thus hinder, rather than aid, in bringing about theright solution of the railway question, viz. , regulation by competition. They contended, in short, that State regulation would be destructive torailroads as well as to every other class of property. Railroad sophistry for many years succeeded in preventing the massesfrom realizing that an increased supply of transportation does notnecessarily lower its price, or, in other words, that railroad abuses donot necessarily correct themselves through the influence of competition. A large capital is required to build and maintain a railroad, which mustnecessarily be managed by a few persons. Besides this, the constructionof a railroad practically banishes at once from its field all othermeans of land transportation. The railroad has thus a practical monopolywithin its territory, and its managers, if left to follow theirinstinct, will despotically control all the business tributary to it, with unlimited power to build up and tear down, to punish its enemiesand to reward its friends. It is not true that State control checks railroad building. While it mayprevent the construction of useless lines and discourage speculation, itwill encourage the building of roads for which there is a legitimatedemand. Stockholders as a whole do not participate in the management ofthe roads and do not profit by railroad abuses, the origin of which mayalmost invariably be traced to selfish designs on the part of a fewentrusted with the management of the property. Where through wiselegislation these abuses are prevented, the roads are managed in theinterest of all the stockholders, develop business and enjoy lastingprosperity. It may be laid down as a general rule that the policy which bestsubserves the interests of the patrons of a road is always the bestpolicy for its owners. Injustice to a railroad will interfere with itsusefulness; injustice to shippers depresses production and consumption;and in either case both the road and its patrons will suffer. Statecontrol is therefore as much needed in the interest of the owners ofrailroads as in the interest of their patrons. What should be the natureof such control will be discussed hereafter. A full understanding of thequestion at issue, however, makes necessary an inquiry into the variousabuses which unrestrained railroad management of the past has developed. Perhaps no better presentation of the evils and abuses of railroads andtheir consequences can be found than that contained in the report of theSenate Committee on Interstate Commerce, submitted by Senator Cullom, in1886. This report charges: 1. That local rates are unreasonably high, as compared with throughrates. 2. That local and through rates are unreasonably high at non-competingpoints, either from the absence of competition or in consequence ofpooling agreements that restrict its operation. 3. That rates are established without apparent regard to the actual costof the service performed, and are based largely on "what the trafficwill bear. " 4. That unjustifiable discriminations are constantly made betweenindividuals in the rates charged for like service under similarcircumstances. 5. That improper discriminations are constantly made between articles offreight and branches of business of a like character, and betweendifferent quantities of the same class of freight. 6. That unreasonable discriminations are made between localitiessimilarly situated. 7. That the effect of the prevailing policy of railroad management is, by an elaborate system of secret special rates, rebates, drawbacks andconcessions, to foster monopoly, to enrich favored shippers, and toprevent free competition in many lines of trade in which the item oftransportation is an important factor. 8. That such favoritism and secrecy introduce an element of uncertaintyinto legitimate business that greatly retards the development of ourindustries and commerce. 9. That the secret cutting of rates and the sudden fluctuations thatconstantly take place are demoralizing to all business except that of apurely speculative character, and frequently occasion great injusticeand heavy losses. 10. That, in the absence of national and uniform legislation, therailroads are able by various devices to avoid their responsibility ascarriers, especially on shipments over more than one road, or from oneState to another, and that shippers find great difficulty in recoveringdamages for the loss of property or for injury therefor. 11. That railroads refuse to be bound by their own contracts, andarbitrarily collect large sums in the shape of overcharges in additionto the rates agreed upon at the time of shipment. 12. That railroads often refuse to recognize or to be responsible forthe acts of dishonest agents acting under their authority. 13. That the common law fails to afford a remedy for such grievances, and that in cases of dispute the shipper is compelled to submit to thedecision of the railroad manager or pool commissioner, or run the riskof incurring further losses by greater discriminations. 14. That the differences, in the classifications in use in various partsof the country, and sometimes for shipments over the same roads indifferent directions, are a fruitful source of misunderstandings, andare often made a means of extortion. 15. That a privileged class is created by the granting of passes, andthat the cost of the passenger service is largely increased by theextent of this abuse. 16. That the capitalization and bonded indebtedness of the roads largelyexceed the actual cost of their construction or their present value, andthat unreasonable rates are charged in the effort to pay dividends onwatered stock and interest on bonds improperly issued. 17. That railroad corporations have improperly engaged in lines ofbusiness entirely distinct from that of transportation, and that undueadvantages have been afforded to business enterprises where railroadofficials were interested. 18. That the management of the railroad business is extravagant andwasteful, and that a needless tax is imposed upon the shipping andtraveling public by the necessary expenditure of large sums in themaintenance of a costly force of agents engaged in a reckless strife forcompetitive business. Under the operation of the Interstate Commerce Law some of these evilshave, so far at least as interstate commerce is concerned, disappeared, and others have been considerably mitigated. It cannot be expected, however, that a bad system of railroad management, to the development ofwhich the ingenuity of railroad managers has contributed for twogenerations, could be entirely reformed in a few years. It is acomparatively easy task for shrewd and unscrupulous men, assisted byable counsel and unlimited wealth, to evade the spirit of the law and toobey its letter, or to violate even both its letter and spirit, andescape punishment by making it impossible for the State to obtain proofof their guilt. It is a humiliating spectacle to see the self-debased railroad officialsconfessing their own guilt by refusing to testify before the InterstateCommerce Commission on the ground that they would thereby criminatethemselves. Congress should have sufficient respect for this commissionand for itself to provide a way to punish such recusant witnesses whoare willing to degrade themselves in so base a manner. Whether the lawwill eventually be respected by all depends upon the vigilance andcourage of the people. That our railroad legislation is not yet perfect even its friends willadmit; and as under a free government the demand of an enlightenedpublic opinion is the first step toward the enactment of a law, itbehooves the intelligent citizen to study the various railroad problemsand to then exert his influence toward bringing about such a solution ofthem as justice and wisdom demand. In discussing the various evils of railroad management, the author willcommence with and dwell more particularly upon those abuses which maybesaid to be the cardinal ones, viz. , discrimination, extortion, combinations and stock and bond inflation. When these are onceeffectually eradicated, other abuses of railroad management which havebeen the subject of public complaint will not long survive them. One of the strongest arguments that could be adduced by the founders ofthe American Constitution in favor of the establishment of a moreperfect union was that the inequality of taxes placed upon commerce bythe various States was a serious obstacle to its free development. Muchas the individual States dislike to give up a part of their sovereigntyto a central or national power, the demand for a common and uniformsystem of commercial taxation was so great that they were forced toyield and ratify the new Constitution. Our forefathers thus consideredit a dangerous policy to permit a single State to lay any imposts uponthe commercial commodities which passed over its borders. They wererightly of the opinion that industrial and commercial liberty was asessential to the welfare of the nation as political freedom and thattherefore interstate commerce should not be hemmed in or controlledwithin State lines, but that the power to regulate it should be lodgedin the supreme legislative authority of the nation, the Congress of theUnited States. For over half a century Congress alone exercised thepower thus conferred upon it by the people. After the introduction ofrailroads, however, their managers gradually assumed the right toregulate the commerce of the country in their own interest through theadoption of arbitrary freight tariffs. Freight charges are practically atax which follows the commodity from the producer to the consumer. Anarbitrary and unjust charge is therefore an arbitrary and unjust taximposed upon the public without its consent. It is a well-establishedrule of society that laws should be equitable and just to all citizens. Congress never assumed the role of Providence by attempting to equalizethose differences among individuals which superior intellect, greaterindustry and a thousand other uncontrollable forces have ever createdand will ever create. It has been reserved to railroad managers todemonstrate to the public that a power has been allowed to grow up whichhas assumed the right to counteract the dispensations of Providence, toenrich the slothful, to impoverish the industrious, to curtail theprofits of remunerative industries and revive by bounties thoselanguishing for want of vitality, to humble proud and self-reliant martsof trade and to build up cities in the desert. It will scarcely beclaimed even by railroad managers that their policy of thus arbitrarilyregulating commerce originated in philanthropic motives. They are forcedto admit that it grew out of an attempt to increase the income ofrailroads by the extension of favors to naturally weak enterprises andto recoup by overtaxing stronger ones. The practical operation of this system soon showed to railroad managerstheir power and to the patrons of railroads their dependence upon thosewho dispensed railroad favors. The former soon discovered that theirpower might be used to further their private interests as well as thoseof the roads, and unscrupulous patrons were not slow to offerconsiderations for favors which they coveted. When such favors were oncegranted by the officials of one road, rival roads would grant similarones in self-protection. Thus this vicious system grew until the paymentof a regular tariff rate was rather the exception than the rule, andspecial rates became an indispensable condition of success in business. We may distinguish three classes of railroad discriminations, viz. : 1. Those which affect certain individuals. 2. Those which affect certain localities. 3. Those which affect certain branches of business. Discrimination between individuals is the most objectionable, because itis the most demoralizing of all. Where such discrimination obtains, every shipper is in the power of the railroad corporation. It makes ofindependent citizens of a free country fawning parasites and obsequioussycophants who accept favors from railroad managers and in return dotheir bidding, however humiliating this may be. The shipper, realizingthat the manager's displeasure or good will toward him finds practicalexpression in his daily freight bills, finally loses, like the serf, allself-esteem in his efforts to propitiate an overbearing master. He isintimidated to such an extent that he never speaks openly of existingabuses, lest he lose the special rates which have been given him, or, ifhe is not a participant of such privileges, lest additional favors begiven to his rivals and they be thus enabled to crush him. Intimidationof shippers prevailed to such an extent previous to the enactment of theInterstate Commerce Law that when, in 1879, the special committee onrailroads appointed by the legislature of New York invited all personshaving grievances against railroads to come before them to testify, notone shipper testified voluntarily. On the contrary, they all insistedupon being subpoenaed, hoping that the railroad managers would nothold them responsible for any statement which they might be compelled tomake under such circumstances. The report of that committee stated thatthe number of special contracts in force within the period of one yearon the New York Central and Hudson River Railroad alone was estimatedby the railroad people at 6, 000. Mr. Depew, when he made the statement:"In territories comparatively new, and with little responsibility on thepart of the managers to distant owners, they became in many cases veryarbitrary and exercised favoritism and discriminations, which led topopular indignation and legislation, " had probably not heard of this. The committee's report further stated that these special rates conformedto no system and varied without rule, that every application for aspecial rate was judged by itself and with reference to its own peculiarcircumstances, and that it depended upon the judgment, or rathercaprice, of the officer to whom the application was made, whether and towhat extent a special rate should be granted. The reductions made toprivileged merchants often amounted to more than what would be a fairprofit to the dealer on the commodities shipped. The privileged dealerwas thus enabled to undersell his rivals and eventually force them outof business or into bankruptcy. It was not at all uncommon for railroadcompanies to allow discounts amounting to 50, 60, 70 and even 80 percent. Of the regular rates. The New York Central gave a Utica dry-goodsmerchant a special rate of 9 cents while the regular rate was 33 centson first-class freights. The lowest special rate granted at Syracuse wasas low as 20 per cent. Of the regular tariff rate on first-class goods. David Dows & Company and Jesse Hoyt & Company, by means of a grain ratefrom 2-1/2 to 5 cents lower than those given to other firms, wereenabled to control in the winter of 1877 the grain trade of New York. The railroad even extended its fostering aid to A. T. Stewart & Co. , giving them a special rate "to build up and develop their business. " Thetestimony given by Mr. Goodman, assistant general freight agent of theNew York Central, in reference to the principle by which he was guidedin granting special rates, is of sufficient interest to be given a placehere: Question. You made the rate for A. T. Stewart & Company? Answer. Yes, sir. Q. Was that to build up and develop their business? A. Yes, sir. Q. That was the object? A. That was one of the objects. Q. January 11th, 1879? A. Yes, sir. Q. You thought that business was not yet sufficiently built up anddeveloped? A. No, sir; not the manufacturing part of it. Q. How long had the factories of A. T. Stewart & Company been inexistence? A. The one at Duchess Junction about three years, I think; itisn't completed yet. Q. And they were languishing and suffering? A. To a great extent; yes, sir. Q. And you acted as a fostering mother to A. T. Stewart & Company tobuild it up? A. Yes, sir; I added my mite to develop their traffic; wewanted to carry the freight; boats might have carried it in the summer. Q. Do you know anything of G. C. Buell & Company? A. Yes, sir. Q. You wanted to develop their business? A. Yes, sir; they are atRochester--wholesale dealers. Q. Do you know H. S. Ballou, of Rochester? A. I do not. Q. He seems to be a grocer there? A. A small concern, perhaps. Q. Small concerns are not worth developing, according to your opinion?A. Our tariff rates are low enough for them at Rochester. Q. That is to say, a small concern ought to pay 40, 30, 25 and 20, asagainst a large concern, 13; that is your rule? A. Well, if he is agrocer, most of his business is fourth-class freight. Q. And he ought to pay 20, as against 13? A. Yes, sir. Q. That small man has no right to develop? A. He has the same chancethat the other man has. Q. At 20 against 13? A. Oh, yes. Q. Do you call that the same chance? A. About the same chance, yes, sir. Q. You consider it the same chance? A. Yes, sir. Many reasons were assigned by railroad men in justification of theirpractices. It was claimed that special rates were given to regularshippers, but it has been proved that not all regular shippers hadspecial rates, and that persons who made only single shipments wereoften fortunate enough to obtain special favors. It was further claimedthat special rates were given to those who, starting out new in businessor developing new enterprises, needed aid and encouragement. But it wasshown on the other hand that the aid and encouragement thus given tosome bankrupted others, and in the end deprived the companies of morebusiness than their policy of discrimination brought them. Railroadmanagers also argued that they could afford to make lower rates on largeshipments than on small ones for the same reasons that the wholesalemerchant can sell his goods for less than the retailer. But while thismay be a good reason why rates on car-load shipments should be lowerthan rates on shipments in less than car-load lots, it is certainly nogood reason why five car-loads belonging to one shipper should betransported the same distance for less than five carloads belonging tofive shippers. In the case of local shipments the car is scarcely everloaded to its full capacity; one shipment after another is taken from itas the train moves along, and the car perhaps reaches its finaldestination nearly, if not entirely, empty. The terminal charges arehere also largely increased, and it is but just that the shipper shouldpay the additional cost of carrying and handling the goods. The case isentirely different when the railroad company carries five full carloadsfrom one station of its line to another. Whether they have been loadedby one or five persons, whether they are consigned to one or fivepersons, matters little to the railroad company. It merely transportsthe cars, and in either case its responsibility and its services are thesame. The car-load must therefore be accepted and is now generallyaccepted by the best railroad men as the unit of wholesale shipments, and any discrimination made in favor of large wholesale shippers isarbitrary and unjust. In the shipment of some commodities, such aswheat, flour and coal, a small advantage in rates is sufficient toenable the favored shipper to "freeze out" all competitors. It iscertainly not to the interest of any railroad company to pursue such apolicy; for by driving small establishments out of the business itencourages monopoly, which almost invariably enhances prices anddecreases consumption. The railroad thus suffers in common with thepublic the consequences of its short-sighted policy. That even railroadmanagers realize that these practices cannot be defended upon anyprinciple of justice or equity is apparent from the fact that one of thenever-varying conditions of special rates is that they be kept secret. Aspecimen of a special rate agreement which was placed before the NewYork investigating committee is here presented to the reader: "This agreement, made and entered into this eighteenth day of March, 1878, by and between the New York Central and Hudson River Railroad Company, party of the first part, and Schoellkopf & Mathews, of the city of Buffalo, N. Y. , party of the second part: "Witnesseth, That said party of the first part hath promised and agreed, and by these presents does promise and agree to transport wheat from the elevator in Buffalo, reached directly by said first party's tracks, except at such mills as time said tracks may be obstructed by snow or ice, to the which said second party may erect or operate at Niagara Falls, N. Y. , at and for the rate of one and a quarter cents per bushel. "And further, that said first party shall and will at all times give, grant and allow to said second parties as low rate of transportation on all property shipped by them from their said mills at Niagara Falls, and as favorable facilities and accommodation in all respects as are afforded by the party of the first part to the millers of Buffalo and Black Rock. And also that the said party of the first part will transport for said second party all of their east-bound New York freight at and for the price or rate of forty-seven per cent. Of the current all-rail through rates, via the route of party of the first part, from Chicago to New York, at the times of shipment, adding thereto three cents per barrel for flour and one and one-half cents per hundred pounds for mill feed or grain, as a terminal charge, to provide for the incidental expenses attending local transportation. "And will transport their freight to Boston and all points in New England, taking Boston rates at the same rate as to New York, with ten cents per barrel added for flour and five cents per hundred pounds added for mill feed or grain. "Provided, however, and this agreement is made upon the express understanding and consideration, that said second party shall regard and treat this agreement as confidential, and will use all reasonable precaution to keep the same secret. "And upon condition also that said second party shall ship by the first party's road all the product from their mill at Niagara Falls destined to all points in New York, Pennsylvania and New England, reached by said first party, directly or by connections with other routes. "And this agreement shall be and remain in force for the term of five years from and following the first day of September, 1878, after which period it may be terminated by sixty days' written notice from either party. "In witness whereof, the parties hereto have signed these presents the day and year first above written. "N. Y. C. & H. R. R. R. Co. , By J. H. RUTLER, General Traffic Manager. SCHOELLKOPF & MATHEWS. " It will be noticed that this agreement was based upon the expressedcondition that Schoellkopf & Mathews treat it as "confidential, " and useall reasonable precaution to keep it secret. It is difficult to accountfor this strong injunction of secrecy except upon the assumption thatthe managers of the road, conscious of the great wrong which theyinflicted upon the body of the people by their discriminations, hoped toescape public criticism by adopting a policy of secret dealing. Much asspecial rates were sought after, but few shippers to whom they had beengranted were contented with their lot, for none was confident that hisrivals did not have better rates than himself. Discriminations between localities had their origin in the naturaldesire of competing roads to increase their business at the expense oftheir rivals. When two or more railroads touched the same point eachwould attempt to secure the largest possible share of the throughbusiness by holding out every possible inducement in rates to theshippers of that place. Indeed, the freight rates at competitive pointswere often so low that railroad managers found themselves placed in arather unpleasant dilemma. They either had to admit that the ratescharged by them at non-competitive places were exorbitant or that theywere carrying the freights of competitive points at a loss and were thussquandering the money of their stockholders. They preferred as a ruleto admit that they were doing competitive business at a loss, butasserted that, inasmuch as they were compelled to run their trains, theycould better afford to do competitive business temporarily at a lossthan not to do it at all. The same logic might with equal propriety beemployed by the grocer. To draw to him distant customers, he might offerto sell to them at cost or even at a loss; and then, to recuperate, hemight advance the prices of his goods for his regular customers. Ifthere is any difference between the grocer and the railroad company, itlies in the fact that the former's old customers would soon find reliefat a rival store, while the patrons of the railroad at non-competitivepoints are like the traveler in the hands of a highwayman, withoutimmediate redress. The railway company which discriminates betweencompetitive and non-competitive points forgets that its line is a commonhighway for all points tributary to it; that all have equal rights, andthat the only differences in tariff which the principles of the commonlaw permit are those which arise from a difference of service and cost. All other differences that railroad companies may make are unjustdiscriminations in violation of their charter and expose them to aforfeiture of the franchises conferred upon them. The nature and extent of the discrimination practiced between differentplaces are often such that no interest of the company can possibly besubserved by them, and the conclusion is forced upon us that theadvantages granted by railroad managers to certain places are designedto serve chiefly personal and selfish interests. The great fortunesamassed in a brief period of time by railroad managers can in almostevery case be traced to stock, real estate, commercial and otherspeculations directly or indirectly connected with railroadconstruction or management. And where other than personal interestcannot be shown, this is the only basis upon which the many apparentabsurdities of railroad discrimination can be harmonized. It is claimed by railroad men that transportation by water is aregulator of railway rates which they must respect. It is contended, forinstance, that, although the cities situated on our large lakes enjoysuperior commercial advantages which are mainly due to their having attheir disposal water communication with the Atlantic Ocean, inland townshave no cause to complain against the railroads for not equalizing thosedifferences which nature has largely created. It might be more difficultto meet this argument if, owing to peculiar combinations, these waterrates were not made to extend their influence to almost every inlandcity north, east and south in the Union, and if those cities were notgiven much lower rates than hundreds of places much nearer the lakes. The teamster who, half a century ago, found it impossible to competewith the canal, river or lake boats, simply surrendered the field tothem and confined his operations to such a territory as could give himassurance of a profitable business. Let the railroads do likewise. Nocompany has a right to destroy a rival route, water or rail, by adoptingspecial tariffs for competing points. There are at points accessible towater transportation certain freights requiring speedy carriage whichwill go to the railroads at profitable rates, but the heavier freights, as coal, lumber and even certain kinds of grain, should go to thecarrier by water if he can afford to transport them at lower cost. There have been but few legislative investigations of railroad abuses inthis country, but the disclosures which they have made to the publicare astounding. The most noteworthy of these were made by the Hepburncommittee, of New York, to which reference has already been made. It isdifficult to understand how a free and enlightened community could solong and so patiently bear railroad despotism. Individual discriminationmight, under the veil of secrecy, long escape notice, but that a systemof open and widespread discrimination affecting every non-competitiveand even many a competitive point in the State, doing visible andirreparable injury to thousands of shippers, and infringing upon therights of millions, should long be borne by a free and enlightenedpeople, is a strange phenomenon of democratic endurance. It would lead us too far from our subject to review in detail the manyand glaring instances of local discrimination which the reportenumerates. A few will suffice to show their scope and nature. William W. Mack, of Rochester, a manufacturer of edged tools, testifiedthat, in order to save fourteen cents per hundredweight on his freightsto Cincinnati, he shipped his goods to New York and had them shippedfrom there to their destination, via Rochester; and that he availedhimself of the same roundabout route for his St. Louis shipments, andsaved thereby eighteen cents per hundredweight. In both of these casesthe railroad company carried the goods 700 miles farther than the directdistance for a less charge. Port Jervis millers had their grain shipped from the West to Newburgh, apoint fifty miles to the east of them, and then had it returned to PortJervis on the same line, at a less rate than that charged for a directshipment. The grain rates from Chicago to Pittsburgh were 25 cents per hundred inMarch, 1878, and only 15 cents from Chicago to New York. Flour was carried from Milwaukee to New York for 20 cents, while therate from Rochester to New York was 30 cents at the same time. It wasalso carried from East St. Louis to Troy at the same rate as fromRochester to Troy. The rate on butter from St. Lawrence County, N. Y. , toBoston, over the Ogdensburg and Lake Champlain and Vermont Central, was60 cents per hundred; from the nearer county of Franklin, 70 cents; itthen continued to increase as the distance decreased, until it reached90 cents at St. Albans, Vermont. Soap shipped by Babbit & Co. , of New York, to Crouse & Co. , of Syracuse, paid 8 cents per box when the freight was paid in Syracuse, but 12 centsper box when paid by the shipper in New York. It cannot even be said that New York fared worse than any of her sisterStates. There is hardly a business man in any community in the UnitedStates who cannot cite many cases of similar discrimination. Hundreds ofwell authenticated cases have been reported from every part of thecountry. A few striking ones may be given space here: The Illinois Central Company hauled cotton from Memphis to New Orleans, a distance of 450 miles, at $1. 00 a bale, while the rate from Winona, Miss. , to New Orleans, about two-thirds of the distance, was $3. 25 abale. The same company charged for fourth-class freight from Chicago toKankakee, a distance of 56 miles, 16 cents per hundred, and only 10cents to Mattoon, 116 miles farther. The rate from New York to Ogden was$4. 65 per hundred, and only $2. 25 per hundred from New York to SanFrancisco. The car-load rate on the Northern Pacific was $200 from NewYork to Portland and just twice as much to a number of points from 100to 125 miles east of Portland. The Chicago, Burlington and Quincy hauledstock from points beyond the Missouri River to Chicago for $30 percar-load, while it exacted $70 per car in Southwestern Iowa for a muchshorter haul. To what extent local discrimination has been carried by railroadcompanies is well illustrated by the following incident: A nurserymanresiding at Atlantic, Iowa, a station on the Chicago, Rock Island andPacific Railroad, 60 miles east of Council Bluffs, bought a car-load ofgrapevines at Fredonia, New York. Finding that the through rate fromFredonia to Council Bluffs, plus the local rate from the latter place toAtlantic, was less than the rate for the direct shipment from Fredoniato Atlantic, he caused the car to be consigned to Council Bluffs, intending to have it thence hauled back to Atlantic. Being short ofstock at the time the train containing his car passed through his townon its way to Council Bluffs, the consignee prevailed upon the stationagent to set out his car. In due time he received a request from thegeneral office of the railroad to pay an amount equal to the rate percar-load from Council Bluffs to Atlantic. The request was promptlycomplied with by the appreciative nurseryman, who after all had beensaved an annoying delay by the courtesy of the company's agent. An infinite number of similar discriminations might be cited. They allshow the same violation of the fundamental principles of justice andequity, the same despotical assertion of the power of the railroads toregulate the commerce of the country as the caprice or selfish interestsof their managers might direct. Discriminations between commodities, or, as they might also be called, discriminations in classification, are probably the most common ofunjust railroad practices. For the purpose of establishing as near asmay be uniform rules in all matters pertaining to rates, the variousroads operating in a certain territory usually form trafficassociations. The general freight agents of the roads that are membersof the association in turn form a select body known as the ratecommittee. These committees of freight agents have for more than twentyyears constituted the supreme authority in all matters pertaining tofreight classification. The trunk line classification recognizes sixregular and two special classes, and every article known to commerce isplaced in one of these classes. One whom Providence has not favored withthe mysterious wisdom of a general freight agent might suppose thatconsiderations of bulk, weight, insurance and similar factors formed abasis of railroad classification. Nothing, however, is farther from thetruth. Freight charges, when permitted to be fixed by railroadcompanies, are invariably such as the traffic will bear, and freightclassifications are arranged on this principle, provided competition bywater, rail or other land transportation does not demand a modification. It is, as a rule, not to the advantage of a railroad to entirely starveout any commercial or industrial concern along its line. Hence tariffsare scarcely ever made entirely prohibitory. Railroads proceed here uponthe principle of the robber knight of mediæval times, who simplyplundered the wayfaring trader to such an extent as to reduce hisprofits to a minimum. He never stripped him, for by doing so he wouldhave prevented his return and would have destroyed his own source ofrevenue. In like manner a railroad will never annihilate any weak branchof business along its line, nor will it, if it is in its power, permitany business to prosper without paying to it heavy tributes out of itsprofits. Every commodity is therefore made to pay a transportation taxbased chiefly on its value and the profit which it yields, and allclassifications are prepared with this object in view. The protection which, through exceptionally low rates, is extended bythe railroad companies to certain industries, may not be objectionable_per se_, but the question arises whether the railroad companies or thepeople should exercise the right to determine when and where suchprotection is necessary. Moreover, to tax one branch of commerce for thebenefits bestowed upon another is a practice of extremely doubtfulpropriety, and the power to do so should certainly never be conferredupon a private corporation. When customs laws are proposed in Congressample opportunity is given to the representatives of the variousindustries of the country to be heard upon the subject. No hasty step istaken. Members of Congress have every opportunity to ascertain thesentiment of their constituents, through the public press, petitions andprivate correspondence. The subject is discussed in all its phases, bothin the committee-rooms and upon the floors of both houses of Congress. Every detail is fully considered, and many compromises are oftennecessary to secure for a bill the support of the majority. When itfinally passes it represents the will of the people, or at least thewill of their legal representatives, who may be expected to know theirwants and are accountable to them for their acts. Freightclassifications, however, while they are fully as far-reaching ascustoms laws, are made by a few freight agents meeting in secretsession, listening to no advice and acknowledging no higher authority. It is claimed by the railroad men that it is to the interest of railroadcompanies to do justice to all, and that the best classification forthe largest number of people is also the best for the roads. If this betrue, it is difficult to see why railroads should fail to consult theirpatrons in the arrangement of their freight classifications. Intelligentshippers may certainly be supposed to know as well as the railroadcompanies what classification is to their common interest. Railroadmanagers are naturally despotical. They do not wish and do not tolerateany outside interference with what they obstinately term their privatebusiness. Even if the general policy of the companies designed thegreatest good to the greatest number, the opportunities and temptationsof their agents to pursue selfish ends or take advantage of individualsin the preparation or application of their tariffs are such that in thepractical execution the evil will always outweigh the good. It is not within the scope of the present inquiry to review in detailthe various classifications in force, or to point out the unjustfeatures. The author will confine himself to showing by a fewcharacteristic examples that the power now in the hands of the railroadcompanies to classify the various commodities of commerce for thepurpose of rating is greatly abused and is a potent means of railroadextortion. And that it may not be charged that abuses have been citedwhich are a thing of the past, the examples will chiefly be taken fromcases which have come before the Interstate Commission for adjudication. A complaint was filed with the commission in 1887 by T. J. Reynoldsagainst the Western New York and Pennsylvania Railroad Company, fromwhich it appeared that that company charged a greater price for thetransportation of railroad ties from points in the State of Pennsylvaniato points in the State of New York than was charged at the same timefor the transportation of lumber between the same points. The commissionheld that this was a case of unjustifiable discrimination and orderedthe company to place railroad ties in the same class with other roughlumber. Many Western roads for years have been guilty of the samediscrimination. The reasons for such a policy are obvious. A high tariffon railroad ties prevents their being shipped, depreciates their marketprice at home, to the sole benefit of the discriminating company, whichis thus enabled to buy ties at a low price. Prohibitory rates on tiesand rails are also often maintained by railroad companies to eitherdelay or render more costly the construction of new lines which threatento become their competitors. The Union Pacific Railroad Company severalyears ago even went so far as to make prohibitory rates on steel railsintended for the construction of a road which promised to become acompetitor of one of its connecting lines. From another case decided by the Interstate Commerce Commission itappeared that the Lake Shore and Michigan Southern Railway Companycharged for blocks intended for wagon-hubs, and upon which only so muchlabor had been expended as was necessary to put them in condition, ahigher rate than for lumber, claiming that such blocks were unfinishedwagon material and were therefore, as articles of manufacture, subjectto higher charges than raw material. The commission justly held thatthese blocks were as much to be regarded as raw material as the boardsfrom which wagon-boxes are made. In the classification of the Southern Railway and Steamship Associationpearline was placed in the fourth class, with a rate of 73 cents perhundred pounds, and common soap in the sixth class, with a rate of 49cents per hundred pounds. This latter article, when shipped by largemanufacturers, enjoyed besides a special rate of 33 cents perhundredweight. Pearline and soap are competitive; there is noappreciable difference between them as regards the cost oftransportation; but one commands a higher price in the market than theother, and upon this fact solely did the railroad company base itsalleged right to levy upon pearline a transportation tax 120 per cent. In excess of that levied upon soap, though the service rendered by thecompany was the same in either case. The commission held that thediscrimination made by the "special rate" of the Southern Railway andSteamship Association between pearline and common soap was unjust, andordered that it be discontinued and that, with common soap in the sixthclass, pearline be placed in the fifth. For years the rate from Indianapolis to New York was the same for cornas for its direct products, such as ground corn, cracked corn, cornmeal, hominy and corn feed. Such a tariff made it possible for Westernmills to compete with similar mills that had been established in theEast, since a discrimination of 5 per cent. Was sufficient to absorbthree or four times the profits of any Western mill. It was shown by theevidence produced that the actual cost of transportation wassubstantially the same for direct corn products as for the raw corn. Theonly defense which the railroad company could make for thisdiscrimination was that in the carriage of raw corn they had to meetlake competition. The weakness of this argument will be perceived whenit is remembered that Indianapolis is 154 miles from the nearestlake-shipping point. There is but little doubt that this discriminationwas made by the railroad company because it was to its interest to haulthe raw corn from the West to the East and to return it in alteredform. Railroads care, as a rule, little for a waste of force, if suchwaste is to their own advantage. In another case brought before the commission in 1889 it was shown thatthe "Official Classification" placed common soap in carload lots inClass V, while such articles as coffee, pickles, salted and smoked fishin boxes or packages, rice, starch in barrels or boxes, sugar, cerealline and cracked wheat are placed in Class VI. The chief reply of therailroad companies to this complaint was that soap was justly placed inClass V because the components from which it is in part made stood inClass V. In another case it was shown that one kind of soap was burdened with ahigher transportation tax than another, irrespective even of cost, because one had been advertised as toilet and the other as laundry soap. The principle of charging what the traffic will bear is well illustratedby the relative rates on patent medicines and ale and beer, asmaintained by the Official Classification. In a complaint made by a prominent manufacturer of proprietary medicinesagainst the New York Central and other roads, it was shown that thecomplainant's products were shipped at owner's risk, and that they werein bulk and intrinsic value similar to ale and beer, but that in spiteof these analogies the former were rated as first-class and the latteras third-class goods, simply because they retailed at a higher price. Another unwarrantable discrimination is that in favor of live stock andagainst dressed beef. While Mr. Fink, the commissioner of the Trunk LinePool, himself admitted that the cost of carrying dressed beef fromChicago to New York was only 6-1/4 cents per 100 pounds in excess ofthe cost of hauling live stock, the trunk lines maintained on dressedbeef a rate 75 per cent. Higher than that on live cattle. The railroadcompanies asserted that this was due to those people in the East whoseliving depended on the live-stock interest. The railroads have in thisassumed a paternalism which would not be tolerated even in theGovernment. To protect the East, railroads will not permit the West toengage in new industries. The position which the Interstate Commerce Commission has assumed ininterpreting the rights of shippers under the law which railroadcompanies are bound to respect in the preparation of their tariff sheetsand classifications cannot but be most gratifying to the people. In adecision relating to the classification and rates for car-loads and lessthan car-loads, filed March 14, 1890, the commission laid down thefollowing rules for the guidance of railroad companies: "1. Classification of freight for transportation purposes is in terms recognized by the act to regulate commerce, and is therefore lawful. It is also a valuable convenience both to shippers and carriers. "2. A classification of freight designating different classes for car-load quantities and for less than car-load quantities for transportation at a lower rate in car-loads than in less than car-loads is not in contravention of the act to regulate commerce. The circumstances and conditions of the transportation in respect to the work done by the carrier and the revenue earned are dissimilar, and may justify a reasonable difference in rate. The public interests are subserved by car-load classification of property that, on account of the volume transported to reach markets or supply the demands of trade throughout the country, legitimately or usually moves in such quantities. "3. Carriers are not at liberty to classify property as a basis of transportation rates and impose charges for its carriage with exclusive regard to their own interests, but they must respect the interests of those who may have occasion to employ their services, and conform their charges to the rules of relative equality and justice which the act prescribes. "4. Cost of service is an important element in fixing transportation charges and entitled to fair consideration, but is not alone controlling nor so applied in practice by carriers, and the value of the service to the property carried is an essential factor to be recognized in connection with other considerations. The public interests are not to be subordinated to those of carriers, and require proper regard for the value of the service in the apportionment of all charges upon traffic. "5. A difference in rates upon car-loads and less than car-loads of the same merchandise, between the same points of carriage, so wide as to be destructive to competition between large and small dealers, especially upon articles of general and necessary use, and which, under existing conditions of trade furnish a large volume of business to carriers, is unjust and violates the provisions and principles of the act. "6. A difference in rate for a solid car-load of one kind of freight from one consignor to one consignee, and a carload quantity from the same point of shipment to the same destination, consisting of like freight or freight of like character, from more than one consignor to one consignee or from one consignor to more than one consignee, is not justified by the difference in cost of handling. "7. Under the official classification the articles known in trade as grocery articles are so classified as to discriminate unjustly in rates between car-loads and less than car-loads upon many articles, and a revision of the classification and rates to correct unjust differences and give these respective modes of shipment more relatively reasonable rates is necessary and is so ordered. " The efforts which the commission has made to bring about a uniformclassification throughout the country are in the right direction, whilethe results of its labor are not yet satisfactory. In their fifth annual report, the Commissioners, after giving an accountof their efforts and the shuffling and double-dealing of the railroadcompanies with them upon this matter of uniform classification, said: "Its conviction remains unchanged that the necessities of commerce require that the existing classifications be consolidated, and that this result should be accomplished as speedily as may be found practicable; and it does not feel justified in asking for the further efforts of the carriers the same measure of indulgence which from time to time it has heretofore suggested should be extended to them, and which was thought to be required in the public interest. "The commission can not but think that if legislation to that end be enacted by Congress the carriers will speedily consummate the reform already begun in this direction. It is therefore recommended that an act be passed requiring the adoption within one year from the date of its passage of a uniform classification of freight by all the carriers, subject to the act to regulate commerce, and providing that if the same be not adopted within the time limited, either this commission or some other public authority be required to adopt and enforce a uniform classification. " The present confusion which exists in the classification and rates ofthe seventeen hundred railroad organizations of the country makes itdifficult for the commission to do justice to all interests andlocalities. With the adoption of a uniform classification it is to behoped that in time many of the present inequalities will be adjusted, especially if an intelligent public sentiment upon the subject ofrailroad regulation is maintained. A prominent railroad manager in theEast, whose devotion to corporate interest is only equaled by hispolitical ambition, has recently made repeated efforts to convince thepeople that railroad abuses are things of the past and that, if any suchabuses still linger in isolated districts, they are simply unavoidableexceptions to the rule which will soon have to yield to the generalspirit of fairness and amity for which, in his opinion, the railroadshave of late been distinguished. He reasons that the law has fulfilledits mission, that the railroads have reformed, and that it now behoovesthe people to relent and to extend to the much persecuted corporationsthe hand of friendship and good will. The postprandial eloquence of thisgentleman has often suavely intimated that the repeal of the InterstateCommerce Act would be the most opportune recognition of restoredconfidence. Still bolder champions of the railroad cause do not hesitate to demandthe repeal of the law. It is not likely that the sophistry of railroadhirelings will triumph over the practical logic of an intelligentpublic. No law, be it ever so wise, can in the space of a few yearscorrect all the abuses which half a century of unbridled railroaddomination has developed. Yet, since both the friends and the enemies ofthe law agree that it has been partially successful in its operation, itshould be continued and improved to keep it in harmony with newconditions and a progressive public sentiment. It is claimed by railroadmanagers that the adoption of a uniform classification will remove theonly vestige of discrimination still left. This is not true, for by farthe largest number of complaints that have recently been brought beforethe Interstate Commerce Commission charged personal and localdiscrimination independent of any question of classification. It is shown by the reports of the commission that discriminations arestill practiced by various companies, that annual passes are stillillegally issued to bribe or appease men of influence, that discountsare still given to favor shippers under various pretexts, that somelarge railroad centers still enjoy more favorable rates than smallertowns, and that the long and short haul clause of the InterstateCommerce Act is still violated by railroad companies. There are besidesthese scores of other devices in vogue among railroad managers tosubvert the principles of the common law. No doubt discriminations arenow much less frequent, and are possibly the exception where but a fewyears ago they were the rule, but the fact that such abuses still existis a strong argument for the retention of the law as well as for thenecessity of continued vigilance on the part of the people and thoseespecially charged with the execution of the laws. The railroad acts ofCongress and the various States ask nothing of common carriers but justand equitable treatment for all their patrons. If this is freelyaccorded, these laws are no burden to the railroads. If, on the otherhand, there is a tendency on the part of the railroads to resort tosubterfuges and evasions, the wholesome restraint of the statute isabsolutely necessary for the protection of the shipper. The repeal of the Interstate Commerce Law, or the adoption of suchamendments as are demanded by railroad men, would be interpreted by themas an abandonment of all its principles and would inaugurate an era ofunprecedented railroad oppression. History ever repeats itself. Unchecked license will always lead to arrogance and despotism, and anypower which is long permitted to defy the state will in time control it. It is not likely that the people of the United States can be induced todemonstrate to the world that democratic government is incapable ofprofiting in the dear school of experience. Our railroad legislation contains no principle that is not found in thecommon law. Its maxims are our birthright and will be the birthright ofour children and children's children, and while railroad companies maybe able in the future, as they have been in the past, to violate the lawtemporarily with impunity, they will never be able to prevail upon theAmerican people to abandon the policy of railroad reform which thepassage of the Interstate Commerce Law inaugurated. The Interstate Commerce Commissioners say in their sixth annual report: "Whoever will read the report of the special committee of the United States Senate, commonly called the 'Cullom Committee, ' will be astounded at the magnitude and extent of railroad abuses brought to light by their investigation. Those unfamiliar with the facts made public at that time can hardly believe the outrages which were proven to exist and the manifold devices by which the most flagrant injustice was perpetrated. A single illustration will furnish a better reminder than extended comment. "It appears from that report that the Standard Oil Company, in one instance at least, boldly demanded from a certain railroad that its shipments should be carried for 10 cents a barrel; that all other shippers should be charged 35 cents a barrel on the same article, and that 25 cents of the 35 paid by such other shippers should be handed over by the railroad to the Standard Oil Company, and the penalty threatened for non-compliance with this impudent extortion was a withdrawal of its entire business. "The foregoing statements but imperfectly describe the situation which existed when the Interstate Commerce Law was enacted. In any reasonable view of the case it was too much to expect that the common and long continued abuses of railroad management could be corrected in less than half a dozen years, or that the first scheme of legislative regulation would prove adequate to that end. It would be contrary to all experience if so great and radical a reform could be thus speedily accomplished, or if the initial statute should be found sufficient to bring it about. The law was the outgrowth of an aroused and determined public sentiment, which, while united in demanding Government interference, was divided and uncertain as to the best methods of affording relief. Like all attempts in a new field of legislation, the statute was a compromise between divergent theories and conflicting interests. It was scarcely possible that it should be so complete and comprehensive at the outset as to require no alteration or amendment. Those who are familiar with the practices which obtained prior to the passage of this law and contrast them with the methods and conditions now existing will accord to the present statute great influence in the direction of necessary reforms and a high degree of usefulness in promoting the public interest. "Whoever will candidly examine the reports of the commission from year to year, and thus become acquainted with the work which has been done and is now going on, will have no doubt of the potential value of this enactment in correcting public sentiment, restraining injustice and enforcing the principle of reasonable charges and equal treatment. Imperfections and weaknesses which could not be anticipated at the time of its passage have since been disclosed by the effort to give it effective administration. The test of experience, so far from condemning the policy of public regulation, has established its importance and intensified its necessity. The very respects in which the existing law has failed to meet public expectation point out the advantages and demonstrate the utility of Government supervision. "Moreover, it may be fairly claimed that much greater benefits would have been realized had the statute as enacted expressed the evident purpose of those who framed it, and received a construction according to its apparent import. It is not too much to say that judicial interpretation has limited its scope and ascribed to it an intent not contemplated when it was passed. If its supposed meaning, as understood at the time of its passage, had been upheld by the courts, it is believed that its operation would have been much more effective and its usefulness greatly increased. So far as failure has attended the efforts to give it proper administration, that failure can be mainly attributed to differences between its apparent meaning and the judicial interpretation which some of its provisions have received; and the commission is of the opinion that if the present law could be so altered as to express clearly and beyond doubt what it was evidently intended to express at the time of its enactment, it would prove, even without other amendment, an instrumentality of the highest value in removing the evils against which it is aimed. "The specific instances in which the statute has received judicial construction, and the limitations upon its scope and meaning which the courts have imposed, will be alluded to at greater length in another part of this report. "It seems proper, however, to observe in this connection that the effect of these decisions in weakening the law and preventing its enforcement has been greatly exaggerated. The impression has been created in many directions that judicial construction has invalidated the essential feature of the statute and condemned the general principle which lies at its foundation. That impression cannot be too speedily corrected, for nothing has been decided which permits such an inference. On the contrary, neither the power of the national legislature to regulate the transportation of interstate commerce nor the general policy of the existing law has been questioned by any tribunal. " Probably no law in the United States has ever before been so fiercelyattacked at all of its vital points as has this law. It is not strangethat among the great number of National and State courts the railroadcompanies have found occasionally a judge ready and willing to assistthem in breaking it down, but upon the whole the judiciary has beendisposed to co-operate with other departments of the Government in theirefforts to secure effective regulation of the transportation business. CHAPTER VI. STOCK AND BOND INFLATION. The complaint is frequently heard from railroad men that our freightrates are too low, and in support of it the statement is usually madethat the greater part of the railroad stocks of the United States paysdividends considerably smaller than the average interest realized bycapitalists on money loaned or invested in other enterprises. This statement may be true, and yet it is valueless as an argument forhigher rates. It may be admitted that the dividends declared upon theface values of railroad stocks are quite moderate, but it is a fact toowell authenticated to be contradicted that railroad securities representto a considerable extent only fictitious capital. The public concedesthat liberal returns should be allowed to railroad companies on moneyactually invested, but it naturally objects to being taxed for thepurpose of making dividends on watered stock. The evil referred to is aserious one, and has contributed much to the general demand for railroadreform. Most of the early roads of this country were built for theaccommodation of local traffic. They were constructed and managed bybusiness men upon business principles. The stock issued by the companieswas in most cases paid for in full and was not unfrequently sufficientfor the completion of the entire road, and no incumbrance was permittedby the owners to be placed upon the property. These enterprises as arule proved very profitable. One of the first roads running west ofChicago will serve as an illustration. The Galena and Chicago UnionRailroad Company paid a 10 per cent. Dividend within a year after beingopened to traffic, and gradually increased its dividends to 15, 20 and22 per cent. During the first two years of the road's operation itsexpenses were only 38-1/2 per cent. Of its earnings. During the secondyear the company, after paying a 15 per cent. Dividend, diminished itsdebt nearly $60, 000 and increased its surplus $11, 700. In 1856 the roadhad a length of 232 miles, on which the gross earnings amounted to$2, 315, 787. This revenue exceeded the estimate made by the company'sofficers the year previous by $300, 000. In his annual report for 1856the president of the company said: "This result shows an _increasedsurplus_ of $65, 000, after paying 22 per cent. In dividends and allexpenses and interests chargeable to income account. " The report alsoshows that expensive improvements, such as large permanent bridges andstone culverts, displacing as a rule wooden ones, were charged tocurrent expenses. The financial success of railroads soon attracted the cupidity offinancial adventurers--men of great energy, but small means--whose aimwas to secure the greatest possible returns with the least possibleoutlay of money. With the introduction of these elements into railroadcircles the era of speculation commenced. Take the line just referredto. In 1852 the average number of miles operated was 62, and the yearfollowing, 90. But while the number of miles operated increased lessthan 50 per cent. , the capital stock of the company grew from $444, 193to $1, 362, 559, and its debt from $60, 145 to $542, 287. The capitalizationof the road was thereby increased from $8, 000 to $21, 000 per mile, andthis was done for the purpose of making the capital appear adequate toits earnings. Nearly all railroads became in time the foot-balls ofshrewd manipulators. They were bonded before they were constructed, andoften for more than the value of the completed road. Stocks at the bestonly represented nominal values and were given as premiums to thebondholders or promoters of the road. But the science of stock-watering did not reach its fullest developmentuntil during the period of railroad consolidation. Fictitious valueswere now created as often as a new consolidation took place. Wateredstocks and bonds were watered again and again, until they representedlittle more than a purely imaginary capital upon the basis of whichdividends might be declared. Take the case of the New York Central andHudson River Railroad companies, which consolidated in 1869 with acapital of $103, 110, 137. 31. The former of these roads was organized in1853 by the consolidation of ten smaller roads connecting the cities ofAlbany and Buffalo. The capital stock of these companies amounted to$20, 799, 800, of which $16, 852, 870 was claimed to have been paid in. Their funded debt was $2, 497, 526. It is impossible at this day toascertain the original cost of all these roads, but it is certain thatthe above sums represent about three times the amount actually expendedfor their construction. One of the roads entering into the consolidation was the Utica andSchenectady. It was 78 miles long and formed about one-fourth of theconsolidated line. It had the heaviest grading and rock-cutting, was thebest-equipped and undoubtedly the most expensive, in proportion to itsextent, of the ten roads out of which the New York Central was created. The original cost of this line was $2, 000, 000. Bonds were never issuedby the company. The line was profitable from the very beginning, paidregularly ten per cent. Dividends, --the limit to which railroadcompanies were then restricted, --and had a large surplus, which itexpended mainly for improvements. No assessment was ever made on thestock beyond the $1, 500, 000 which was originally paid in by theshareholders and upon which they had drawn regular and liberaldividends. Taking the original cost of this line as a basis, it is butfair to presume that the entire line from Albany to Buffalo, covering adistance of 297 miles, did not cost to exceed $6, 000, 000. These roads, however, entered into the consolidation with a capital stock of$15, 274, 800 and a bonded indebtedness of $1, 696, 326. Estimating the cost of the branches upon the same basis upon which wehave estimated that of the main line, we shall find that the totaloriginal cost of the consolidated lines cannot have exceeded $8, 000, 000. The Mohawk Valley road was put in at $2, 000, 000 and the Syracuse andUtica direct at $600, 000, though the roads only existed on paper and didnot represent any value whatever. The Schenectady and Troy road, whichwent into the consolidation with $650, 000 stock and $90, 000 bonds, hadbeen bought for less than $100, 000 two months previous to theconsolidation. It will thus be seen that already nearly one-third of the stocks andbonds of the consolidated companies was water. The consolidationagreement fixed the capital stock of the New York Central at $23, 085, 600and its funded debt at $11, 564, 033. 62, increasing the stock over$2, 000, 000, and the bonded debt over $9, 000, 000. The latter was morethan quadrupled, and $8, 000, 000 worth of bonds were, under the name ofconsolidation certificates, given as a present to the stockholders ofthe new road. The capital stock of the New York Central grew steadily upto the time of its consolidation with the Hudson River road, when it was$28, 795, 000. All improvements made during this time were paid for out ofits surplus earnings, with the single exception of the Athens branch, for which the company issued $2, 000, 000 of its stock. The gross earnings of the New York Central in 1854 were $5, 000, 000, andits net earnings $2, 830, 000. In 1863 its gross earnings were in roundnumbers $10, 000, 000, and in 1869 they reached $15, 000, 000. The dividendspaid during that year amounted to $4, 300, 000, and the interest to$894, 000. In view of the fact that the bonded indebtedness of the roadwas from two to three million dollars more than the original cost, thisdividend of 15 per cent. Upon a wholly fictitious capital must beregarded as an unwarranted tribute levied upon the commerce of thecountry. But we shall soon see that in railroad hydraulics, as well asin other branches of human industry, success stimulates to still greaterenergy. The Hudson River Railroad Company was organized in 1847. It extendedfrom New York City to East Albany and was 144 miles long. There are nodata extant upon which could be based a reliable estimate of itsoriginal cost. Estimating it upon the basis of that of the Utica andSchenectady, we should have to place it somewhat below $3, 000, 000. Whilesuch an estimate may be too low, the amount of its funded indebtednessin 1851, which was $5, 640, 000, probably more than covers the amountactually expended in the construction of the road. In 1851 the capitalstock of the Hudson River road was $4, 000, 000. In 1853 the funded debthad increased to $7, 000, 000, and in 1862 to $9, 000, 000. In 1869 thebonded indebtedness had decreased to $4, 309, 000, but the capital stockhad grown to over $16, 000, 000. Between 1853 and 1869 the companyincreased its stock and bonded indebtedness nearly $11, 000, 000, whilethe assessments paid by its stock and bondholders during this time didnot exceed $1, 000, 000. Improvements were made, but these were chieflypaid for out of the surplus earnings of the road. It has been shown byexperts that $6, 640, 000 is a high estimate of the actual original costof the Hudson River road to its stock-and bondholders, and thatsecurities to the amount of more than $13, 000, 000 represented surplusearnings and water. At the time of the consolidation of the Hudson Riverand New York Central railroads the capital stock of the two roads hadgrown to $44, 800, 000. Under the consolidation agreement the stock wasfixed at $45, 000, 000. The new company also assumed all the bonded andother indebtedness of both roads. If the consolidation manipulators hadpaused here, the capital of the new company would have been somewhatless than $60, 000, 000, or more than three times the cost of theproperty. But the road was, under existing rates, capable of earningdividends on a much larger capital, and this emergency was met by theissuance of consolidation certificates to the amount of $45, 000, 000. Thetotal capital of the road was thus increased to and made to paydividends on over $103, 000, 000, while the total cost of the road and itsequipment, as claimed by the company in 1870, was less than $60, 000, 000, their estimate being based upon assumed consolidation values and theexpenditures made from surplus earnings. During the same year the grossearnings of the company were $22, 363, 320, and their net earnings$8, 295, 240. In 1880 the gross earnings had increased to $33, 175, 913, and the net earnings to $15, 326, 019. The company was able to declare inthat year 11. 82 per cent. Dividend on its $89, 500, 000 of fictitiousstock. In 1890 its gross earnings were $37, 008, 403, or $26, 050 per mile, while its total net earnings were $12, 516, 273. The gross earnings havelargely increased during the years 1891 and 1892. It is safe to say that$2, 000, 000 per annum would pay very liberal interest and dividends onthe amount of money expended upon the construction of the New YorkCentral and Hudson River Railroad from the proceeds of its bonds andstocks. By the creation of fictitious values the managers of the companyhave attempted to impose an exorbitant tax upon the commerce and travelof the country for all time to come. The Government guarantees aninventor a monopoly only for a limited space of time, upon theexpiration of which his invention becomes the common property of thepeople; but railroad managers endeavor to collect, under the protectionof our laws, an exorbitant royalty from our people forever. The case of the New York Central and Hudson River Railroad Company isonly one of the innumerable instances of stock watering in the historyof American railroads. Indeed, it can be shown that stock-wateringreached a still higher degree of development in the case of the Erieroad. It has been demonstrated that the actual original cost to thestock-and bondholders of the New York Central Railroad Company, whichwas, with its branch lines, 593 miles long, did not, including theAthens branch, exceed $10, 000, 000. Its cost to its owners, in 1869, including the bonuses, premiums, commissions and fictitious equalizationvalues of several transfers, was reported by them to be only$37, 600, 000, or about $63, 400 per mile. At about the same time the mainstem of the Erie Railway, extending from New York to Dunkirk, a distanceof 459 miles, was represented by a capital of $108, 807, 687, or $237, 000per mile. Considering the inferiority of this road to the New YorkCentral, we are forced to the conclusion that nearly 85 per cent. Of thecapital of the road represented water, or, in other words, that thecommerce of the United States was taxed to pay dividends on about$90, 000, 000 of watered securities. In 1863 the Erie Railroad hadoutstanding $11, 437, 500 of common stock. In 1864 this had been increasedto $15, 693, 000, in 1868 to $37, 765, 000, and in 1869 to $70, 000, 000. Notone-tenth of this enormous increase of capital was ever expended on theproperty of the road. The stock was sold at from 20 to 40 cents on thedollar, and the proceeds disappeared in the hands of its managers. Towhat extent this freebootery was carried will probably never be known. An idea of the rottenness of the Erie management may be had from thefact that the courts at one time ordered its president to restore to thecompany $9, 000, 000 of diverted securities, which order was compliedwith. Vast private fortunes were amassed by nearly all the men whodirected the affairs of the road, and the mismanagement became in timeso notorious that the legislature of the State of New York was appealedto, to remove the directors of the road for the protection of itsstockholders, and to reduce the capital stock of the company to theamount actually paid for it. This movement failed, however, because itwas opposed by the very stockholders whose interests were supposed tohave suffered by directorial mismanagement. They preferred to continueto draw dividends on the face value of stocks which they had purchasedat 20 cents on the dollar. The capitalization of the company has sincebeen increased to $163, 679, 825, and it is by no means a secret amongthose familiar with railroad values that the bonded indebtedness of theErie road represents alone many millions more than the total amount thatwas ever invested in the property. The principal competitor for through traffic of the two companies whosefinancial operations we have just reviewed is the Pennsylvania CentralCompany. It has often been asserted by the managers and friends of thiscompany that its capital is free from water; but this is not true. In1864 a dividend of $4, 130, 760 was made out of the surplus earnings ofthe road. This dividend was payable in capital stock and was equal to 30per cent. Of the then outstanding capital. Similar surplus dividends, each equal to 5 per cent. Of the company's outstanding stock, weredeclared in 1867 and 1868. The people were thus taxed to pay dividendson a capitalized surplus which had been derived from excessive chargespreviously imposed on them. I shall not attempt here to determinewhether the capital represented by the Pennsylvania Railroad Company hasbeen honestly invested. A committee of Congress has expressed theopinion that the capitalization of its main line exceeds the amount ofthe actual cost of the property by more than eleven million dollars. There is, however, a system of inflation practiced by the PennsylvaniaRailroad Company which is simply a new form of bond and stock watering. More than one-half of the capital of this company has been invested inthe stocks and bonds of other corporations. In 1891 the amount soinvested was $154, 319, 240, and the income derived from it $4, 852, 181. This does not only cause the stocks and bonds of certain companies to becounted twice, but exacts a double tax from the commerce of thecountry, interests and dividends upon the same capital being paid bothto the bond- and stockholders of the Pennsylvania Central and to thebond-and stockholders of the roads in whose securities it has madeinvestments. The income of the company is thus swelled far beyond theamount which the traffic reports indicate. It will be seen that, toperpetuate extortionate rates, this process of manifolding securitiesmight be continued indefinitely. The cost to its stock-and bondholders of the Baltimore and Chicago lineof the Baltimore and Ohio Railroad, which has a length of 795 miles, wasestimated by the company's officers at about $57, 000, 000. The actualcost of this road, owing to its expensive mountain grades, was probablygreater than that of any of the other through lines between thesea-coast and Chicago, but there can be no doubt that the capitalizationof this road represents from one-half to one-third pure water. At thetime of the completion of this road to Chicago the surplus earnings ofthe company, after the payment of interest and dividends, amounted toover $29, 000, 000. This had been charged to "profit and loss" and used inthe construction of branch lines. Thus an amount equal to more than halfof the reported cost of this line had at the time of its completion beenreturned to its owners in other railroad values. The Select Senate Committee on Transportation Routes to the Seaboard in1874 estimated the excess of the capital over actual cost of the Erieroad, from New York to Dunkirk, at $68, 807, 000; that of the New York, Lake Shore and Michigan Southern line to Chicago at $115, 188, 137, andthat of the Pennsylvania and Fort Wayne line to Chicago at $11, 290, 374. If this estimate was correct the entire over-capitalization of theselines, on which the commerce between the West and the East was forced topay a dividend of 8 and 10 per cent. Per annum, was no less than$195, 000, 000. The committee assumed the actual cost of these roads to be$182, 000, 000, or about $78, 000 per mile. They based their estimate uponthe cost of the main branch of the Baltimore and Ohio, as reported bytheir officers, supposing it to represent the actual outlay made by itsstock-and bondholders. Various revelations which have since been made tothe public, as to the real cost of railway construction, justify thebelief that the estimated cost of $78, 000 per mile for those roads isfar too high. Mr. Henry Poor, several years ago, estimated the averagecost of the roads of the United States at $30, 000 a mile. Makingallowance on one hand for Mr. Poor's tendency to favor the railroad sideof the question, and on the other hand for the more expensive grades, double tracks and better terminal facilities of these trunk lines, $50, 000 per mile may be considered a fair estimate of their averagecost. Upon this basis the total cost of the three lines in questionwould amount to $116, 450, 000, and the excess of their capital overactual cost would be the enormous sum of $261, 000, 000, or 325 per cent. Of their actual cost, and probably not less than 400 per cent. Of theoriginal cost to their stock-and bondholders. The capital of thesecompanies has since been considerably increased, to enable theirmanagers to increase their dividends, and with it the tax levied uponthe commerce of the country. These are only a few of the many instances of stock watering that mightbe mentioned. In fact, there are to-day very few railroads in the UnitedStates that are entirely free from it. It is a notorious fact that thestock of a large number of railroad companies represents little or novalue, having either been sold at a mere nominal price or been donatedas a premium or bonus to those who purchased a large amount of thecompany's bonds. In recommending, in his December, 1891, annual message, Government aid for the Nicaragua Canal, President Harrison said: "But ifits bonds are to be marketed at heavy discounts and every bond sold isto be accompanied by a gift of stock, as has come to be expected byinvestors in such enterprises, the traffic will be seriously burdened topay interest and dividends. " It is not difficult to surmise to whatenterprises the President referred. It has for many years been awell-settled principle among railroad incorporators that no largerassessments should be made upon the stockholders than is necessary tofloat the company's bonds. A company, for instance, is organized with acapital stock of, say, $1, 000, 000. Five per cent. Of this sum, or$50, 000, is paid into defray preliminary expenses. The road is thenbonded for perhaps $2, 000, 000, but as the bonds are sold for only 80 percent. Of their face value and as the incorporators allow themselves 5per cent. For the negotiation of the bonds, only $1, 500, 000 is realizedfor the construction of the road. The incorporators now vote tothemselves a contract to construct the road for $1, 500, 000 and at oncesublet it to a contractor who is ready and anxious to build the road for$1, 200, 000. The incorporators thus realize $1, 000, 000 worth of stock, aportion of which is unloaded upon unsophisticated investors, and$300, 000 in cash, at an outlay of $50, 000; and the road, which cost$1, 200, 000, is made to pay interest and dividends on a total capital of$3, 000, 000, and this is subsequently watered indefinitely if the roadproves profitable or a consolidation with some other road justifies thebelief that its earning capacity might be increased. Nor is this anoverdrawn picture. On the contrary, instances might be cited where onlyone-half of one per cent. Of the company's stock was paid in by theshareholders. In the days of inflation such transactions did not seem to seriouslyaffect railroad securities. Even when they were no longer a secret tothe public, stocks and bonds sold readily, because, owing to the largeearnings of the roads, this class of investments was unusuallyproductive. In 1868 the earnings of the railroads of Massachusetts averaged $15, 400a mile, and were equal to 38 per cent. Of the total reported cost of allthe lines of the State. The Chicago, Burlington and Quincy earned$15, 386 per mile in 1867, and paid a 15 per cent. Dividend. Its stockswere quoted 100 per cent. Above par. In 1867 the Lake Shore Railroadearned more than 50 per cent. , and the Terre Haute and Indianapolis evenas much as 57. 2 per cent. Of the amount of its cost. Previous to the warthe inflation of railroad securities was, as a rule, confined to thestock. Where roads were bonded for more than the cost of construction itwas, with but very few exceptions, done to make their capital tocorrespond with their earning capacity, or rather to divert publicattention from the fact that the rates in force had outlived theirreasonableness. It was reserved to the Union Pacific and the CentralPacific companies to bond their roads from the beginning to an amountequal to twice their actual cost, or, in other words, to virtuallyreceive them as a present from the Federal Government, bond them for allthey were worth, and, in addition, issue stock to an amount largely inexcess of the cost of construction, and then try to earn interest anddividends on the whole amount of securities issued. The history ofthese companies forms so interesting and instructive a chapter in therailroad annals of America that a short synopsis of it may not seem outof place here. The charter of the Union Pacific Railroad Company was granted byCongress on the first day of July, 1862. Shortly after the beginning ofthe War of the Rebellion it was made to appear to the country that atranscontinental road was a national necessity; that without it we couldnot hope to retain long the Pacific Coast. It was also very plausiblyargued that the political benefits to be derived by the country from theconstruction of such a road, as well as its great length andextraordinary cost, made it the duty of the nation to aid liberally itsenterprising and patriotic promoters in the prosecution of theirgigantic task. In those stirring times few people were inclined toquestion the motives of those who advocated what appeared to bepatriotic measures, or to be penurious in the expenditure of publicfunds when the public weal seemed to demand such expenditure. The Union Pacific Railroad charter, which in substance was passed byCongress as it had been drafted by the promoters of the enterprise, gaveto the new company the right of way through the public lands, andauthorized it to take, from the lands adjacent to the line of its road, earth, stone, timber and other materials for its construction. Itfurther granted to the company every alternate section of land to theamount of five alternate sections per mile on each side of its line, excepting only those lands to which preëmption or homestead claimsattached at the time when the line of the road should be definitelyfixed. In addition to these donations the United States issued to thecompany subsidy bonds in an amount equal to $16, 000 per mile for thedistance from the Missouri River to the eastern line of the RockyMountains, $48, 000 per mile for a distance of 150 miles through theRocky Mountains, and $32, 000 per mile from the western base of the RockyMountains to the terminus of the road. Similar franchises were at thesame time given to the Central Pacific Railroad Company, a corporationwhich had previously been chartered by the State of California. Besidesits grant of right of way, land, timber, etc. , this company receivedsubsidy bonds at the rate of $16, 000 a mile for a distance of 7. 18 mileseast of Sacramento, of $48, 000 a mile for 150 miles through the SierraNevada, and of $32, 000 a mile for the distance from the eastern base ofthat mountain range to its junction with the Union Pacific. The chartersof the two companies provided that, to secure the repayment to theUnited States of the amount of those bonds, they should _ipso facto_constitute a first mortgage on the entire lines of the road, togetherwith their rolling stock, fixtures and other property. The franchisesand donations thus granted by Congress were most valuable; in fact, thelatter were alone sufficient to build and equip the roads. In spite, however, of the liberal grants and in spite of the urgent necessity ofthe roads in those years of national trial, both of these enterprisesmade very slow progress. Their promoters were men of small means, andthe capitalists to whom they appealed for help failed to realize thevalue of the franchises. No doubt when these men first engaged in theircause they expected to encounter serious obstacles in Congress, supposing that that august body would consider the proposed measure withmuch deliberation and to act upon it with still more circumspection. Their success greatly surprised them. They made the discovery thatmembers of Congress could be imposed upon as easily as privatecitizens, and when they fully realized how readily their demands hadbeen granted, they were greatly provoked at themselves because they hadnot asked for more. According to a story told by my old friend Mr. J. O. Crosby, anexperienced member of the brotherhood of tramps late one afternoonchanced to stroll into the city of Alton. Having no visible means ofsupport, he was picked up by the police and brought before the Mayor togive an account of himself and to be dealt with as that dignitary mightsee fit. The tramp, a printer by profession, and by no means a tyro inmeeting such emergencies, so managed to impress the Mayor with hissuperior accomplishments that the latter concluded it would be a goodinvestment, both for himself and the city over which he presided, tooffer the genial stranger a contribution to his traveling fund, upon thecondition that he would no longer than absolutely necessary molest thecity with his presence. He accordingly told the intercepted tourist thatwhile it had been for years the policy of the city and its officials toentertain all tramps found within the limits of Alton for thirty days atthe city jail in exchange for a fair amount of labor, he would, inconsideration of the apparent fact that he was of better metal than theaverage tramp, make an exception in his case, and would, even at therisk of being censured for it by his constituents, hand over to him fivedollars from the municipal funds if he would agree to leave the cityearly next morning. The tramp gladly accepted the proposition, replenished his empty purse with the proffered bounty and withdrew fromthe City Hall, to take a stroll through Main Street. The city seemed tohim as prosperous as the Mayor had shown himself liberal. It occurred tothe itinerant typographer that its treasury would not have been theworse off for a ten-dollar levy, and he hastily returned to the Mayor'soffice to plead for a larger donation. The Mayor, not disposed to arguethe question, handed him another five-dollar bill and improved theopportunity to remind him of his previous promise and to give expressionto the hope that as a gentleman of honor he would now discharge hisobligation. The tramp fairly overwhelmed His Honor with assurances ofgood faith and bade him an affectionate good-by. The next rising sunfound him on his onward journey. His route led through Alton on theHill, a portion of the city which he had not seen before. He viewed withsurprise the many fine residences and other evidences of opulence whichthis part of the city contained. He passed on in a pensive mood until hereached the summit of the hill, which commanded a fine view of theentire city. Here he turned to cast a farewell glance over the townruled over by the most generous mayor that it had ever been hisprivilege to meet. As he beheld before him the fine homes and beautifulyards, and below in the valley the lofty church-steeples, the manyschool-houses, the massive business blocks, the long and well-pavedstreets and the spacious and shady parks, an expression of mingledsurprise and disappointment stole over his face. He thrice slapped hiswrinkled brow and then hurriedly retraced his steps down the hill. Whenthe chief magistrate of Alton came to his office that morning, he metthe irrepressible tramp anxiously waiting for him at the door. "Mr. Mayor, " said the wily extortioner, "I acted very hastily yesterday whenI accepted your second proposition. You have here a much larger townthan I ever supposed. I have been constrained to take our last agreementinto reconsideration, and I shall not leave this point until you addanother five dollars to your consideration. You can certainly betterafford to do that than to throw away thirty days' board and the tendollars which you have already paid me besides. " The diplomacy of the Union Pacific and Central Pacific railway companieswas the same as that of the Alton tramp. They had found Congress asgenerous as the tramp had found the Mayor of Alton, and now reproachedthemselves for their modesty and resolved to bring the pliability ofCongress to a severer test. They again appeared before that body in 1864and asked that their charter be so amended as to grant to them tenalternate sections instead of five on each side of the road, and alsoall the iron and coal found within ten miles of their track, which hadpreviously been reserved by Congress. And in addition to this they askedthat they be authorized to issue their own mortgage bonds on theirrespective roads to an amount equal to the bonds of the United States, and that the lien of the United States bonds be made subordinate to thelien created by the companies' bonds. By the act of Congress, July 2, 1864, all these demands were granted, and the two companies were thusvirtually presented with their roads and were at the same time givenpermission to mortgage this gift of the people and divide the proceedsamong their shareholders, many of whom had received their stock chieflyin consideration of their influence in and out of Congress. Thecontribution of the United States to these companies on account of theirmain lines has not been far from $80, 000, 000, of which over $52, 000, 000was paid in bonds, and the remainder in lands, which aggregated about23, 000, 000 acres. The whole line from Council Bluffs to Sacramento is1, 780 miles long. It will thus be seen that the national contributionwas about $45, 000 per mile, besides the right of way and all timber, iron and coal found within ten miles of the road. There is no doubt thatthis contribution was equal to, if it did not exceed, the actual cost ofthe road. There has been an erroneous impression abroad which haslikened the Pacific road to those wonderful and very expensive lineswhich cross the Andes and the Alps. Those who have not crossed thecontinent can hardly believe that the construction of this line wasneither more difficult nor more expensive than that of any of thenumerous railroads crossing the mountain ranges of the East, but such isthe fact. Starting from Omaha, the Union Pacific follows for nearly 500 miles, oralmost half of its entire length, the valley of the Platte River. Abetter route for a railroad cannot be found upon the western continent. There are between Omaha and Cheyenne but three bridges worthy of thename. The Platte Valley is almost straight, rising toward the west at anearly uniform rate of about 10 feet to the mile. Grading waspractically unnecessary, and the work of construction consisted oflittle more than the laying of the ties and track. From the base of themountains at Cheyenne to their summit is a distance of about thirty-twomiles, the difference in altitude between the two points being less than2, 200 feet. The average grade is therefore about 68 feet to the mile, and nowhere are the grades heavier than 80 feet to the mile. There areheavier grades than these in the prairie State of Iowa, and the mountaingrades of a number of Eastern roads exceed those of the Union Pacific byfrom 30 to 40 feet to the mile. The rise is, if not uniform, at leastgradual, and the construction of even this portion of the road required, therefore, neither great engineering skill nor any unusual expenditureof money. The road now crosses a plateau which extends almost to theterminus of the Union Pacific at Ogden, and a very large portion of thisis as favorable for a roadbed as the average railroad territory of thecountry. The route of the Central Pacific presented to the engineer no greatobstacles between Ogden and the State line of California, the onlyelevation of any note to be surmounted being the Humboldt Mountains inNevada. Their highest point, Humboldt Wells, is 221 miles west of Ogden, and has an elevation of 5, 650 feet above the level of the sea, whilethat of Ogden is 4, 320 feet. Upon an average the grades of this portionof the road do not differ from those found in the Mississippi Valley. The portion of the Central Pacific Railroad which traverses the SierraNevada is the most expensive of the whole line, but the cost ofconstruction did not, even on this division, exceed the amountcontributed for it by the Federal Government; for the statement is madeupon good authority that a few of the leading promoters of the roadbuilt the first western section of twenty miles with their own capital, of less than $200, 000, and a loan from the city of Sacramento and PlacerCounty, amounting to $550, 000, and then drew $848, 000 Governmentsubsidy, or more than enough to build the second section and drawanother installment of the subsidy; and that they repeated the operationuntil the whole line was completed. These men were in such haste torealize the profits which their undertaking promised them that they didnot even take sufficient time to make a proper survey of their line. Hadthey done so, a great saving, both in the construction and in thesubsequent operation of the road, might have been effected. It is nowwell known that a route could have been found through the Sierra NevadaMountains, not far distant from the route chosen, which would have saved800 feet in elevation and at least 25 per cent. In the expense ofgrading. It is certainly safe to say that if less than forty thousand dollars amile was sufficient to construct the road through the Sierra Nevadas theFederal contribution of $50, 000, 000 for the entire line, from Omaha toSan Francisco, left, after the completion, a respectable surplus, eitherto the companies or those of their members who had the constructioncontract, and that the $75, 000, 000 of capital stock and the $55, 000, 000of first mortgage bonds which the two companies issued were a giganticdividend to the stockholders, for which, practically, no considerationwas given. The companies might well have been satisfied with the Government'sgenerosity, but their success in imposing upon Congress stimulated theirgreed. The act of 1864 provided that the charge for Governmenttransportation over these roads should be applied to the liquidation ofits bonds, and that after the completion of the lines five per cent. Oftheir net earnings should likewise be so applied. When the Secretary ofthe Treasury, under the law, refused to pay them the amount earned byGovernment transportation, and in addition to this demanded the five percent. Of their net earnings in liquidation of their debt, the companiesapplied to Congress to again amend their charters so as to relieve themfor the time being from any direct payment of either principal orinterest of the Government bonds, and to make it the duty of theSecretary of the Treasury to pay to the companies in money one-half ofthe compensation allowed to them by law for services performed for theGovernment. And again Congress responded to their demands, grantingthem, by a rider to the army appropriation bill, passed March 3, 1871, all the relief asked for. Owing to the policy of the managers of thePacific line to pay as little of the interest on the Government subsidydebt as is absolutely necessary to prevent foreclosure proceedings, theunpaid interest has accumulated until it now almost equals the amount ofthe original indebtedness. The last report of the Commissioner ofRailroads shows that the total indebtedness, principal and interest, tothe United States of the Pacific railroad companies, was $114, 490, 000 onJuly 1, 1892. The Commissioner seems to be of the opinion that the UnionPacific Company will not be able to pay the subsidy bonds at maturity, and he urges that some step be taken in the matter by Congress, whetherit be to extend the loan, which will mature within the next six years, or to sell the road. The managers of the Pacific roads and their friendsask an extension of the Government subsidy bonds for fifty years, and areduction of interest from 6 to 2 per cent. If Congress continues to beservile to these interests, the Pacific railroad lobby will secure justsuch legislation as they demand. At the time the Pacific roads were built the people of the United Stateshad no adequate knowledge of the topography of the Territories, and thepromoters of the road for a while found it a difficult task to convincecapitalists that the investment would be a safe one. That they knew thevalue of the projected road was shown by the contest between the CentralPacific and the Union Pacific for mileage. For a distance of over 200miles the two companies graded roads side by side in contest for theGovernment subsidy. The promoters were even disappointed in the cost of the roads, as Mr. Sidney Dillon states in an article published in the August number of_Scribner's Magazine_, 1892, in which he says: "At the end of 1867 the road was completed to the top of the mountains and nearly half way to Salt Lake City. The cost of building over the mountains was so much less than we had expected that the construction company found itself with a surplus from the proceeds of the subsidy bonds. This was imprudently distributed in dividends. " The United States Government could parallel to-day the line of eitherroad for less than the amount of its first mortgage bonds, and itssubsidy bonds are therefore nearly worthless. Mr. Clews, in his "Twenty-Eight Years in Wall Street, " says: "After the Thurman bill had been sustained by the Supreme Court Mr. Gould had a plan to build a road from Omaha to Ogden, just outside the right of way of the Union Pacific, and give that road back to the Government. It would give others 'a chance to walk. ' The Government tried to squeeze more out of the turnip than was in it. For $15, 000, 000 a road could be built where it had cost the Union Pacific $75, 000, 000. " It may be admitted that the Pacific roads, even at an extravagant cost, have proved a good investment for the country, yet their historyreflects severely on the statesmanship of those members of Congresswhose duty it was to properly protect the interests of the nation atthat time. They were unequal to their task. The Great Northern Railway Company has just completed its road to thePacific Coast. Its line is very direct, and it has unusually lightcurvature and low grades, which will enable it to be operated morecheaply than any Pacific line yet constructed. Much of its route isthrough a rich and productive country, insuring to it a heavy localbusiness. The following statistics concerning it are given in the _Railway Age_: Total mileage, December 18, 1890 2, 850 Average bonded debt per mile $18, 636 75 Average stock per mile 7, 015 67 Total 25, 652 42 Interest charges per mile 1, 005 76 Dividend charges per mile 420 94 A comparison of these figures with those corresponding of othertranscontinental lines is instructive, and is commended to Congressmenwho have to deal with the Union Pacific and Central Pacific questions. Stock and bond inflation, it may confidently be asserted, has createdfrom five to six thousand millions of dollars of fictitious railroadcapital. In 1890 the average liabilities of the railroads in the UnitedStates, including the capital stock and the funded and unfunded debt, were $63, 600 per mile. According to Mr. Poor's estimate of the averagecost of American railroads per mile, more than 50 per cent. Of this vastsum is pure water. But, as has been stated before, Mr. Poor is partialto the railroad interest, and his estimate of $30, 000 a mile is too highfor the time at which it was made. Furthermore, railroad building hassince then been materially cheapened. Tens of thousands of miles of roadhave been built in recent years that did not cost to exceed $10, 000 amile. Very recently the Union Pacific Railroad Company proved, beforethe Board of Equalization at Salt Lake City, by the testimony ofengineers, that the average cost per mile of the Utah Central line wasonly $7, 298. 20, itemized as follows: Engineering $ 300 00 Grading 5-ft. Fill, 18, 480 yds. 2, 310 00 Ties, 2, 640, at 30 cts. 792 00 Rails, 82 tons 1, 845 00 Splices 12 00 Bolts 24 00 Spikes 142 20 Track-laying 600 00 Bridges 200 00 Station-building 100 00 Fences 150 00 Right of way 720 00 --------- $7, 298 20 In a recent article Mr. C. Wood Davis states that "many auxiliary lineshave been built at costs ranging from $8, 000 to $15, 000 per mile, andcapitalized at two, three, four, and even five times their cost, as inthe case of the 107 miles of the Kansas Midland, costing, including asmall equipment, but $10, 200 per mile, of which 30 per cent. Wasfurnished by the municipalities along its line. Yet, with constructionprofits and other devices, this road shows a capitalization of $53, 000per mile. " And that "the Missouri Pacific line from Eldora to McPherson, Kansas, acomparatively expensive prairie road, being located across the line ofdrainage, cost much less than $10, 000 per mile, as have thousands ofmiles of other prairie roads. " It is safe to say that $25, 000 is a liberal estimate of the average costper mile of American roads to the stock-and bondholders, and that theircapitalization represents $38, 000 of water per mile. The total netearnings of the railroads of the country were $341, 666, 639 in 1890, and$356, 227, 883 in 1891, upon an actual investment of only about$4, 250, 000, 000. This is a return of about 8-1/2 per cent. And shows theforce of Mr. Poor's statement that, if the water were squeezed out ofrailroad securities, no better-paying investment could be found in thecountry. We often see references to the fact that no dividends are paid upon alarge portion of railroad stocks, but there is no reason why dividendsshould be paid upon many of them, as they represent no capital whateverthat has gone into the road. It is probable that not to exceed ten centson the dollar upon an average was originally paid for these stocks, andthe $80, 000, 000 distributed annually as dividends upon them does notvary much from fifteen to twenty-five per cent. Upon the amount actuallyinvested in them. CHAPTER VII. COMBINATIONS. It is the favorite argument of railroad men, and the writer must confessthat he himself formerly believed, that if all legal restraints wereremoved from railroad business, the laws of trade would regulate it moresuccessfully and more satisfactorily, both to the railroad companies andtheir patrons, than the wisest statutes could ever regulate it. To giveforce to their argument, they cite the old Democratic maxim that thatState is governed best which is ruled the least. They also assert thatit is the province of the State to guarantee to each of its citizensindustrial freedom; to permit him to transact any legitimate businessaccording to his best judgment; to buy and to sell where and at whatprice he pleases; in short, to earn without restriction the reward ofhis intelligence and his industry. They further contend that under afree government the law of supply and demand should be allowed freesway, and that he who buys or sells transportation should not behampered in his transactions any more than the grocer and his customer. The reply to this is that, while the grocer is a natural person, therailroad company is an artificial person, and that, while the businessof the former is purely private, that of the latter is quasi-public. Thegrocer must rely solely upon his personal rights and private resources, but the railroad company accepts from the State the franchises whichenable it to do business. And yet, if the public had any assurance thatthe laws of trade would regulate both kinds of business alike, it isnot likely that the State would distinguish between the two. They claimthat their business is like other private business, and therefore theyshould be let alone; that competition can be relied upon to correctabuses; and where competition does actually exist they forget, and thenclaim that their business is not like other private business, and theyshould be allowed to make pools and combinations, because in theirbusiness competition is ruinous. Experience has certainly demonstratedthat competition is only possible where combination is impossible. Wherethe same commodity is supplied by a large number of individuals, thereis but little danger for the public from those who supply it, for anagreement among many cannot easily be effected; and even if anunderstanding could be reached, it would not long be satisfactory to allparties. Disagreements would arise which would end in the dissolution ofthe combination. Where, however, the number of competitors is small, agreements can be easily effected and successfully maintained. It is doubtful whether there is at present any interest in thecommercial world which has a greater tendency to monopoly andcombination than the railroad interest. There are in the United Statessome 40, 000 railroad stations. Not more than 4, 000 of these arejunctions of two or more roads. At 90 per cent. Of these stationsshippers are therefore confined to one line of railroad, and are, inabsence of State regulation, compelled to pay for transportationwhatever price the companies may be disposed to charge, subject only tosuch restrictions as the proximity of competing points may impose. Ifcompetition obtained at all points where two or more roads meet, manyrailroad companies could not afford to charge excessive rates atnon-competitive points along their lines of road, for such a policywould slowly but surely drive a large volume of their legitimatebusiness to rival roads, to whose interest it would be to encourage byevery means in their power such diversion of traffic. Railroads earlyrecognized this fact and took steps to enable each line to control itslocal business. The first combinations among railroad companies tocontrol prices at competitive points were rather crude; in fact, muchcruder than the first Granger legislation. They were simple agreementsamong the various roads touching a common point to maintain certainfixed rates. But while each road was anxious to have the rates agreedupon maintained by all of its rivals, it cared but little aboutmaintaining its own good faith, and it improved every opportunity to getbusiness at reduced rates so long as it could reasonably hope to escapedetection. As soon as any of the competing roads, through thefalling-off of its business, became convinced that it was the victim ofoverreaching rivals, it retaliated by offering still lower rates toclose-tongued shippers. This tricky rivalry would be continued until theanimosity engendered by it would lead to an open rupture, and whatrailroad men are pleased to term a rate war would follow. As theschedule rates had before been unreasonably high, so they became nowunreasonably low. Hostilities would be continued until all belligerentsbecame exhausted and manifested a disposition to negotiate a treaty ofpeace. The former high rates would then be restored; the compact wascarried out for a short time, to be again violated and finally annulled. These rate agreements were in vogue in New England before the War of theRebellion and gradually found their way to the Middle States and theWest. Wherever they were tried they were violated, until even among themost unsophisticated of freight agents a rate agreement was looked uponas a farce. The statement is often made by railroad managers that excesses inrailroad competition are the result of the peculiar conditions of theirbusiness, which has heavy fixed charges on one hand and a ficklepatronage on the other; that the uncertainty of through business compelsthem to rely upon the local business for such revenue as is necessary tomeet these fixed charges; and that, inasmuch as their trains _must_ run, and any through freight hauled by them is so much business taken fromthe enemy, they can better afford to take it at any price than to haveone of their competitors take it. It is difficult to see why this reasoning should not be applied to otherbranches of business; for instance, to milling. The mill-owner, like therailroad company, has heavy fixed charges. He has to earn the intereston his capital, he has to keep his mill in repair, he now and then hasto meet the demands of the times and purchase improved appliances, andhe has to keep a certain number of employes, whether business is briskor slack. He might, therefore, if he saw fit to employ the logic ofrailroad managers, earn revenue enough to meet his fixed charges fromthe business which his regular customers give him, and then do anybusiness coming from beyond this circle at any price rather thansurrender it to a rival. It will readily be conceded that any enterprise conducted on suchprinciples could, at the best, flourish only temporarily, for it wouldsoon encounter difficulties from two sources. Its local customers, thusdiscriminated against, would withdraw their patronage, while itscompetitors, finding their territory encroached upon, would, inself-defense, offer still better terms to the public to regain theirlost customers. Such ruinous competition, if long persisted in, mustnecessarily cripple, if it does not bankrupt, a majority of those whoengage in it. It is fortunately as rare in industrial and commercialcircles as it is common among public carriers. This difference can easily be accounted for. Where there are a largenumber of competitors the prices of the commodities supplied by them areleveled down until they reach a point where they will afford only areasonable margin of profit, and beyond which they will cease to beprofitable, and will therefore cease to be supplied until theequilibrium is again established. Where, however, the number ofcompetitors is small, the price of the commodities supplied by themwill, by agreement, for a time at least, be maintained at a point whereit affords considerable more than a reasonable profit. Here the largegain presents to the various competitors such a temptation to outstriptheir rivals and increase their business at the expense of good faith, that but few, if any, of them will, in the long run, resist it. Thetendency to underbid rivals will always be strong where profits arelarge, and it may safely be asserted that efforts to maintain, throughcombinations, excessive rates are the most fruitful source of ruinouscompetition. In time railroad managers became convinced that, unless it was possibleto radically reform railroad ethics, rate agreements could never berelied upon for the maintenance of excessive rates at competing points. The combined roads found it an easy matter to agree upon excessiverates, but were powerless to enforce them. Experience convinced theirmanagers that to make their tariffs effective it was necessary todeprive individual roads of the power or the inducement to cut below theagreed rates. Their ingenuity in time developed a system which promisedto remove from individual roads every temptation to take business atless than schedule prices. This device consists in a division ofrailroad business and is commonly called a pool. There are various waysin which such a division is made. Either the traffic is divided amongthe various companies meeting at a common point, or each road is allowedto carry all freights that it may receive, and then the earnings of thedifferent roads are divided, each road being paid the actual cost ofsuch service as it has performed. There is still a third poolingarrangement, consisting in a division of territory, but this has beenfound less satisfactory and is now but rarely resorted to. It is said that the first regular pool organized in the United Stateswas the Chicago-Omaha pool, formed in 1870 by the Chicago, Burlingtonand Quincy, the Chicago, Rock Island and Pacific, and the Chicago andNorthwestern railroad companies, then the only three lines connectingthe cities of Chicago and Omaha. This pool, which was subsequentlyjoined by other lines, made an equal division of the traffic, and was sowell organized that it lasted fourteen years "without a break. " Theabuses practiced by the companies belonging to this pool were one of thechief causes of the Granger movement in Iowa. It is indeed doubtfulwhether any other railroad combination ever maintained itself longer orpursued its ends with greater pertinacity than this pool. Another poolof national notoriety was the Southern Railway and SteamshipAssociation, which was organized, though at first under a differentname, in the State of Georgia, in 1875. It was probably the first moneypool formed in the United States. Each member was awarded a certainpercentage of the total business between the various competitive pointsalong its line. If a company carried more than its share, it wascompelled to turn over the receipts from such additional traffic to itsrivals, which paid it a nominal price for carriage. This allowance wasalways made so low that there was no inducement for any company to seekto carry more than its allotment. The pool had its own executive, legislative and judicial departments, and it enforced its decrees withan iron hand. It maintained a strong centralized government, andrebellious members had but little mercy to expect from it. It providedthat if any officer or representative of any company should authorize orpromise, directly or indirectly, any variation from established tariffs, he should be discharged from the service, with the reason stated. Thestrong sentiment which we to-day find in the South in favor of Statecontrol of railways is the direct result of the many evils which thispowerful pool introduced into the railway business of that section ofthe country. Other pools followed, as the Southwestern Association, organized in1876, to control the traffic between Chicago and St. Louis, and theMinnesota and the Colorado pools. Within a few years railroad poolscovered the whole country. All pursued the same object, viz. , thecontrol of rates at competitive points, which enabled the companies tomaintain excessive schedule rates at local points. Between 1875 and 1880 the pooling system rapidly spread all over theUnion. Wherever competition promised to regulate rates by theapplication of the law of supply and demand, the pool was resorted to asthe never-failing remedy to preserve dividends on watered stock. As longas lake and canal navigation controlled the carriage of heavy freightsbetween Chicago and New York by means of rates so low that railroadsfound it, or at least thought it, impossible to compete with them in thetransportation of agricultural products during the greater part of theyear, railroad pools between Chicago and New York could not besuccessfully maintained. In 1873 the railroads transported only about 30per cent. Of this kind of freight from the West to Eastern ports. Owing, however, to the rapid decrease of the cost of transportation, railroad companies from this time on were enabled to encroach rapidlyupon the business of water routes, so that in 1876 they carried over 52per cent. Of the entire volume of agricultural products that were movedfrom the West to the East. As long as these products were carried almostentirely by water from lake ports to the East, New York, as the terminusof this route, enjoyed decided advantages over the other Atlantic ports. When, however, the railroads commenced to successfully compete with thewater routes in the transportation of these commodities, a considerableshare of this business was diverted to Boston, Philadelphia andBaltimore, and it soon became apparent that these ports, in somerespects, enjoyed advantages for the export trade not possessed by NewYork. It was, therefore, not surprising that the business men of thesecities, together with the railroads terminating in them, made everyeffort to come in for their share of the traffic which was drifting awayfrom New York. Competition between the New York Central and the Pennsylvania Railroadfor the Western through traffic dated back as far as 1869, the year inwhich both systems secured, through consolidation with connecting roads, through lines to Chicago. Rates fell in one year from $1. 80 to 25 centsper hundred pounds. After a time the managers of the two companies met, and schedule rates were restored. Rates were, at least outwardly, maintained until the Baltimore and Ohio and the Erie system enteredChicago, and the Grand Trunk made connections with Milwaukee and otherlake points, and thus disturbed through rates. All efforts to maintainthe level of the old tariffs, through agreements, proved now fruitless, for both the Baltimore and Ohio and the Grand Trunk found it to theirinterest to pursue independent policies, and refused to have their handstied by an agreement with roads that were interested in continuing, ifpossible, the commercial supremacy of New York. Rate skirmishing finally developed into open war in 1876, whenfourth-class rates between Chicago and the Atlantic fell as low as 16cents per hundred. This rate, however, was eclipsed in July, 1878, whenwheat was carried from Chicago to New York for 10 cents per hundred. Theexisting conditions left no doubt in the minds of those familiar withrailroad tactics that this war was simply the precursor of a giganticcombination between the trunk lines. An unsuccessful attempt to effectsuch a combination had been made before. In 1874 the managers of theErie, Pennsylvania and New York Central met at Saratoga for the purposeof devising means for the suppression of competition in the trunk linetraffic. This meeting, however, known in railroad history as theSaratoga Conference, was the first step toward the organization of atrunk line pool, although the conference did not lead to any immediateresults, the Grand Trunk and the Baltimore and Ohio refusing to be boundby its decision. It was certainly no easy task to devise means to bringabout an effective and permanent combination among five large throughlines with greatly conflicting interests. So far pools had never failed to suppress competition wherever they wereorganized. But in the past pools had, almost without exception, onlyattempted to control rates between common points. They accomplishedtheir object by a division of the entire traffic or earnings from thetraffic between common points. The schedule rates remained the same forall. But the traffic of the trunk lines brought a new factor into theproblem. Here the rival routes did not terminate at the same points. Itwas contended by the Baltimore and Ohio that, whatever might be thefacilities of Baltimore for exporting agricultural products, that portwas at a disadvantage as compared with the more northern ports onaccount of the longer voyage and higher ocean rates to Liverpool, andthat it could therefore not enter into a combination with the roadsleading directly to New York and Philadelphia upon equal terms, sincethis would divert its legitimate share of the through business to thoseports. The Grand Trunk, on the other hand, refused to enter thecombination because, not having any direct Chicago connection, it fearedthat the enforcement of pool rates would materially diminish the volumeof its business. As yet the railroad wiseacres did not seem to be equalto the emergency, and matters drifted along in the old channel. The ratewar of 1876 gradually brought about an understanding among thebelligerents. The competing roads accepted the terms offered, and withthis a new principle entered into the science of pooling. Rates betweenChicago and Baltimore were fixed somewhat lower than those betweenChicago and Philadelphia, and in turn Philadelphia was allowed a smalladvantage over New York. This concession was made to equalize thedifference in the ocean rates of the competing ports. These equalizingor--to use railroad nomenclature--differential rates were subsequentlygranted by pools to such roads as, on account of some disadvantage, could not compete with other members of the pool on equal terms. Thusthe longest route was usually permitted to charge the lowest, and theshortest route the highest rate. This practice is in conformity with theprinciple of charging whatever the traffic will bear, but it iscertainly devoid of every consideration of justice and equity. If thelonger line can afford to carry freight at rates lower than scheduleprices, no further proof is needed under ordinary circumstances that theregular schedule rates of the shorter line are exorbitant. The concession of differential rates settled, at least temporarily, thedifficulties that had arisen out of the east-bound traffic of the trunklines. This arrangement did not, however, in any way affect the trafficmoving in the opposite direction. The volume of west-bound freight isvery much larger at New York than at any other of the Atlantic ports. Inorder to get its share of the business, each trunk line maintained anoffice in New York. These offices eagerly solicited business for theirrespective roads, and the freights which they received fortransportation to the West would be forwarded either directly or by acircuitous route; but, the longer the route, the lower as a rule was thecompensation asked for the service. Under these circumstancescompetition was brisk, and the profits realized were far from satisfyingthe cupidity of the competing lines. It was apparent to their managersthat the competition in the west-bound traffic was similar to thatformerly existing between Chicago and Mississippi and Missouri Riverpoints, which had promptly yielded to pools. The temporary adjustment ofthe more perplexing questions which had arisen out of the east-boundtraffic now paved the way for a pooling arrangement for the west-boundfreight. The Southern Pool, under the management of Albert Fink, hadlong attracted the attention of the trunk line managers. Its system ofdividing the traffic, of reporting to a central office and of hearingand deciding complaints had enabled it to exert an almost absolutecontrol over its members, to compel them to make honest returns and toprevent rupture and rebellion. It was believed that a pool of the trunklines could not be effective or permanent unless organized upon theSouthern basis and presided over by a trunk expert. Accordingly, when in1877 an agreement for the pooling of the west-bound traffic was reachedby the trunk lines, Mr. Fink was tendered the position of poolcommissioner. Under the agreement reached the total tonnage of thewest-bound business was divided in such a way that the Erie and New YorkCentral roads each received 33 per cent. , the Pennsylvania 25 per cent. , and the Baltimore and Ohio 9 per cent. Of it. If any road received morefreight than was allotted to it by the pool, it delivered such surplusto the pool, or rather to such a road as the pool commissionerdesignated as not having received its allotment. The success of thispool from a railroad point of view made the trunk lines anxious toorganize a similar pool for the whole east-bound traffic. It wasproposed to control by such a combination the rates on all theeast-bound traffic of the Northwest, by making Chicago the poolingcenter, fixing for it a schedule of rates and making the rates of allthe railroad centers in the West and Northwest dependent upon it. Thecombination was to comprise more than forty companies, controlling over25, 000 miles of road. The scheme was tried for three months in 1878, but proved a failure, owing to the fact that nearly all of the manydiverging interests sought their own advantage. The Eastern and Westerntrunk line pools were, through the efforts of their commissioner, successfully maintained, though even their harmony was occasionallymarred by a short war precipitated by such members as would thinkthemselves entitled to larger shares of the spoils. But a readjustmentwould invariably follow, and the expenditures of the war would be taxedup to the public. After the failure of the gigantic Western pool which had been organizedunder the protectorate of the trunk lines, the companies which hadcomposed it formed such local combinations as their individual interestsdictated. It is doubtful whether during the five years immediatelypreceding the passage of the Interstate Commerce Law there was anyjunction of two or more roads in the United States which, except duringthe period of an occasional railroad war, had any competition in thetransportation business. As has been shown before, discriminationswithout number were practiced between places and persons; goods were notunfrequently carried at a loss; but the general public was, as a rule, compelled to pay what the traffic would bear, or rather what the poolingroads thought it could bear. It is claimed by railroad managers that pools are the only effectivecontrivances for checking ruinous competition among railroad carriers, and that they are therefore justifiable as a means of self-protection. This might perhaps be a valid argument if any attack were made upon therailroads which encroached upon their rights or endangered theirexistence, but if railroad companies are disposed to cut each other'sthroats, the public should not be made to pay the penalty of theirdepravity. As long as schedule rates are unreasonably high, railroadswill be tempted to offer to certain shippers low secret rates; but assoon as all rates have been leveled down to a point where they willyield only a fair profit with good management, the inducement to cutbelow them is largely taken away. Pools, far from being a remedy for theevils of excessive competition, will in the end only aggravate thedisease which they attempt to cure. The high rates which they maintainattract the attention of speculative men and lead to the construction ofrival roads. While the traffic remains the same, the proceeds must thenbe divided among a larger number of carriers. Thus the construction ofunnecessary roads, which has often been the subject of bitter complainton the part of the older roads, is chargeable directly to their wrongpolicies. One of the principal objections to industrial and commercialcombinations is that they paralyze trade. Competition stimulates everycompetitor to offer the best at the lowest possible price. Thisincreases the demand for the commodity, and both the producer and theconsumer are in the end benefited by the operation of this law. On theother hand, combinations, or, what is the same, monopolies, increase theprice, remove the stimulus to excellence, and reduce the demand, andthereby affect injuriously the producer and consumer alike. Competitionin the railway service would mean an improved service and lower ratesand would speedily be followed by a large increase of business. Another serious objection to pooling is that it invariably leads toperiodic wars, which unsettle all business, and but too often introduceinto legitimate trade the element of chance. These wars give, moreover, to designing railroad managers an opportunity to enrich themselves bystock speculations at the expense of the stockholders, whose intereststhey use as a football for the accomplishment of their selfish ends. When rates are reduced to a right level, and are properly adjusted, andare equal to all, even railroad men will find no necessity for pools. The desire for such a combination is a desire to impose upon somebody, or some locality, or the public at large. The proposition to give legalsanction to pools, made by railroad managers, is preposterous; and evena pool to be approved by the Interstate Commerce Commission is out ofthe question, as it would cause the railroads to increase their effortsto control the appointment of the commission. However honest it may lookon its face, however plausible may be the arguments produced in itsfavor, it should not be permitted. There is no doubt but under the proposed pooling arrangement railroadinterests, watered stocks and all, would be cared for, but there isevery reason to believe that public interests would not be properlyprotected. So long as servility by a member of the Interstate Commerce Commissionto railroad influences serves as a stepping-stone to a high position inthe employ of railroad combinations, with a salary of three or fourtimes that of an Interstate Commerce Commissioner, so long will it beunsafe to permit such powers to be vested in that commission. Pooling by railroads should not be permitted, if permitted at all, solong as representatives of speculative interests have a voice in theirmanagement, and not until all fictitious valuations are altogetherbanished from the equation, and until the roads are brought undercomplete Government control. There is no more necessity for pools amongrailroads than there is among merchants and manufacturers. The capitalactually invested in railroads is now receiving larger returns thaninvestments in other lines of business, and their incomes are increasingfrom year to year. Every pooling combination of railroad companies for the maintenance ofrates is a violation of common law. From time immemorial the law hasstamped as a conspiracy any agreement between individuals to supporteach other in an undertaking to injure public trade. The InterstateCommerce Act reasserts this principle, and provides penalties for themaintenance of such combinations among railroad companies. If, in spiteof this act, the evil still exists, it is no argument against the meritsof the law, but it does prove that the machinery provided for itsenforcement is insufficient. That railroad companies can be made torespect the law there can be no doubt; but much cannot be accomplishedunless the people fully realize the magnitude of the undertaking andvest the Government with sufficient power to cope with an organizedforce whose total annual revenue is nearly three times as large as thatof the United States. The discussion of the question how this may bedone will be reserved for a subsequent chapter. CHAPTER VIII. RAILROADS IN POLITICS. The question might be asked how the railroad companies for many years insuccession have been able to prevent State control and pursue a policyso detrimental to the best interests of the public. One might think thatin a republic where the people are the source of all power, and whereall officers are directly or indirectly selected by the people to carryout their wishes and to administer the government in their interest, acoterie of men bent on pecuniary gain would not be permitted to subvertthose principles of the common law and public economy which from timeimmemorial have been the recognized anchors of the liberty of theAnglo-Saxon race. The statement that under a free government it is possible for a few tosuppress the many might almost sound absurd to a monarchist, and yet isit true that for the past twenty-five years the public affairs of thiscountry have been unduly controlled by a few hundred railroad managers. To perpetuate without molestation their unjust practices and prevent anyapproach to an assertion of the principle of State control of railroadtransportation, railroad managers have secured, wherever possible, theco-operation of public officials, and, in fact, of every semi-public andprivate agency capable of affecting public opinion. Their great wealthand power has made it possible for them to influence to a greater orless extent every department of the National and State governments. Their influence extends from the township assessor's office to thenational capital, from the publisher of the small cross-roads paper tothe editorial staff of the metropolitan daily. It is felt in everycaucus, in every nominating convention and at every election. Typicalrailroad men draw no party lines, advocate no principles, and takelittle interest in any but their own cause; they are, as Mr. Gouldexpressed it, Democrats in Democratic and Republicans in Republicandistricts. The large means at the command of railroad companies, theirfavors, their vast armies of employes and attorneys and their almostequally large force of special retainers are freely employed to carryinto execution their political designs, and the standard of ethicsrecognized by railroad managers in these exploits is an exceedingly lowone. It is a settled principle of these men that, if they can prevent it, noperson not known to be friendly to their cause must be placed into anypublic office where he might have an opportunity to aid or injure theirinterests. The records of the various candidates of the principalparties for city, county, State and national offices are thereforecarefully canvassed previous to the primaries, the most acceptable amongthe candidates of each party are selected as the railroad candidates, and the local representatives of the railroad interest in each party areinstructed to use all means in their power to secure their nomination. If none but candidates who are servile to the railroad interest arenominated by the principal parties, the election is permitted to takeits own course, for, whichever side is successful, the railroad interestis safe. If, however, there is reason to believe that a nominee is notas devoted to their interests as the nominee of an opposing party, thelatter is sure to receive at the polls whatever support railroadinfluence can give him. That a public official elected by the grace of arailroad manager is but too apt to become a tool in his hands needs noproof. Both gratitude and fear tie the average politician to thepowerful forces which can control his political destiny. The railroad manager, on the other hand, always kindly remembers hisofficeholding friends as long as they are loyal and in a position toserve him. Before the enactment of the Interstate Commerce Act there wasevery year a wholesale distribution of railroad passes among publicofficeholders and other prominent politicians. The pass was the token ofthe continued good will of the railroad dignitaries as the withholdingof the "courtesy" was a certain indication of their displeasure. If theofficeholder had personal or political friends whom he desired to haverecognized, an intimation of this desire was generally sufficient tohave the pass privilege even extended to them. And yet these favors werenot bestowed indiscriminately. Thus the pass credit of a county officialwas more limited than that of an officer of the State, and the latterclass were again rated according to their influence and rank. Furthermore, while annual passes were thus freely distributed among oneclass of officials, others could obtain them only by making specialapplication for them. Members of the legislature would not unfrequentlyreceive their supply of railroad passes before their certificates ofelection were issued, but legislative committee clerks and employes inthe various departments of the State government were required to satisfythe railroad authorities that they were in a position to aid or toinjure the railroad cause before their names were placed on the list ofpersons "entitled to the courtesy". Of course the judiciary, as a coördinate branch of the government, couldnot well be slighted. Indeed, previous to the enactment of theInterstate Commerce Law, a judge would have regarded it an affront if hehad not been furnished with passes by the various companies operatingrailroads in his district. It appears that the law has not entirelycorrected this abuse, for only about two years ago the Chicago _News_made the discovery that nearly every judge in the city of Chicagotraveled on passes. It is strange to what extent the pass often debasedthe judiciary. It was not unfrequent for judges to solicit passes forfamily and friends, and instances might be named where they demandedthem in a wholesale way. The impudent demands were usually honored by the railroad authorities, who reasoned that they could better afford to bear the shamelesseffrontery of the ermined extortioner than the damage which might resultto them from adverse decisions. A railroad pass, when presented by a public official or even by anypublic man, is now, in nine cases out of ten, a certificate of dishonorand a token of servility, and is so recognized by railroad officials. What equivalent railroad companies expect for the pass "courtesy" iswell illustrated by the experience of an Iowa judge. This gentleman, whohad been on the bench for years and always had been favored with passesby the various companies operating lines in his district, at thebeginning of a new year failed to receive the customary pass from aleading road. Meeting its chief attorney, he took occasion to call hisattention to what he supposed to have been an oversight on the part ofthe officer charged with the distribution of the passes. The attorneyseemed to take in the situation at once. "Judge, " said he, "did you notrecently decide an important case against our company?" "And was mydecision, " replied the Judge, "not in accordance with law as well aswith justice?" The attorney did not answer this question, but in thecourse of a few days the Judge received the desired pass. A few monthslater it again became the Judge's unpleasant duty to render a decisionadverse to the same company. This second act of judicial independencewas not forgiven, and the next time he presented his pass it wasunceremoniously taken up by the conductor in the presence of a largenumber of passengers, and he was required to pay his fare. Employes, while engaged in the legitimate business of their companies, should, of course, be transported free, but a great many persons receivepasses and are classed as employes who never render any legitimateservice for the company giving the pass, and by far the greater portionof passes are not granted from pure motives, but are given for thepurpose of corrupting their holders. It arouses antagonism, because as arule passes are given to people who are fully able to pay their fare andare denied to those who are least able to pay it. The passenger who payshis fare and then finds that a large number of his fellow-passengerstravel on passes realizes that he is compelled to pay a higher fare thatothers may be carried free. He feels that he is unjustly discriminatedagainst, and wonders why such discrimination is tolerated in a countrywhose institutions are founded upon the very principle of equal rightsto all. A good anecdote is related which well illustrates this feeling. A farmer and a lawyer occupied the same seat in a railroad car. When theconductor came the farmer presented his ticket, and the lawyer a pass. The farmer's features did not conceal his disgust when he discoveredthat his seat-mate was a deadhead. The lawyer, trying to assuage theindignation of the observing granger, said to him: "My friend, youtravel very cheaply on this road. " "I think so myself, " replied thefarmer, "considering the fact that I have to pay fare for both of us. " But what must be a passenger's surprise when he finds that the judge whoto-morrow is to preside at the trial of a case in which the railroadcompany is a party to-day accepts free transportation at its hands. Ajudge may scorn the charge that he is influenced by a railroad pass, buthis fellow-passenger who has paid his fare cannot understand why therailroad company should give passes to one class of people and refusethem to others, if it does not consider one more than others to be in aposition to reciprocate its favors. In their endeavor to win over the courts, however, the railroads do byno means confine their attention to the judges. They are well aware thata biased jury is often more useful to them than a biased judge, andefforts are made by them to contaminate juries, or at least prejudicethem in their favor. A prominent Iowa attorney, the legal and politicalfactotum of a large railroad corporation, for years made it a practiceto supply jurors with passes. In one instance, when it was shown incourt by the opposing counsel that all jurors in the case on trial hadaccepted passes from the railroad company which was the defendant in thecase, the judge found himself compelled to discharge the whole jury. Theargument made by this counsel, in support of his motion that the jury bedischarged, was certainly to the point. He showed that in order to havean equal chance for justice it would be necessary for his client to giveeach juror at least fifty dollars to offset the bribes given to them bythe railroad company. That it has always been the policy of railroad managers to propitiatethe judiciary is a fact too generally known among public men to admit ofcontradiction. If a judge owes his nomination or election to railroadinfluences, railroad managers feel that they have in this a guarantee ofloyalty. If, however, he acquires the ermine in spite of railroadopposition, every effort is made to conciliate the new dispenser of thelaws. The bestowal of unusual favors, flattery, simulated friendship anda thousand other strategies are brought into requisition to capture thewayward jurist. If he proves docile, if his decisions improve with timeand show a gradual appreciation of the particular sacredness ofcorporate rights, the railroad manager will even forgive him his formerheresy and rally to his support in the future. But if he asserts hisconvictions, if he attempts to discharge the duties of his responsibleoffice without fear or favor, if he can neither be corrupted norintimidated, all available railroad forces will be marshaled against himin the future. It cannot be surprising that, under such circumstances, there always hasbeen a tendency among judges to be conservative and to give therailroads the benefit of the doubt in their decisions. Judges well knowthat railroad companies appeal almost invariably when the decision of alower court is adverse to them, but private citizens only in exceptionalcases. They also know that railroads never forgive adverse decisions, whether right or wrong, while private citizens, as a rule, accept thedecision of the court as justice, and do not hold the judge responsiblefor its being adverse to them. Our judiciary is, and probably always hasbeen, as incorruptible as the judiciary of any country in the world; butour judges are made of no better material than our legislative orexecutive officers. Weak men, in all stations, are influenced by wealthand power, and weak judges can always be found who will be led or forcedfrom the path of duty so long as corrupt men are permitted to managerailroads and to remain in possession of a power only inferior to thatof an autocratic ruler. The influence which railroads exert extends from the lowest to thehighest court of the land. Federal courts have more than once beensuccessfully appealed to to give legal sanction to the perpetuation ofgigantic frauds, or to frustrate attempts made by the individual Statesto place restrictions upon roads operated within their respectiveborders. Twenty years ago a Federal judge aided Mr. Gould in hisnotorious Erie transactions, and in more recent years a Federal circuitjudge in the West threw the property of the Wabash Railroad Company, upon the application of its own directors, into the hands of receiversselected by its former managers without the knowledge or notice of itscreditors, and issued orders for the management of the property whichgreatly discriminated in favor of certain bondholders and were somanifestly unjust that Judge Gresham, before whom the case wassubsequently brought, did not hesitate to say to them that "the boldnessof this scheme to aid the purchasing committee, by denying equal rightto all bondholders secured by the same mortgages, is equaled only by itsinjustice. " At the same time one of the counsel for the dissentingbondholders characterized these strange orders as "the highwayman'sclutch on our throat, the robber's demand, 'Your money or your life. '" The decision which the Supreme Court of the United States rendered inthe Granger cases in 1876, affirming the right of a State to controlrailroad charges for the transportation of passengers and freight whollywithin the State, was a serious disappointment to railroad men, for itwas the first step toward wresting from them the power to arbitrarilycontrol the commerce of the country. Ever since that time it has beentheir determined purpose to bring about, if possible, a reconstructionof the Federal Supreme Court, in order to secure a reversal ormodification of the Granger decision. In the case of Peik vs. Chicago, 94th U. S. , 176, the Supreme Court laid down the following broadprinciple of law: "Where property has been clothed with the publicinterest, the legislature may fix a limit to that which shall in law bereasonable for its use. This limit binds the courts as well as thepeople. If it has been improperly fixed, the legislature, not thecourts, must be appealed to for a change. " In one of the Granger casesthe same court used the following language: "We know that this is apower which may be abused, but that is no argument against itsexistence. For protection against abuses by legislatures, the peoplemust resort to the polls. " Fourteen years later, in the case of C. M. & St. P. R. Co. Vs. Minn. , decided in October, 1890, the same court rendered a decision soindefinite that the lawyers differed much in their opinions as to itsmeaning, and it appears that the members of the court who made thedecision also differed in their opinions as to the meaning of thedecision; for Justice Bradley said in his dissenting opinion, in whichJustice Gray and Justice Lamar concurred, that the decision practicallyoverruled Munn vs. Illinois; but the same court, in a case entitled Buddvs. New York, submitted in October, 1891, and decision rendered February29, 1892, and opinion delivered by Justice Blatchford, in referring tothe Minnesota case, after quoting the above statement from JusticeBradley, said: "But the opinion of the court did not say so, nor did itrefer to Munn vs. Illinois, and we are of opinion that the decision inthat case is, as will be hereafter shown, quite distinguishable from thepresent case. " It is thus apparent that this court has adhered to the decision in Munnvs. Illinois, and to the doctrines announced in the opinion of the courtin that case, and those doctrines have since been repeatedly enforced inthe decisions of the courts of the States. Judge Brewer, whose zeal for the defense of corporate interests seems toamount almost to a craze, dissented. He said: "I dissent from theopinion and judgment in these cases. The main proposition upon whichthey rest is, in my judgment, radically unsound. It is the doctrine ofMunn vs. Illinois reaffirmed. The paternal theory of government is to meodious. Justice Field and Justice Brown concur with me in this dissent. " It should be remembered that Justices Brewer and Brown were bothappointed to the Supreme bench by President Harrison. We have every reason to believe that, unless the people of the UnitedStates are on the alert, as railroad managers always are, there is, withfurther changes in the personnel of the court, danger of its deviatingfrom the sound principles of law laid down in its decision in theGranger cases. Railroad attorneys have repeatedly been raised to seatsin the highest tribunal in the land. So great is the power of therailroad interests, and so persistent are they in their demands, that, unless a strong public sentiment records its protest, their candidatesfor appointive offices are but too apt to be successful. Representativesof the railroads sit in the Congress of the United States, others aremembers of the national campaign committees of both of the greatpolitical parties, others control the politics of the States, and theirinfluence reaches to the White House, whether its occupant is aware ofit or not. Other interests in the past have succeeded in securing theappointment of biased men as judges of the Supreme Court who afterwardscould always be relied upon to render decisions in their favor. Will thepeople profit by their experience, or will they be indifferent to thedanger which surrounds them, until nothing short of a political upheavalcan restore to them these rights of sovereignty, of which they have soinsidiously been deprived? Human gratitude is such that even high-minded men who, through theinfluence of the railroad interest, have been placed upon the Federalbench, find it impossible to divest themselves of all bias when calledupon to decide a case in which their benefactors are interested. Such isthe human mind that, when clouded by prejudice, it will forever be blindto its own fault. Even the members of so high a tribunal as theElectoral Commission which decided the presidential contest betweenHayes and Tilden could not divest themselves of their prejudices; eachone, Republican or Democrat, voted for the candidate of the party withwhich he had cast his political fortune. Last January, in an address delivered before the New York State BarAssociation at Albany, Mr. Justice Brewer reminded his hearers that therights of the railroads "stand as secure in the eye and in the custodyof the law as the purposes of justice in the thought of God. " Andfurther on they were told that "there are to-day $11, 000, 000, 000invested in railroad property, whose owners in this country number lessthan two million persons. Can it be that whether that immense sum shallearn a dollar or bring the slightest recompense to those who haveinvested perhaps their all in that business, and are thus aiding in thedevelopment of the country, depends wholly upon the whim and greed ofthat great majority of sixty millions who do not own a dollar? It may besaid that that majority will not be so foolish, selfish and cruel as tostrip that property of its earning capacity. I say that so long asconstitutional guarantees lift on American soil their buttresses andbulwarks against wrong, and so long as the American judiciary breathesthe free air of courage, it cannot. " Unfortunately judicial buttresses and bulwarks have not always beenlifted against wrong. Judge Taney, like Brewer, supposed that it wasleft at his time for his court to preserve the peace and provide for thesafety of the nation; but history has shown that we cannot depend uponthat high tribunal for safety when it is controlled by weak orinefficient men. When we consider what "that great majority" has done for this country inthe past, and is doing for it at the present time, and especially whenwe contrast its sense of justice and right with the weakness andinability of some of its public servants, does it not seem to be alittle presumptuous for them to assume that "the danger is from themultitudes--the majority, with whom is the power, " and that, were it notfor their superior wisdom and patriotic action, this great government ofthe people, by the people and for the people would be a failure? Mr. Lincoln never feared "the whim and greed" of "that great majority, "but he had at all times implicit confidence in the great mass of thepeople, and they in return had full confidence that no temptation ofwealth or power was sufficient to seduce his integrity. We cannot dismiss this subject without referring to a stratagem whichrailroads have in the past repeatedly resorted to for the purpose ofremoving from the bench judges of independent minds whom they found itimpossible to control. This stratagem consists of a well-disguisedbribe, by which a Federal judge is changed into a railroad attorney witha princely salary. The railroad thus gets rid of an undesirable judgeand gains a desirable solicitor at a price at which they could well haveafforded to pension the judge. The following is a copy of a broker's circular letter sent to prominentbankers of Iowa, and shows that even the Clerk of the United StatesCourt is not overlooked: "----, June 30th, 1892. "Mr. ----, "We offer, subject to sale at par and interest, note $2, 500. Date, July 5th, 1892. Time, six months; rate, 6 per cent. Payable where desired. Maker, ---- Endorser, Judge ---- Mr. ----, the maker, is clerk of the United States Circuit Court at ---- Judge ---- the well known attorney of the ---- and ---- Railway Co. , of ----, stated to us to be worth $150, 000 to $200, 000. Can you use it?" While railroad managers rely upon servile courts as a last resort todefeat the will of the sovereign people, they are far from losing sightof the importance of controlling the legislative branch of thegovernment. By preventing what they are pleased to call unfriendlylegislation they are more likely to prevent friction with publicopinion, and they avoid at the same time the risk of permanentlyprejudicing their cause by an adverse opinion upon a constitutionalquestion which they may find it necessary to raise in order to nullify alegislative act. There are three distinct means employed by them tocontrol legislative action. First, the election to legislative officesof men who are, for some personal reason, adherents to the railroadcause. Second, the delusion, or even corruption, of weak or unscrupulousmembers of legislative bodies. Third, the employment of professional andincidental lobbyists and the subsidizing of newspapers, or theirrepresentatives, for the purpose of influencing members of legislativebodies and their constituencies. There are probably in every legislative body a number of members who arein some way or other connected with railroad corporations. No doubt, amajority of these are personally irreproachable and even so high-mindedas to always postpone private for public interest; yet there are alsothose whose political advancement was brought about by railroad managersfor the very purpose of having in the legislative body servile memberswho could always be relied upon to serve their corporate masters. Nevertheless, were railroad interests restricted to the votes of thesemen for their support, the public would probably have no cause for alarmon account of the presence of railroad representatives in legislativebodies, but, as many other interests seek favorable legislation, railroad men are often enabled to gain support for their cause by acorrupt bargain for votes, and it is thus possible for them to double, triple, and even quadruple, their original strength, by a policy ofreciprocity. As in Congress and State legislatures, so these representatives of therailroads may be found in our city councils. The leaders of therailroads in Congress and in the legislatures of the various Statesusually rely upon discretion for obtaining their end, but railroadaldermen with but few exceptions seek to demonstrate their loyalty tothe cause to which they are committed by a zealous advocacy of extrememeasures, and will not unfrequently even gain their end through the mostunscrupulous combinations. If their votes, together with such support asthey obtain by making trades, are not sufficient to carry out or defeata measure which the railroad interests may favor or oppose, even morequestionable means are employed to gain a sufficient number of votes tocommand a majority. Outright bribery is probably the means least often employed bycorporations to carry their measures. While it may be true that the voteof every weak and unscrupulous legislator is a subject of barter, moneyis not often the compensation for which it is obtained. It is the policyof the political corruption committees of corporations to ascertain theweakness and wants of every man whose services they are likely to need, and to attack him, if his surrender should be essential to theirvictory, at his weakest point. Men with political ambition areencouraged to aspire to preferment and are assured of corporate supportto bring it about. Briefless lawyers are promised corporate business orsalaried attorneyships. Those in financial straits are accommodated withloans. Vain men are flattered and given newspaper notoriety. Others aregiven passes for their families and their friends. Shippers are givenadvantages in rates over their competitors; in fact, every legislatordisposed to barter his vote away receives for it compensation whichcombines the maximum of desirability with the minimum of violence to hisself-respect. Those who attempt to influence or control legislative bodies in behalfof interested parties are collectively called the lobby. As a rule, thelobby consists of prominent politicians likely to have influence withmembers of their own party; of men of good address and easy conscience, familiar alike with the subject under consideration and legislativeprocedure, and last, but not least, of confidential agents authorizedand prepared to enter into secret negotiations with venal members. Thelobby which represents the railroad companies at legislative sessions isusually the largest, the most sagacious and the most unscrupulous ofall. Its work is systematic and thorough, its methods are unscrupulousand its resources great. Yet all the members of a legislative bodycannot be bribed, either by money, or position, or favors. Some of themwill not vote for any proposed measure unless they can be convinced thatit is for the public welfare. These legislators, if their votes areneeded, are turned over to the persuasive eloquence of those members ofthe lobby who, apparently, have come to the capital moved by a patrioticimpulse to set erring legislators right on public questions. Theirfamiliarity with public matters, their success in public life, theirhigh standing in political circles, their apparent disinterestedness andtheir plausible arguments all combine to give them great influence overnew and inexperienced members. In extreme cases influential constituentsof doubtful members are sent for at the last moment to labor with theirrepresentatives, and to assure them that the sentiment of theirdistricts is in favor of the measure advocated by the railroads. Telegrams pour in upon the unsuspecting members. Petitions in favor ofthe proposed measure are also hastily circulated among the moreunsophisticated constituents of members sensitive to public opinion, andare then presented to them as an unmistakable indication of the popularwill, although the total number of signers forms a very small percentageof the total number of voters of the districts in which these petitionswere circulated. A common method employed by the railroad lobby in Iowahas been to arouse, by ingenious arguments, the prejudices of the peopleof one part of the State against those of another, or of one classagainst those of another class; for instance, the East against the West, or that portion of the State the least supplied with railroad facilitiesagainst that which is best supplied; or the river cities against theinterior cities; or the country people against the city people; or thefarmer against the merchant, and always artfully keeping in view theopportunity to utilize one side or the other in their own interest. Another powerful reinforcement of the railroad lobby is not unfrequentlya subsidized press and its correspondents. The party organs at thecapital are especially selected to defend as sound measures, either froma partisan or non-partisan standpoint, legislation of questionablepropriety desired by the railroads. When such measures are advocated byparty organs, partisan members, either from fear or prejudice, are aptto "fall into line, " and then to rely upon these organs to defend theiraction. Editors, reporters and correspondents are even retained asactive lobbyists and give the railroad managers' cause the benefit oftheir prestige. To such an extent has the abuse of the press beencarried that a considerable number of its unworthy representatives lookupon railroad subsidies as legitimate perquisites which they will exactthrough blackmailing and other means of compulsion if they are notoffered. A case may be cited here to illustrate their mode of operation, as well as the ethics of railroad lobbies. During one of the sessions ofthe Iowa legislature a newspaper correspondent came in possession ofsome information which reflected severely on the railroad lobby. He madehis information the subject of a spicy article and showed it to afriend who stood close to the gentleman chiefly implicated, with theremark that nothing but a hundred dollar bill would prevent thetransmission of the article by the evening mail to the paper which herepresented. Before sundown the stipulated price for the correspondent'ssilence was paid, and an enemy was turned into a friend. Professor Bryce says of the American lobby system: "All legislativebodies which control important pecuniary interests are as sure to have alobby as an army to have its camp followers. Where the body is, therewill the vultures be gathered together. " To such an extent is the lobbyabuse carried that some large corporations select their regularsolicitors more for their qualifications as lobbyists than for theirlegal lore. It is a common remark among lawyers that a great company inChicago pays a third-class lawyer, who has the reputation of being afirst-class lobbyist, an extravagant salary and calls him generalsolicitor, while it relies upon other lawyers to attend to its importantlegal business. The readiness of members of the bar to serve wealthycorporations is fast bringing the legal profession of America intodisrepute abroad. The author just quoted, in speaking of its moralstandard, says: "But I am bound to add that some judicious Americanobservers hold that the last thirty years have witnessed a certaindecadence in the bar of the great cities. They say that the growth ofenormously rich and powerful corporations, willing to pay vast sums forquestionable services, has seduced the virtue of some counsel whoseeminence makes their example important, and that in a few States thedegradation of the bench has led to secret understandings between judgesand counsel for the perversion of justice. " There are, of course, able and honorable attorneys employed by railroadcompanies, but often railroad lawyers are selected more for theirpolitical influence, tact and ingenuity than for legal ability, and, asa rule, the political lawyer receives much better compensation for hisservices than does the lawyer who attends strictly to legitimate legalwork. The danger from railroad corporations lies in their great wealth, controlled by so few persons, and the want of publicity in theirbusiness. Were they required to render accounts of their expenditures tothe public, legislative corruption funds would soon be numbered with thedefunct abuses of railroad corporations, and, with bribes wanting in thebalance of legislative equivalents, the representatives of the peoplecould be trusted to enact laws just alike to the corporations and thepublic, while asserting the right of the people to control the publichighway and to make it subservient to the welfare of the many instead ofthe enrichment of the few. A wise law regulating lobbies exists inMassachusetts. Every lobbyist is required to register, as soon as heappears at the Capitol, to state in whose interest and in what capacityhe attends the legislative session, to keep a faithful account of hisexpenses and to file a copy of the same with the Secretary of State. Were a similar law enacted and enforced by every State legislature, aswell as by Congress, the power of railroad lobbies would be curtailed. Railroad managers never do things by halves. Well realizing that it isin the power of a fearless executive, by his veto, to render futile theachievements of a costly lobby and to injure or benefit their interestsby pursuing an aggressive or conservative policy in the enforcement ofthe laws, they never fail to make their influence felt in the selectionof a chief magistrate, either of the Nation or of an individual State. No delegate, with their permission, ever attends a national convention, Republican or Democratic, if he is not known to favor the selection of aman as the presidential candidate of his party whose conservatism in allmatters pertaining to railroad interests is well established. At theseconventions the railroad companies are always represented, and theirrepresentatives do not hesitate to inform the delegates that this orthat candidate is not acceptable to their corporations and cannotreceive their support at the polls. During the Chicago convention of1888 the statement was openly made that two of the Western candidateslost Eastern support because they were not acceptable to a prominent NewYork delegate who had come to Chicago in a threefold capacity--that of adelegate, a presidential possibility, and special representative of oneof the most powerful railroad interests in the country. This same manappeared again last year at the Minneapolis convention as chieforganizer of the forces of a leading candidate. His counterpart was inattendance at the Chicago convention looking after the same intereststhere. It is the boast of prominent railroad men that their influence electedPresident Garfield, and the statement has been made upon good authoritythat "not until a few days before the election did the Garfield managersfeel secure, " and that "when the secret history of that campaign comesto be written it will be seen that Jay Gould had more influence upon theelection than Grant and Conkling. " It cannot be said that railroadmanagers, as a class, have often openly supported a presidentialcandidate. This may be due to the fact that with the uncertainty whichhas for years attended national politics they deem it the part ofdiscretion to pretend friendship for either party and then shout withthe victor. In conformity with this policy, a well-known New Yorkrailroad millionaire has for years made large and secret contributionsto the campaign funds of both political parties. He thereby places bothparties under political obligations, and believes his interests safe, whichever turn the political wheel may take. After the contest he isusually the first to congratulate the successful candidate. In thenational campaign of 1884 this railroad king completely outwitted aprominent Western politician and member of the Republican nationalcampaign committee who has always prided himself on his politicalsagacity. This gentleman had taken it upon himself to enlist the richand powerful New Yorker in the Republican cause, and to obtain from him, as a token of his sincerity, a large contribution to the Blaine campaignfund. He succeeded, at least so far as the contribution was concerned;but when the struggle was over and the opposition, in the exuberance ofjoy over their victory, told tales out of school, he was not a littlechagrined to find that the managers of the Cleveland campaign hadreceived from the astute railroad millionaire a campaign contributiontwice as large as that which he had obtained from him. The diatribeswhich for weeks after the election filled the columns of his paperreflected in every line the injured pride of the outwitted general. Judging from the laxity with which the railroad laws have been enforcedin a considerable number of States, their executive departments are asmuch under the influence of railroad managers as are the legislativedepartments of others. This cannot be surprising to those who know howoften governors of States are nominated and elected through railroadinfluences, and what efforts are made by corporations to humor servileand to propitiate independent executives. The time is not far remotewhen nearly every delegate to a State convention had free transportationfor the round trip. This transportation was furnished to delegates byrailroad managers through their local attorneys, or through favoredcandidates and their confidants. It was only offered to those who weresupposed to be friendly to candidates approved by the railroad managers;and as free passage was looked upon as the legitimate perquisite of adelegate, but few persons could be induced to attend a State conventionand pay their fare. As a consequence, the railroad managers found it toooften an easy matter to dictate the nomination of candidates. Since the adoption of the Interstate Commerce Law convention passes, assuch, have largely disappeared; but many a prominent politician in goingto and returning from political conventions travels as a railroademploye, though the only service which he renders to the railroadcompanies consists in manipulating conventions in their favor. If allthe railroad candidates--and the companies usually take the precautionto support more than one candidate--are defeated in the convention ofone party, and a railroad candidate is nominated by the other party, thelatter is certain to receive at the polls every vote which railroad andallied corporate influence can command. One might suppose that an attempt would at least be made to hide fromthe general public the interference of such a power with the politics ofa State; but railroad managers seem to rely for success as much uponintimidating political parties as upon gaining the good will ofindividual citizens. To influence party action, the boast has in recentyears repeatedly and boldly been made in Iowa that 30, 000 railroademployes would vote as a unit against any party or individual daring tolegislate or otherwise take official action against their demands, andforgetting that, with the same means used in opposition to them, a fewhundred thousand farmers and business men could be easily organized tooppose them. Unscrupulous employers often endeavor to control the votesof their employes. This is particularly true of railroad companies, andthey use many ingenious plans to accomplish it. In the Northwest, andespecially in Iowa, they have for several years organized their employesas a political force for the purpose of defeating such candidates forState offices as were known to favor State control of the transportationbusiness. They have even paid the expenses of the organization, althoughthey have made every effort to make it appear as if the movement was avoluntary one on the part of their employes. They are employing thismethod in Texas and other States at the present time, in opposition tothe effort that is being made by the people to secure just andreasonable treatment from the railroads. That the chief executive of a State should be influenced in thedischarge of his official duties by such favors as passes, the freedomof the dining- and sleeping-car, by the free use of a special car, oreven a special train, one is loath to believe; yet it is a fact, andespecially during political campaigns, that such favors are frequentlyoffered to, and accepted by, the highest executive officers, and it isequally true that many of these officers often connive at the continuedand defiant violations of law by railroad officials. While the men whomanage large railroad interests do not always possess that wisdom whichpopular reverence attributes to them, they certainly possess greatcunning, and expend much of their artfulness in efforts to win overscrupulous, and to render still more servile unscrupulous executives. The general railroad diplomate never omits to pay homage to the man inpower, to flatter him, to impress him with the political influence ofhis company, to intimate plainly that, as it has been in the past, so itwill be in the future its determined policy to reward its friends and topunish its enemies. If the executive proves intractable, if he canneither be flattered, nor coaxed, nor bribed into submission, he doesnot hesitate to resort to intimidation to accomplish his purpose. Thisis by no means a rare occurrence. There are few public men who, ifdetermined to do their duty, have not been subjected to railroad insultand intimidation. The author may be permitted to give an instance fromhis personal experience. Soon after his inauguration as Governor of Iowaa general officer of one of the oldest and strongest Western railroadscalled at his office and importuned him with unreasonable requests. Whenhe found that he had utterly failed to impress the author with hisarguments, he left abruptly, with the curt remark that these matterscould be settled on election day, and he emphasized his statement byslamming the door behind him. A servile railroad press has always been ready to misrepresent andmalign executive officers who have refused to acknowledge any higherauthority than the law, the expressed public will and their ownconception of duty. This abuse has even been carried so far that theeditorial columns of leading dailies have been prostituted by theinsertion of malicious tirades written by railroad managers and railroadattorneys; and the fact that public opinion has not been more seriouslyinfluenced by these venal sheets must be solely attributed to the goodjudgment and safe instinct of the masses of the people. However persistently railway organs deny it, it is a matter of generalnotoriety that railway officials take an active part in politicalcampaigns. Hundreds of communications might be produced to show theirwork in Iowa, but the following two letters, written by a prominentrailroad manager to an associate, will suffice for the purpose. It willbe noticed that one was written before and the other after election. Comments upon their contents are unnecessary: "----, Iowa, Nov. 2nd, 1888. "DEAR SIR: I have just discovered this P. M. That the Central Committee have sent electrotypes to all the printing offices in the State of the State ticket, with the names of the Railway Commissioners and Supreme Judge in so small a space as to make it very difficult, if not impossible, to write in the names. I am having slips made with Commissioners' names and Judge written on them, and they will be sent to all agents, not later than to-morrow, to paste over the printed names on the ticket, and thus beat this scheme. Have you seen any tickets yet? And what do you think of this plan? "Yours truly, "----" "----, Iowa, Nov. 11, 1888. "DEAR SIR: Repeating the old and time-honored saying: 'We have met the enemy and we are theirs. ' The Democratic Granger and the largely increased Republican vote was too much for us. Many friends voted with the railway men, but to no purpose. The comparison between Granger and Smyth will tell more than anything else the strength of the railway vote. But we are badly used up, and may as well take our dose. "Yours truly, "----" While the result of this election was indeed a bad dose for speculatingrailway managers, it is the opinion of the masses and of railwaystockholders, who are more interested in the general welfare of theroads than in speculation in their stocks, that the dose was welladministered, and should be repeated whenever the necessity for it mayagain arise. It is probably true that railroad managers have lost much of theirformer influence in politics. As their means of corruption have becomegenerally known they have become less effective. The public is more onthe alert, and corrupt politicians often find themselves unable to carryout their discreditable compacts. But it is unreasonable to expect the evil to cease until the cause isremoved. The trouble is inherent in the system, and the fault is theremore than in the men who manage the business, and not till the greatpower exercised by them is restrained within proper limits will the evildisappear. All this can be accomplished when there shall be establisheda most thorough and efficient system of State and National control overthe railroad business of the whole country. CHAPTER X. RAILROAD LITERATURE. The cause of the railroad manager has never been without time-servers. Not to speak of those newspaper editors who, for some consideration oranother, defend every policy and every practice inaugurated or approvedby railroad authorities, there has always been a school of literati whofelt it their duty to enlighten, from a railroad standpoint, theirfellow-men by book or pamphlet upon the transportation question, tocorrect what they supposed to be false impressions, and to round up withan apology or defense for the railroad manager, who is invariablyrepresented by them as the most abused and at the same time mostpatriotic and most progressive man of the age. The benefits derived from the railroad are great. It has been animportant factor in the development of our country's resources and theadvancement of our civilization. Its value is fully appreciated, butthere is no reason why the men who have utilized the inventions ofStephenson and others, and have grown rich by doing so, should beeulogized any more than those who are ministering to the wants of thepublic by the use of the Hoe printing press, McCormick's reaper, Whitney's cotton gin, or any of the thousands of other moderninventions. These authors doubtless are prompted by various motives. Some have beeneducated in the railroad school and are therefore blind to railroadevils. Others naturally worship plutocrats, because they hold theopinion that capital is entitled to a larger reward than brains andmuscle, for the reason that the latter is more plentiful than theformer. But there is a third class of railroad authors, who, there is reason tobelieve, enter the literary arena in defense of railroad evils notsolely for the love they bear the cause, but as the paid advocates of aclass of men who feel that their cause is in need of a strong defense atthe bar of public sentiment. It would be difficult to account in anyother way for the extravagant statements and one-sided arguments made bythis class of writers. Yet railroad literature has not confined itselfto the retrospective field. Its scope has grown with the significance ofits contributors. In more than one instance have men at the head oflarge railroad corporations, influenced by temporary interest, becomethe authors of documents containing assertions and prophecies highlypathetic at the time, but subsequently shown to be so replete withfalsehoods and absurdities that few railroad managers would to-day bewilling to father them. Thus Alexander Mitchell, the late president ofthe Chicago, Milwaukee and St. Paul Railroad Company, addressed on the28th of April, 1874, shortly after the passage of the Wisconsin GrangerLaw, a letter to Governor Taylor, containing the following passages: "That it [the Wisconsin law] has effectually destroyed all future railroad enterprises, no one who is acquainted with its effect in money centers will for a moment doubt. .. . The whole amount received on the investment [Chicago, Milwaukee and St. Paul Railroad] for interest and cash and stock dividends, amounts to only six per cent. Per annum of the actual cost of the property. I submit to your Excellency, and through you to the people of the State, whether this is more than a fair and reasonable return for the capital invested in these improvements. Is it not far below such reasonable amount? The best and most careful economists admit that no less than ten per cent. Per annum should be allowed on such investments. .. . The directors of this company have at all times had a due regard to the interests of the public, and a desire to furnish transportation at the lowest possible figures, and, although not receiving a fair and reasonable return on their investments, they have for the last four years prior to 1873 steadily reduced their rates of freight and passengers from year to year, as will be seen from the following tables, showing the charge for freight per mile, and the average per mile for passengers for each year, from 1868 to 1873 inclusive: Charges per ton Average passenger rate per mile--cents. Per mile--cents. 1864 . 04 1868 . 03 40-100 . 03 86-100 1869 . 03 10-100 . 03 92-100 1870 . 02 82-109 . 03 85-100 1871 . 02 54-100 . 03 75-100 1872 . 02 43-100 . 03 54-100 1873 . 02 50-100 . 03 42-100 "The law in question proposes to reduce our passenger rates twenty-five per cent. And our freight rates about the same, thus deducting from our present tariff about twenty-five per cent. Of our gross earnings. .. . This act, as we have seen, proposes to take from us twenty-five per cent. Of our passenger and freight earnings, and the additional tax of one per cent. Of our gross earnings, all of which is equivalent to taking from us twenty-six per cent. Of our gross earnings. Therefore, deducting this amount, equal to twenty-six per cent. Of our entire gross earnings, from thirty-three per cent. , our average net earnings on business, would leave us only seven per cent. Of our gross earnings as the entire net earnings of the road, out of which must be paid the interest on the bonds and the dividends to our stockholders. It is therefore manifest that this law will take from us over three-fourths of the net income received under our present tariff. .. . The board of directors have caused this act to be carefully examined and considered by their own counsel, and by some of the most eminent jurists in the land, and after such examination they are unanimous in their opinion that it is unconstitutional and void. .. . The board of directors are trustees of this property, and are bound faithfully to discharge their trust, and to the best of their ability to protect it from spoliation and ruin. They have sought the advice of able counsel, and, after mature consideration, believe it their duty to disregard so much of said law as attempts arbitrarily to fix rates of compensation for freight and passengers. .. . Being fully conscious that the enforcement of this law will ruin the property of the company, and feeling assured of the correctness of the opinions of the eminent counsel who have examined the question, the directors feel compelled to disregard the provisions of the law so far as it fixes a tariff of rates for the company, until the courts have finally passed upon the question of its validity. " The letter was at the time regarded by railroad men as a very strongdocument, and the railroad journals were filled with lengthy editorialsin praise of the soundness of the doctrines and arguments which itcontained. The disinterested of the enlightened portion of the communityeven then realized that the "eminent jurists" whom the company hadconsulted were hired attorneys and greatly biased in their views as tothe constitutional rights of corporations, and that President Mitchellon his part had painted by far too dark a picture of the situation. Itis now quite generally admitted that many of Mr. Mitchell's statementswere as false as his counsel's interpretation of the Constitution andthe law was erroneous. From the assertions made in this letter one isled to infer that the then stock-and bondholders of the Milwaukee roadhad paid in full every dollar of the capitalized value of the road, andthat they derived from their investment an income of only about six percent. On the money actually invested by them. The cost of the entireChicago and Milwaukee system in Wisconsin was stated in the letter asbeing $38, 000 per mile. It is not likely that this line of road evercost to exceed $25, 000 a mile, or that those who then owned the roadpaid much more than two-thirds of its actual cost for it. The road, asthe letter itself admits, was bought at sheriff's sale, and no mercywhatever was shown to the farmers who had mortgaged their farms to aidthe 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 CityRailroad, in his recent excellent work, "The Railway Problem, " reviewsMr. Mitchell's letter as follows: "Mr. Mitchell states the average rate per mile in 1873 for passengers at 3. 42 cents. It was well understood that this was an average rate received from those passengers who paid anything, and that, had the average rate been obtained by using as a divisor the total number of paying passengers plus the number of those who rode free the average would have been much below three cents, the price fixed by the law, and consequently, if the company would collect the legal rate from all alike and abolish the free list, its revenues from the passenger business would be increased rather than decreased. If the same test is applied to the freight rates it becomes equally evident that this statute did not reduce the rates in Wisconsin below the average rate of 2. 50 cents per ton per mile, which, according to Mr. Mitchell's statement, was the average for the year 1873. For proof, it may be stated that the law classified freight into four general classes, to be designated as first, second, third and fourth classes, and into seven special classes, to be designated as D, E, F, G, H, I and J. The rates on the four general classes were made the same as were 'charged for carrying freights in said four general classes on said railroads on the first day of June, 1873, ' and the rate per ton per mile was fixed at certain rates for the first twenty-five miles, a less for the second twenty-five miles, and a fixed rate per mile after, as follows: 1st 25 Miles 2nd 25 Miles. All Over 50 Miles. D 4-4/5 cents 3-1/5 cents 1 3/5 cents. E Same as class above. F 4 cents 2 cents 1 cent. G 3-1/5 cents 2 cents 1 cent. H 4 cents 2-4/5 cents 1-3/5 cents. I 4-2/5 cents 2-2/5 cents 1-1/5 cents. J 3-1/5 cents 2-2/5 cents 1 cent. "When it is considered, in connection with these figures, that the four general classes were left by the legislature under the same tariffs as had been enforced by the companies, and, as a rule, first class is three times the rate of class D, and third and fourth class materially higher, the evidence seems conclusive that the rates fixed by law would produce an average materially higher than the average of the whole year, stated by Mr. Mitchell at 2-1/2 cents. It seems also probable that, had the rates fixed by this law been applied to the whole business of the line, the interstate as well as the State traffic, it would still have produced a larger average. The latter of course is the proper test. There are little inaccuracies in the material facts as stated by Mr. Mitchell which were pointed out at once. For example: In his tabulated statement of passenger earnings per mile, averaging the gross earnings from transportation of passengers who paid any fare, and omitting the large number who went free, the rate is stated at 3 42-100 cents per mile; then he says: 'The law in question proposes to reduce our passenger rate twenty-five per cent. , ' which would have reduced the rate to 2. 57 cents per mile, while, the rate fixed by the law complained of was three cents per mile. Then Mr. Mitchell proceeds: 'And our freight rates about the same; thus deducting from our present tariff about twenty-five per cent. Of our gross earnings. ' It was immediately pointed out that the law only applied to strictly State business; that is, to traffic that originated and ended in the State of Wisconsin. All other traffic was interstate commerce, and could not be controlled by State legislation. The volume of business which would be affected by the law would therefore be comparatively small--estimated at not over ten per cent. , of the total traffic of the line. Hence, if the rates fixed by the law were twenty-five per cent. Less than the rates the company had been in the habit of collecting (which was denied), it could not possibly have 'deducted from its present tariff' more than two and one-half per cent. , instead of twenty-five per cent. As stated by Mr. Mitchell. "It was claimed that the facts were, that the Chicago, Milwaukee and St. Paul Company, in its efforts to bankrupt the Lake Superior and Mississippi Company, had many of its interstate rates so low that it had resulted in loss, and that its other rates had been made unreasonably high in order to recoup this loss, and that the State of Wisconsin was compelled to pay a part of the expense of the transportation of favored sections of the State of Minnesota. " All through the Granger contests the railways have weakened the force oftheir arguments by their misrepresentation of facts and by theirextravagant predictions of ruin. The companies were continuallyproclaiming: 'If this or that is done, it will ruin us; it will ruin theState, ' when, in fact, a road cannot be mentioned that has suffered fromState legislation. Nineteen years ago no railroad manager could havewritten what Mr. Stickney writes to-day, and few railroad managers wouldwrite to-day what Mr. Mitchell wrote then. And yet, such is the changewhich public sentiment is undergoing upon these questions, that theutterances of many of our present railroad authors will appear as absurda few years hence as Mr. Mitchell's letter of nineteen years ago appearsto us now. Many railroad attorneys have since been guilty of resorting to thesophistry employed by President Mitchell in that strange letter which headdressed to the Governor of Wisconsin. Even so distinguished agentleman as Hon. James W. McDill, now a member of the InterstateCommerce Commission, made in 1888, as a member of a railroad lobby, thefollowing remarkable statements before the Railroad Committee of theGeneral Assembly of Iowa, in a speech opposing a proposed reduction ofthe passenger rate of first-class roads from three to two cents permile: "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 severalyears. He may, therefore, be presumed to have known that the State ofIowa could not, and did not propose to, regulate interstate traffic, andthat the thirteen million dollars railroad revenue to which he referredwas derived both from interstate and State traffic; that the latter wasonly about one-fourth of the former, and that therefore the proposedreduction on the basis of schedule rates would have cut down the netrevenue of the roads only about one million instead of five milliondollars. But Mr. McDill himself states that the average rate earned byall the railroads of the United States was, for the year 1886, only2. 181 cents per passenger per mile. It certainly was not over 2-1/2cents per mile for the first-class roads of Iowa. Thus the proposedreduction, 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 localbusiness of the first-class roads. In other words, the bill underconsideration, had it been enacted into law, would have caused areduction of 20 per cent. On about 25 per cent. Of the total revenuefrom passenger business of the first-class roads, or of five per cent. On their total income from passenger traffic in the State of Iowa. Itwill be noticed that Mr. McDill in his calculation made no allowancewhatever for the increase of business which would have followed such areduction. The gain from this source would probably have greatlyexceeded the loss due to this small reduction in the fare. In the sameaddress Mr. McDill made many other equally fallacious statements. One of the most devoted advocates of the interests of railroad managersis Marshall M. Kirkman. He is the author of a number of books andpamphlets upon railway subjects, among them a pamphlet entitled "TheRelation of the Railroads of the United States to the People and theCommercial and Financial Interests of the Country. " Mr. Kirkman introduces his subject with the following rather remarkablestatement: "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 thelocation of business centers, and vitalizes by its presence, or blastsby its absence. " He contends that rigid and scrutinizing supervisionshould be exercised by the Government over the location of railroads, and that only such lines should be permitted to be built as affordreasonable grounds for profitable enterprise. "It should be, " he says, "an axiom in our day that a government that permits or encourages theconstruction of two railways where one would suffice is, to the extentthat it does this, a public nuisance. " Mr. Kirkman here makes it theduty of the Government to arbitrarily meddle with railroad affairs. Hewould give the Government the power to determine when and where anadditional railroad is needed, and to prohibit the construction of anynew road that has not the Government sanction. The interests of athousand towns might suffer for want of adequate transportationfacilities, individuals and communities might be anxious to build theirown lines for the development of local resources, but all railroadenterprise is doomed to a standstill until a conservative governmentalcommission has been entirely satisfied that a prospected road will payand not deprive existing roads of any part of their revenue. There canbe no doubt that if such a policy were ever adopted in America, fewroads would be built without having first passed the ordeal of a legalinjunction, and many a prospected road, though greatly needed, wouldremain unbuilt because its promoters would be discouraged by the delayand cost of litigation. But while this author is perfectly willing to trust the Government withthe great responsibility of prohibiting the construction of proposedroads, he is not willing to have it exercise the power to determine whatare reasonable rates. He tries to sustain his objection by the followingargument: "The fixing of rates upon a railroad is as delicate a processas that of determining the pulse of a sick man. They cannot bedetermined abstractly, or in advance of the wants of business, but mustbe adjusted from hour to hour to conform to its fluctuations. Fivethousand men find active employment in the United States in connectionwith the important duty of making rates. Each case requires particularinvestigation and involves, in many instances, prolonged study andresearch. The duty requires men of marked experience and capacity. Theyand men like them are the silent, unseen power that moves greatenterprises of every nation. In the case of railroads we may enumeratethose having official positions, but the experts from whom the officialheads derive information and assistance cannot be classified. Theycomprise a vast army of experienced and able men familiar with railwaytraffic and quick to respond to its requirements. Such a body of mencould not be organized by a government, or, if organized, would rapidlydeteriorate under conditions so unfavorable for their support anddevelopment. Whatever authority exercises the duty of fixing rates musttake up the subject in the same methodical way and, acting throughskilled agents, pursue its inquiries and determine its results with thesame experience, minute care and _conscientious regard_ for thetechnical requirements of business that the railway companies observe. No government can possess the facilities for perfecting so vast andintricate an organization and at the same time render it responsive tothe public good. The labor is too great and the responsibility tooremote. It could not move with sufficient quickness to respond to theactual requirements of trade, and too many restrictions wouldnecessarily govern its actions. For these and other equally importantreasons governments must always be satisfied to restrict their officesin this direction. " Speaking of the men who are commonly termed railroad magnates, Mr. Kirkman says: "They alone possess the needed administrative ability thatthe situation demands. They not only provide largely the capital, butthey discover the fields wherein it may be used most advantageously. They are the advance guard of all great enterprises, the natural leadersof men. They are an integral part of the country, a necessary andvaluable element, without which its natural resources would availlittle. " This is a very strong statement in the face of the fact thatbut very few of the class of men to whom Mr. Kirkman refers ever built aline 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 ofrailroads; on the contrary, the latter have always been the victims ofpublic persecution, and "every species of folly, every conceivabledevice of malice, the impossible requirements of ignorance, the selfishcunning of personal interests, the ravings of demagogues, thedisappointments, envies, prejudices and jealousies of mankind have eachin turn and in unison sought to injure the railway interest. " But probably the most extravagant passage in the whole treatise is theone referring to special rates, which he calls "the foundation andbuttress of business, " without which it could not be carried on. Heexpresses the opinion that without the continued and intelligent use ofsuch rates "our cities would soon be as destitute of manufactories asone of the bridle paths of Afghanistan, " and then continues: "Thespecial rate of carriers is like the delicate fluid that anoints andlubricates the joints of the human body. It is an essential oil. Withoutit the wheels of commerce would cease and we should quickly revert tothe period when the stage-coach and the overland teamster fixed thelimits 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 fromour 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 hissubject he revels in such phrases as: "Subject too vast to becomprehended. " "Acts of agrarian legislation and foolish manifestationsof disappointment and hate. " "The rabble will avail itself of everyexcuse to pass laws that would, under other circumstances, be calledrobberies. " "Ignorance and demagogism. " "Government interference, thepanacea of cranks and schemers. " "Only understood by the few. " "Thesepeople are as sincere as they are ignorant. " "Governments have nocommercial sense. " "Those who condemn them are not so dishonest asignorant, and not so malicious as foolish. " "Silly people. " "Justice andcommon honesty are systematically denied [the railroads]. " "Legal meansof plundering them. " "The intelligence and facilities of Government arebut one step above the barbarian. " "Those who use railroads should payfor them, " etc. , etc. Mr. Kirkman's argument is in substance: Rate-making is a difficultsubject. The people are too ignorant to understand it. Those who carryon the Government are for the most part fools and demagogues, and areutterly unfit to do justice to such a task. Railroad men are wise andjust, and neither the people nor the Government should meddle with therailroad business. In order to place a true estimate upon Mr. Kirkman'sutterances, one should remember that he is a railroad employe as well asthe patentee and vendor of a number of railroad account forms which areextensively 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 furtherinvestigation any assertion that has often been reiterated. Most peopleare prone to believe that an assertion made by a thousand hearsaywitnesses is true, overlooking the possibility of their drawing from acommon false source. But it is surprising that an author like Prof. Arthur T. Hadley should fall into such an error. In his otherwiseexcellent work, "Railroad Transportation, Its History and Its Laws, " Mr. Hadley bases a number of his deductions upon false premises advanced byrailroad managers, and arrives at conclusions which appear strange whentheir source is considered. In the chapter on railroad legislationProfessor Hadley says: "But a more powerful force than the authority ofthe courts was working against the Granger system of regulation. Thelaws of trade could not be violated with impunity. The effects were mostsharply felt in Wisconsin. The law reducing railroad rates to the basiswhich competitive points enjoyed left nothing to pay fixed charges. Inthe second year of its operation, no Wisconsin road paid a dividend;only four paid interest on their bonds. Railroad construction had cometo a standstill. Even the facilities of existing roads could not be keptup. Foreign capital refused to invest in Wisconsin; the development ofthe State was sharply checked; the very men who had most favored the lawfound themselves heavy losers. .. . By the time the Supreme Courtpublished the Granger decisions, the fight had been settled, not byconstitutional 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 Statesnever 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 soto make it odious. Rates were never reduced by the legislature to thebasis previously enjoyed by competitive points, but merely to theaverage charge which had obtained before the passage of the law. As arule the railroad revenues increased. If any companies failed to earnenough to pay fixed charges it was simply because they were determinednot to do so. A non-payment of dividends did not injure the managers, but simply other stockholders of the road. A permanent establishment ofthe principle of non-discrimination, on the other hand, would havebenefited stockholders, while prejudicing the speculative interest whichmanagers had in the roads. Railroad construction came, after thefinancial panic of 1873, to a practical standstill throughout the UnitedStates; and if the Granger States did not get their share of the verysmall total increase during the five years following the panic, it wasdue solely to a conspiracy on the part of the railroad managers tomisrepresent and pervert the legislation of these States. The laws, ashas already been stated, were finally repealed, not because the peoplehad tired of them or regarded them unwise or unjust, but because it washoped that the commissioner system would prove more efficient. It wasoffered as a compromise measure and was accepted as such by the railroadmanagers, who, in their eagerness to rid themselves of the restrictionsimposed by the Granger laws, gave every assurance of complete submissionto the requirements of the proposed legislation. Mr. Hadley even goes so far as to defend railroad pools. "Unluckily, " hesays, "we place these combinations outside of the protection of the law, and by giving them this precarious and almost illegal character we temptthem to seek present gain, even at the sacrifice of their own futureinterests. We regard them, and we let them regard themselves, as a meansof momentary profit and speculation, instead of recognizing them asresponsible public agencies of lasting influence and importance. " We canpartially account for this author's defense of pooling when we areinformed that he accepts it as an axiom that "combination does notproduce arbitrary results any more than competition produces beneficentones. " Referring to railroad profits, Mr. Hadley says: "The statementthat corporations make too much money is scarcely borne out by thefacts. The average return of the railroads of this country is only fourper cent. , the bondholders receiving an average of four and a half percent. , the stockholders of two and a half per cent. True, much of thestock is water, not representing any capital actually expended; but, even making allowance for this, it is hardly probable that the roads areearning more than five per cent. On the total investment. This assumesan average cost of $45, 000 per mile, implying that about half of thestock and one-sixth of the bonds are water. " Mr. Hadley would probablyhave come much nearer the truth if he had assumed three-fourths of thestock and one-fourth of the bonds to be water. Even Mr. Poor, whocertainly cannot be accused by railroad men of being inimical to theirinterests, places the average cost of the railroads of this country nohigher than at $30, 000 per mile; and this estimate, it should beremembered, includes the value of the large donations made to railroadcompanies by the public. With a full understanding of all thecircumstances, Mr. Poor said of railroad investments several years agothat if the water were taken out of them no class of investments in thiscountry would pay as well. In the face of this statement Mr. Hadleywould 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 topay as large a dividend as possible for the current year, he can best doit by squeezing his local tariff, of which he is sure, and securingthrough traffic at the expense of other roads by specially low rates;that is, by a policy of heavy discrimination. But the permanent effectof such a policy is to destroy the local trade, which gives a road itsbest and surest custom, and to build up a trade which can go by anotherroute whenever it pleases. The permanent effect of such a policy isruinous to the railroad as well as the local shipper. " And he continues:"By securing publicity of management you do much to prevent thepermanent interests of the railroads from being sacrificed to temporaryones. By protecting the permanent interests of the public you enlist thestockholders and the best class of railroad managers on the side ofsound policy. " Edward Atkinson, in an essay entitled "The Railway, the Farmer and thePublic, " endeavors to prove that the farmers have no cause forcomplaining against the railroad, because rates of transportation havebeen greatly reduced during the past twenty years. Speaking of thereductions made in freight rates in the State of New York, he says: "Hadthe rate of 1870 been charged on the tariff of 1883 the sum would havebeen 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 NewYork. " It either did not occur to Mr. Atkinson, or, if it did occur tohim, he failed to mention it, that these freight reductions were forcedupon the railroads chiefly by water competition, and that if therailroad companies had not saved these seventy-four million dollars forthe people, the canal lines, always subject to competition, would havesaved a large part of it. With equal propriety might it be said that therailroads, by meeting canal competition, saved for themselves in theyear mentioned a goodly share of their gross earnings. Such reasoning isabsurd, and it is high time that the bubble of an argument so often usedby railroad advocates be pricked. As Mr. Atkinson has introduced thefarmer, let us apply his rule to him. There was a time when the farmersold his corn for a dollar a bushel. To-day he sells it for thirtycents. He therefore saves to the people of this country, on2, 000, 000, 000 bushels, the enormous sum of $1, 400, 000, 000. There isscarcely an industry in existence to which this argument does not applywith equal force. Mr. Atkinson virtually admits that railroads chargeall the traffic will bear when he says: "The charge which can be putupon the wheat of Dakota or Iowa for moving it to market is fixed by theprice at which East Indian wheat can be sold in Market Lane. " He isopposed to the Interstate Commerce Law, which he regards as "obnoxiousmeasures of national interference and futile attempts to control thisgreat work. " He would rely chiefly upon the publicity of accounts madeby railway officers, as secured by the private publication of Poor'sRailway Manual, for all needed regulation, but concedes theestablishment of a figurehead commission, concluding his remarks uponthe subject as follows: "A commission which may bring public opinion tobear upon railway corporations may well be established, and there thework of the legislator may well cease. " When we consider the powerfulagencies employed by railroads to create public sentiment in their favorwe can well understand the inefficiency of such a milk-and-water methodof control. One of the most radical books ever published at the instigation ofrailroad managers appeared in 1888, under the title "The People and theRailways. " Its author is Appleton Morgan, who attempts to "allay theanimosity 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, forthe masses of the people prefer in such a controversy arguments toridicule and sarcasm, weapons of literary warfare to which this authorresorts altogether too freely. Mr. Morgan's opinion as to the benefitsof centralized wealth and trade combinations differs greatly from thatheld by the great majority of the American people. He says: "The fact, the truth is, that (however it may be in other countries) theaccumulation of wealth and centralization of commerce in greatcombinations has never, in the United States, been a source ofoppression or of poverty to the non-capitalist or wage-worker. " There isscarcely an evil in railroad management which Mr. Morgan does notdefend. Pools, construction companies, rebates, discriminations andover-capitalization all find favor in Mr. Morgan's eye. "Rebates anddiscriminations, " he says, "are neither peculiar to railways nordangerous to the 'Republic. ' They are as necessary and as harmless tothe farmer as is the chromo which the seamstress or the shop girl getswith her quarter-pound of tea from the small tea merchant, and no moredangerous to the latter than are the aforesaid chromos to the smallrecipients. " Pools and combinations receive an unusually large share ofMr. Morgan's attention. A few selections from his effusions in theirfavor may be given here, viz. : "These pools are the legitimate and necessary results of therechartering over and over again of railway companies to transactbusiness between the same points by paralleling each other. So long asthe people in their legislatures will thus charter parallel linesserving identical points--thus dividing territory they once grantedentire--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 inreliance upon an undivided business) combine to save themselves frombankruptcy. " And again: "Against the inequality of their own rates andthe hardship of the long and short haul (in other words, against thediscrimination of nature and of physical laws) no less than against theperil of bankruptcy and the consequent speculative tendency of theirstocks (after which may come the wrecking, the watering, and the vastindividual fortunes), the railways of this republic have endeavored, byestablishment of pool commissions, to defend both the public andthemselves. .. . 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, canbe conserved in but one way--by living tariffs, such as the pools onceguaranteed. " In the following passage this author denies to the State the right toregulate rates: "Granting that they [the railroads] must carry freightsfor the public in such a way as not to injure either the public or thefreight in the carrying, most emphatically (it seems to me) it does notfollow that they must add to the value of the freights they carry bycharging only such rates as the public or the owners of the freightinsist on. " But Mr. Morgan's indignation rises to the highest pitch in hisdiscussion of the Interstate Commerce Act. He fears that it will causethe downfall of our liberties and sees in the background the VenetianBridge of Sighs and the French Bastille. He asks: "Why should for anypublic reasons--for any reason of public safety--the Interstate CommerceLaw have come to stay?" He then berates the act as follows: "To beginwith, the present act abounds in punishments for and prohibitionsagainst an industry chartered by the people, but nowhere extends to thatindustry 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 companymight, by accident, be in the right, and the patron, customer, passengeror shipper in the wrong. .. . The constitutions of civilized nations, forthe last few centuries at least, have provided that not even guiltshould be punished except by due process of law, and have uniformlyrefused to set even that due process in motion except upon a complaintof grievance. But the Interstate Commerce Law denies the one and doesaway with the necessity for the other. That statute provides that thecommission it creates shall proceed 'in such manner and by such means asit shall deem proper, ' or 'on its own motion, ' and that 'no complaintshall at any time be dismissed because of the absence of direct damageto the complainant. ' Even the Venetian council often provided for acertain and described hole in the wall through which the anonymousbringers of charges should thrust their accusations. Even the court ofstar chamber was known to dismiss inquisitions when it found that nowrong had been done. But the statute of interstate commerce appears toissue _lettres de cachet_ against anything in the shape of a railwaycompany--to scatter them broadcast, and to invite any one who happens tohave leisure to fill them out, by inserting the name of a railwaycompany. It says to the bystander: 'Drop us a postal card, or mention toany of our commissioners, or to a mutual friend, the name of any railwaycompany of which you may have heard, and so give us jurisdiction toinquire if that company may have by chance omitted to dot an i or crossa t in its ledgers, or whether any one of its hundreds of thousands ofagents--in the rush of a day's business, or in a shipper's hurry tocatch a train--may have named a rate not on the schedule then beingprepared at headquarters, or charged a sixpence less than some otheragent 250 miles down the line may have accepted a week ago for whatmight turn out to be a fraction more mileage service in the same generaldirection. No particular form is necessary. Drop in to luncheon with ourcommission any day between twelve and one, and mention the name of arailway company. The railway company may have done you no damage, norgrieved you in any way; just mention the railroad, and we will takejurisdiction of its private (or quasi-public) affairs. Or, if you don'thappen to have time to mention it, we will take jurisdiction anyhow, 'ofour own motion, ' of any railway company whose name we find in theOfficial Gazette. It really does not matter which; any one will do. "This is a fair example of the literature on the Interstate Commerce Lawpaid for by railroad men. Mr. Stickney, although a railroad president, takes an entirely differentview of the situation. He considers the law inadequate to bring aboutthe reforms needed. He says: "This enormous business is now in thecontrol of several hundred petty chieftains, who are practicallyindependent sovereigns, exercising functions and prerogatives indefiance of the laws, and practically denying their amenability to thelaws of the country. If the Government would seek to bring them to termsand compel them to recognize and obey the laws, it must use the meansnecessary to accomplish the end. It must have executive officerssufficient in number as well as armed with an adequate power and dignityto command their respect. .. . The power conferred upon them [theInterstate Commerce Commission] to enforce their judicial orders is thepower 'to scold. ' The penalties of the law which the courts are in powerto impose are certainly severe, but the law has been operated for aboutfour years without any convictions, and yet no well-informed person isignorant of the fact that the law has not been obeyed. The president ofa large system is said to have remarked that 'if all who had offendedagainst the law were convicted there would not be jails enough in theUnited States to hold them. ' It is evident that the Government has notprovided adequate machinery for enforcing the law. " Mr. Stickney is correct in his statement that adequate machinery forenforcement of the law has not been provided, but he does not givesufficient credit to the law or the commission. While much work remainsto be done, much progress has been made. He is of the opinion that the public welfare would be furthered if theNational Government assumed the sole control of railroads. He gives hisreasons for the change which he proposes, as follows: "There are many reasons besides these in the interest of uniformity which make it desirable to transfer the entire control of this important matter to the regulation of the Nation. First, because of its constitution and more extended sessions, Congress is able to consider the subject with greater deliberation, and therefore with more intelligence, than can a legislature composed of members who, as a rule, hold their office for but one short session of about sixty days' duration. There would also be removed from local legislation a fruitful source of corruption, which is gradually sapping the foundations of public morality. .. . In the second place, the problem of regulating railway tolls and managing railways is essentially and practically indivisible, by State lines or otherwise, and therefore it is not clear but that whenever the question may come before the courts it may be held that the authority of Congress to deal with interstate traffic carries with it, as a necessary and inseparable part of the subject, to regulate the traffic which is now assumed to be controlled by the several States. The courts have held that the States have authority to regulate strictly State traffic in the absence of Congressional action, but their decisions do not preclude the doctrine that Congress may have exclusive jurisdiction whenever it may choose to exercise the authority. There is a line of reasoning which would lead to that conclusion. It may be that many will not care to follow the lead of the writer as to the measure of aggregate net revenue which railway companies are entitled to collect in tolls, but it is evident that before the tolls can be intelligently determined some measure of such aggregate revenue must be ascertained. The question would then arise, what proportion must be levied upon State and interstate traffic respectively? If the State should refuse to levy its share (and how could such share be ascertained?), then more than its share would have to be levied on interstate traffic, and thus the State by indirection would be able to do what the Constitution prohibits. Of course, when the Constitution was adopted railways and railway traffic were unknown. But it was a similar question which brought the thirteen original States together into one nation, under the present Constitution. At least the first movement toward amending the original Articles of Confederation was to give Congress enlarged power over the subject of commerce. " In reply to this it may be said that it will be an unfortunate day forthe States when they surrender the power to control their home affairs. Differences between State and interstate rates could easily be adjustedby the National and State commissions and by the courts. It certainlyought not to be difficult for such tribunals to see that a rate which ismade higher or lower, as it may be for State or interstate traffic, iswrong. Mr. Stickney has fallen into the error common to railroad men inbelieving that lower rates of transportation will not prevail in thefuture. There are many reasons why it is probable that they will belower. Present rates are highly profitable on well located lines. Labor-saving inventions will increase, and roads will be built andoperated more cheaply. Lines will be located with lower grades, lightercurvature and more directness. Business will increase largely, and theratio of expenses will decrease. Steel will be improved in quality andwill be substituted for iron. A heavier rail and more permanent roadwaywill be used. Rates of interest will rule lower, and there will be muchmore economy in superintending. Extravagant salaries to favorites willbe reduced, and sinecures and parasites will be cut off from thepayrolls. Lower wages are inevitable as our population becomes moredense. A very interesting and instructive author upon railroad subjects isCharles Francis Adams, Jr. , ex-president of the Union Pacific Railroadand formerly a member of the Board of Railroad Commissioners of theState of Massachusetts. After twenty years' constant association withrailroad men, Mr. Adams should certainly know the character of hisquondam 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 toprotect itself and to secure the advantage over others, have, as theyusually do, bred a general spirit of distrust, bad faith and cunning, until railroad officials have become hardly better than a race ofhorse-jockeys on a large scale. There are notable exceptions to thisstatement, but, taken as a whole, the tone among them is indisputablylow. There is none of that steady confidence in each other, that easygood faith, that _esprit du corps_, upon which alone system and ordercan rest. On the contrary, the leading idea in the mind of the activerailroad agent is that some one is always cheating him, or that he isnever getting his share in something. If he enters into an agreement, his life is passed in watching the other parties to it, lest by somecunning device they keep it in form and break it in spirit. Peace iswith him always a condition of semi-warfare, while honor for its ownsake and good faith apart from self-interest are, in a business point ofview, symptoms of youth and a defective education. " And again, in anaddress delivered before the Commercial Club of Boston in December, 1888, Mr. Adams expressed his opinion concerning the average railroadmanager of to-day as follows: "That the general railroad situation ofthe country is at present unsatisfactory is apparent. Stockholders arecomplaining; directors are bewildered; bankers are frightened. Yet thatthe Interstate Commerce Act is in the main responsible for all theseresults, remains to be proved. In my opinion, the difficulty is far moredeep-seated and radical. In plain words, it does not lie in any act oflegislation, State or National; and it does lie in the covetousness, want of good faith and low moral tone of those in whose hands themanagement of the railroad system now is; in a word, in the absenceamong men of any high standard of commercial honor. These are strongwords, and yet, as the result of a personal experience stretching overnearly twenty years, I make bold to say they are not so strong as theoccasion would justify. The railroad system of this country, especiallyof the regions west of Chicago, is to-day managed on principleswhich--unless a change of heart occurs, and that soon--must inevitablylead to financial disaster of the most serious kind. There is among thelines composing that system an utter disregard of those fundamentalideas of truth, fair play and fair dealing which lies at the foundation, not only of the Christian faith, but of civilization itself. With themthere is but one rule--that, many years ago, put by Wordsworth into themouth of Rob Roy: "'The simple rule, the good old plan, That he shall take who has the power, And he shall keep who can. '" As regards the causes of the Granger movement, Mr. Adams says, in thework above mentioned: "That it [the Granger episode] did not originatewithout cause has already been pointed out. It is quite safe to gofurther, and to say that the movement was a necessary one, and throughits results has made a solution of the railroad problem possible in thiscountry. At the time that movement took shape the railroad corporationswere in fact rapidly assuming a position which could not be tolerated. Corporations, owning and operating the highways of commerce, claimed forthemselves a species of immunity from the control of the law-makingpower. When laws were passed with a view to their regulation theyreceived them in a way which was at once arrogant and singularlyinjudicious. The officers entrusted with the execution of those lawsthey contemptuously ignored. Sheltering themselves behind the DartmouthCollege decision, they practically undertook to set even public opinionat defiance. Indeed, there can be no doubt that those representing thesecorporations had at this juncture not only become fully educated up tothe idea that the gross inequalities and ruinous discriminations towhich in their business they were accustomed were necessary incidents toit which afforded no just ground of complaint to any one, but they alsothought that any attempt to rectify them was a gross outrage on theelementary principles both of common sense and of constitutional law. Inother words, they had thoroughly got it into their heads that they, ascommon carriers, were in no way bound to afford equal facilities to all, and, indeed, that it was in the last degree absurd and unreasonable toexpect them to do so. The Granger method was probably as good a methodof approaching men in this frame of mind as could have been devised. " Speaking of the educational value of railroad competition, Mr. Adamssays: "Undoubtedly the fierce struggles between rival corporationswhich marked the history of railroad development, both here and inEngland, were very prominent factors in the work of forcing the systemsof the two countries up to their present degree of efficiency. Railroadcompetition has been a great educator for railroad men. It has not onlytaught them how much they could do, but also how very cheaply they coulddo it. Under the strong stimulus of rivalry they have done not only whatthey declared were impossibilities, but what they really believed to besuch. " Mr. Adams has, from his long association with railroad managers, imbibedone heresy which is in strange discord with the general soundness of hisopinions. He holds that the railroad system was left to develop upon afalse basis, inasmuch as the American people relied for protecting thecommunity from abuses upon general laws authorizing the freest possiblerailroad construction everywhere and by any one. It can therefore not besurprising that Mr. Adams is an advocate of the legalized pool. He is ofthe opinion that secret combinations among railroads, inasmuch as theyalways have existed, always will exist as long as the railroad systemcontinues as it now is. Hence he proposes to legalize a practice whichthe law cannot prevent, and by so doing to enable the railroads toconfederate themselves in a manner which shall be at once both publicand responsible. The reply might be made that there are many otherconspiracies which the law cannot always prevent, but that this is noreason why conspiracies should be legalized. If pools and other railroadabuses had, since the beginning of the railroad era, been treated ascrimes and misdemeanors, and punished as such by the imposition of heavyfines, few people would to-day be ready to offer apologies for them. Ifthe time shall ever come when pools must be legalized it will be timefor 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 inthe Legislature of Virginia. Mr. Dabney favors State control, and is, onthe whole, friendly to the Interstate Commerce Act. He sees danger inthe pool, but inclines to the belief that the public benefit derivedfrom the pooling system outweighs the danger of public detriment fromits existence. The following is his chief argument for a legalized pool:"Perhaps, so long as railroad companies continue to enjoy an absolutemonopoly of transportation over their own lines, so that freecompetition is restricted in its operation to a comparatively fewfavored points, it may be worthy of serious consideration whether itwould not be better to legalize than to prohibit pooling, taking care toput the whole matter under strict public supervision and control. Thecompanies would then be left comparatively free to bring their localrates into something like harmony with the long-distance rates, andshould they fail to do so where the needs of the local community andtheir revenues make it proper to be done, then it is the function ofpublic regulation to compel it to be done. " Of the Interstate Commerce Act Mr. Dabney says: "The legislationrecently enacted by Congress for the regulation of commerce by railwayis the result of more careful and intelligent deliberation perhaps thanany other measure of similar character, and it is not unlikely that thelegislation of many of the States will sooner or later be conformed toit. " He speaks at some length of the drift toward railroad centralization. Afew extracts from this passage may be here given: "That the tendencytowards the unification and consolidation of different and competitivelines has been decidedly increased by the anti-pooling and the long andshort haul sections of the Interstate Commerce Law can hardly bedoubted. .. . The modern device of the 'trust' as a means of unifyingindustrial interests and eliminating competition had not yet beenapplied in the field of railroad transportation. .. . The scheme of trusthere briefly outlined would probably require for its successfuloperation the concurrence of the entire stockholding interest of eachcompany embraced in it; and herein, it seems likely, will be found thechief difficulty in perfecting such a scheme. Should it ever beperfected, a far more stringent public supervision and control of therailroad 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, " aplan for the reorganization of our railroad system, to remedy the evilsof monopoly which are at present connected with railroad management. Thefollowing quotation from his work outlines the system proposed: "Let theGovernment acquire the title of the franchise, permanent way and realestate of all the railway lines in the country. Let a few corporationsbe organized under Government auspices, and let each, by the terms ofits charter, receive a perpetual lease of all the railway lines built, or to be built, within a given territory. Let the territory of each ofthese corporations be so large, and so planned with regard to itsneighbors, that there shall be, so far as possible, no competitionbetween them. For instance, one corporation would operate all the linessouth of the Ohio and east of the Mississippi River; another all lineseast of the Hudson and of Lake Champlain, etc. Let the terms of rentalof these lines be about 3-1/4 per cent. On the road's actual 'presentcost' (the sum of money it would cost to rebuild it entirely at presentprices of material and labor), less a due allowance for depreciation. The corporations would be obliged to keep the property in as goodcondition as when received, and would own absolutely all theirrolling-stock, machinery, etc. " The proposed reform measures, it must beadmitted, are very good in theory, but their practical application isunfortunately entirely out of the question under our system ofgovernment. Mr. John M. Bonham is the author of a recent work entitled "RailwaySecrecy and Trusts. " This writer, upon the whole, takes advanced groundin dealing with the question of railroad reform. He deems the presentinterstate legislation inadequate to correct all the graver railroadevils, expressing his views upon this subject as follows: "Railway construction continues to increase in the United States with immense rapidity. Concurrent with this increase, and notwithstanding all the efforts that have been made at restraint, the aggressions upon political and industrial rights increase also. Nor is it likely that without more rigorous control than is now exercised these aggressions will be any less active than they are to-day. It is coming to be pretty generally realized that the Interstate Commerce legislation has not fulfilled the expectation of its friends. But this is a frequent trait of tentative legislation. It is not reasonable to expect that the first efforts to solve a problem the factors of which are so hidden and complex will be followed by complete success. " Concerning the changes needed to make Government regulation in theUnited States more effective, he says: "A reform which would deal with an elaborate system of evil cannot, therefore, be confined to treating consequences, the separate instances of the system. There must be a power which can go behind these and grapple with causes. There must, therefore, be something more than a court. There must be a commission, a department of government which will provide organized supervision and inspection against which the quasi-public corporation can claim no privacy as inviolable. Such a department must be clothed with the power to ascertain precisely where and how the evils of the present methods originate, and when these are ascertained it must be able to apply the remedy at the source of evil. The remedial force must be of a preventive kind. " A few grave misstatements of historical facts greatly mar Mr. Bonham'sbook. He makes, for instance, the following statement: "Following this came restrictive legislation, which, in some instances, was so unreasonable as to make any railway management impossible. Some of the Granger legislation, and especially that of Iowa, was of this character, as were also some of the earlier efforts to secure Congressional legislation. " It was left to Mr. Bonham to discover that legislation ever maderailroad management impossible in Iowa. The General Assembly of Iowapassed at two different times railroad laws that were greatly obnoxiousto railroad managers. In 1874 it passed a maximum tariff act which, atthe urgent solicitation of the railroad forces, was repealed four yearslater; and in 1888 it passed an act containing the principles of theInterstate Commerce Act and in addition authorizing the Board ofRailroad Commissioners to fix _prima facie_ rates. Strange as it mayseem to Mr. Bonham and other people inclined to believe withoutinvestigation the statements of railroad men, the earnings of the Iowaroads greatly increased immediately after the enactment of the so-calledGranger laws in 1874, as the following table will show: Year. Miles of Railroad. Gross Receipts. 1871 2, 850 $12, 395, 826 1872 3, 642 14, 534, 408 1873 3, 728 15, 430, 619 1874 3, 765 15, 568, 907 1875 3, 823 18, 422, 587 1876 3, 938 17, 221, 032 1877 4, 075 20, 714, 496 1878 4, 157 21, 294, 275 When the Granger law was repealed in 1878, the railroads were earning$1, 000 per mile more than they were earning when the law was enacted. The present railroad law, which was passed in 1888, and has also beenthe subject of extreme criticism on the part of railroad organs, has hadthe same beneficial effect. The law, owing to the obstacles thrown inits way by the railroad managers, did not become operative until 1889. From July 1st, 1889, to June 30th, 1892, the gross railroad earnings ofthe 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 anyyear previous to 1889, as will be seen from the table below: Gross Railroad Earnings in Iowa. 1886-87 $37, 539, 730 1887-88 37, 295, 586 1888-89 37, 469, 276 1889-90 41, 318, 133 1890-91 43, 102, 399 1891-92 44, 540, 000 The net earnings per mile of the Iowa roads were $1, 421. 91 in the year1888-89, and $1, 821. 37 the year following. The total net earnings of allIowa roads during the year ending June 30th, 1891, were $14, 463, 106, against $11, 861, 310 during the year ending June 30th, 1889, and werestill greater for the year ending June 30, 1892. No further vindicationof the Iowa law is necessary. These figures show plainly that thelowering and equalizing of the rates not only increased the roads'business and income, but also their net earnings. And it must beremembered that the reports showing these facts were made by therailroad companies and were certainly not made with any intention ofprejudicing the cause of the railroad manager. James F. Hudson, the author of "The Railways and the Republic, " is avery exhaustive and instructive writer upon the subject of railroadabuses. His material is well selected, and the subject ably presented. To the assertion of railroad managers, that railroad regulationinjuriously affects the value of railroad property, he makes thefollowing reply: "Suppose that it were true, as these jurists and writers claim, that by the assertion of the public right to regulate the railways the value of their property is decreased, are there no other property rights involved? Do railway investments form the only property in the land which requires the protection of the law? Are we to understand these judgments and their indorsers to mean that because railroad property will depreciate if certain principles of justice prevail, therefore justice is to be set aside for the benefit of railway property? If the magnitude of interests involved is to be of weight in deciding such questions, let us put against 'the hundreds of millions' of railway property on the one side the thousands of millions of private property on the other. Railway regulation, according to a writer in the _Princeton Review_, is 'confiscation of railroad property;' but this puts wholly out of the question the idea of private property which is rendered possible by leaving unchecked the power of the railways over commerce and manufactures through the manipulation of freight rates. Of the two parties in interest the shippers represent far greater property interests than the carriers, although the latter, by their organization, are more powerful. I have yet to hear of a single case where restrictive railway legislation has seriously damaged the honest valuation of any railway. I have yet to learn of any seriously proposed scheme of regulation that has proposed to cut down railway profits below a fair dividend on capital actually invested. But the entire Nation knows of one notorious case in which the discriminating policy of the leading railways of the country has resulted in the wholesale confiscation of private property for the benefit of a favored corporation. " Concerning the inconsistency presented by the plea of railroad managersfor a legalized pool, Mr. Hudson says: "It has been argued for years that the subject is so delicate and vast that it must not be touched by legislation in the public interest. To protect the rights of the ordinary shipper against the favorite of the railway would so hamper the operations of trade, it has been repeated times without number, as to take away the independence of the railways and destroy the freedom of competition. Yet, after years of argument that Government has no constitutional power to interfere with the railways, and of demonstration that all such interference must be ill-advised and injurious, the railway logic comes to the surprising climax of appealing to legislation for the aid of the law in upholding their efforts to prevent competition. " Mr. Hudson maintains that if the pool were legalized it would only be ameans of swelling railroad earnings. He says: "If the pool would maintain equitable rates its success might be desired, but what guarantee is there that the complete establishment of its power would make such rates? Its very character, the functions of the men who control its policy, and its avowed object of swelling the earnings of railways by artificial methods, forbid such an expectation. Make the success of the pool absolute, so that it can work without fear of competition, and its rates will be uniform, but of such a character that their uniformity will be a public grievance and burden. .. . A grave effect of this policy, though not easily calculable, is the ability it gives to railway officials to control the prices of stocks, and the temptation to enhance their fortunes by so doing. .. . It is a heavy indictment against the pooling system that it gives power to avaricious and unscrupulous men in railway management to enrich themselves at the cost of shareholders and investors, both by forming combinations and by exciting disputes or ruptures in them. " The question whether the common law does not protect the publicsufficiently is well answered by Mr. Hudson as follows: "The common law is sufficient in theory, but it has failed in practice. .. . In practice, legal remedies against railway injustice can be applied to the courts only by fighting the railways at such disadvantages that the ordinary business man will never undertake it except in desperate cases. Every advantage of strength and position is with the railways. .. . This [the railroad] power has kept courts in its pay; it defies the principles of common law and nullifies the constitutional provisions of a dozen States; it has many representatives in Congress and unnumbered seats in the State legislatures. No ordinary body of men can permanently resist it. " But the remedy which Mr. Hudson proposes for the correction of railroadevils is one of doubtful efficacy. It is this: "Legislation should restore the character of public highways to the railways by securing to all persons the right to run trains over their track under proper regulations, and by defining the distinction between the proprietorship and maintenance of the railway and the business of common carriers. " While it is admitted that the opening of the railroads to the free useof competing carriers is not necessarily impractical from a technicalpoint of view, it cannot be admitted that the proposed remedy would curethe evil. There would certainly be nothing to hinder carrying companiesforming a trust which might prove more dangerous to the interests ofshippers than are to-day the combinations of the railroad companies. Mr. Hudson devotes a chapter to the railroad power in politics, andshows how corporations, through their wealth, have secured the greatestand most responsible offices in the executive, legislative and judiciarydepartments of the Government. Speaking of their influence in theSupreme Court of the United States, he says: "The assertion that Jay Gould paid $100, 000 to the Republican campaign fund in 1880, in return for which Judge Stanley Mathews was nominated to the Supreme Bench, is denied as a political slander; but the fact remains that this brilliant advocate of the railway theories of law has been placed in the high tribunal, and that his presence there together with Justice Field, long a judicial advocate of the corporations, is expected to protect the railways in future against such constructions of law as the Granger decisions. " An English writer, Mr. J. S. Jeans, presents, in his "Railway Problems, "a great deal that is of interest to American readers. The statisticaldata of his work are especially interesting. We learn that the UnitedKingdom has nearly twenty railroad employes per mile of road operated, to less than five in the United States, and that the average number ofemployes per £1, 000 ($4, 850) of gross earnings is on the railroads ofthe United Kingdom 5. 4 to only about half as many in the United States. We further learn that the average earnings per train mile in America areover 25 per cent. Higher than they are in the United Kingdom, and exceedthose of most European countries. Of the remarkable increase in number and the profitableness of thethird-class passenger traffic in England Mr. Jeans says: "There has hitherto been a great lack of knowledge in this country as to the extent to which the different classes of passenger traffic yield adequate profit to the railroad companies. English passenger traffic differs from that of most other countries in this respect, that the chief companies attach third-class carriages to almost every train. The accommodation provided for third-class passengers in England is also much superior to what is found in other countries where there is the same distinction of classes. The effect of those two distinguishing features of the English railway system is that third-class carriages are much more and first-class carriages much less utilized than in other countries. The tendency appears to be towards an increasing use of third-class, and a decreasing use of first-class vehicles. But, all the same, the leading English lines continue to provide a large proportion of first-class accommodation in every train, and it is no unusual thing to find the third-class carriages of express trains absolutely full, while first-class carriages are almost empty. The natural result is that third-class travel is a source of profit, while first-class travel is not. .. . So far as passenger traffic is a source of net profit, that profit is contributed by the third-class. The total receipts from passenger traffic in England and Wales amounted in 1885 to £21, 968, 000. But if the average receipts per carriage over the whole had been the same as in the case of the Midland first-class vehicles, namely, £330, the total receipts from passenger traffic would only have been about nine millions. It is not necessary to be an expert in order to see that traffic so conducted must be attended with a very serious loss. " Of the stock-watering of American railroad companies Mr. Jeans says: "It seldom happens that in the United States the cost of a railway and its equivalent corresponds, as it ought to, to the total capital expenditure. There is no country in the world where the business of watering stocks is better understood or carried out more systematically and on so large a scale. For this reason there is liable to be a great deal of error entertained in reference to the natural cost of American lines. " There are many financial journals that are so closely identified withthe speculative interests of the country, and many railway papers thatdepend so largely upon railway men for support, that railway managersare never without a medium through which they can present their views tothe public. A systematic and concerted effort is also constantly made bythe railroads to pervert the press of the country at large. The greatcity papers generally yield to their influences and enlist in theirservice, and yet there are notable exceptions to this. In speaking of the extravagant sums which the railroads paid to thegreat dailies, ostensibly for advertising, but in fact for their goodwill and other services, a railroad superintendent recently said that itwas an infamous outrage, and yet it was the best investment of moneythat his company could make. The country papers have shown moreintegrity in maintaining their independence, but the railroads are notwithout their organs among them. It is not unfrequent to find some ofthem defending railroad abuses with all the apparent zeal of a WallStreet organ, and a glance at their columns often reminds one of Mr. Lincoln's story of the Irishman and the pig. Mr. Lincoln defended anIrishman against the charge of stealing a pig. After the testimony wastaken in court, Mr. Lincoln called his client aside and told him thatthe testimony was so strong against him, and that the case was so clear, that it was impossible for him to escape conviction, and he advised himto plead guilty and throw himself on the mercy of the court. "No, Mr. Lincoln, " said Patrick, "you go back and make one of your great speechesand swing your long arms and talk loud to the jury, and you will winthe case. " Mr. Lincoln, in accordance with that disposition toaccommodate so strongly characteristic of him, did as he was directed byhis client, and to his great surprise the jury promptly brought in averdict of not guilty. After it was all over, Mr. Lincoln said: "Now, Patrick, tell me why that jury acquitted you. I know that you stole thepig, and my speech had nothing to do in securing your acquittal. "Patrick replied: "And sure, Mr. Lincoln, every one of those jurymen atea piece of the pig. " CHAPTER X. RAILROAD LITERATURE--CONTINUED. Railroad questions have become of such general interest that theirdiscussion has become a prominent factor of magazine literature. It is asignificant fact that these contributors are usually railroad men, andunder these circumstances an unbiased discussion of the questions atissue is indeed a rare occurrence. It is but too frequently the soleobject of the contributor, and not unfrequently even of the publisher, to create a public sentiment in favor of the unjust demands of railroadmanagers. During the last few years systematic efforts have been made by therailroad interests to influence public opinion against the InterstateCommerce Law and restrictive State legislation through the leadingmagazines of the country. Mr. Sidney Dillon, president of the UnionPacific Railroad, in an article which appeared in the April (1891)number of the _North American Review_, under the title "The West and theRailroads, " endeavors to show that the West is indebted to the railroadmanagers for nearly all of the blessings which its people enjoy, andthat therefore railroad legislation in the West is a symptom of rankingratitude. He prefaces his argument with the remark that the elderportions of our commonwealth have already forgotten, and the youngerportions do not comprehend or appreciate, that but for the railroadswhat we now style the Great West would be, except in the valley of theMississippi, an unknown and unproductive wilderness. He then arguesthat, inasmuch as the railroads carry the wheat of Dakota and Minnesotato the sea-coast, and bring those sections of our community into directrelation with hungry and opulent Liverpool, the world should "thank therailway for the opportunity to buy wheat, but none the less should theWest thank the railway for the opportunity to sell wheat. " It does notseem to occur to Mr. Dillon that the railway might, with equalpropriety, thank the world in general, and the Great West in particular, for its opportunity to carry wheat. We are also told that the railway has reclaimed from nature immensetracts of land that were worthless except as to their possibilities, which once seemed too vague and remote to be considered and are to-dayvaluable; that it has changed the character of the soil as well as theclimate of the West, and we are almost given to understand that in manyrespects it has assumed the functions of Providence. Mr. Dillongenerously admits, however, that railways have not been built fromphilanthropic motives and that we find among railroad promoters andcontractors men of large fortunes. He then proceeds to reprimand theStates west of the Mississippi for their "ungrateful" legislation, which, he says, interferes with the business of the railway, even to theminutest detail, and always to its detriment. Such legislationexasperates Mr. Dillon the more because it originated in States "whichhappened to be the communities that owe their birth, existence andprosperity to these very railways. " Mr. Dillon then gives vent to hiswrath by the use of such terms as impertinence, ignorance anddemagogism. He holds that legislative enactments as to the rights andliabilities of railway corporations are useless, "because the common lawhas long since established these as pertaining to common carriers, andthe courts are open to redress all real grievances of the citizen. " Uponthis theory we might as well dispense with the legislative department ofthe Government, for there is no relation in the community to which theprinciples of the common law can not be applied. Besides this, Mr. Dillon entirely ignores the fact that the railway company is not only acommon carrier, but the keeper of the highway, and as such is subject toGovernment control as much as the turnpike tollgate keeper or thecollector of customs. "Then as to prices. " Mr. Dillon continues: "Thesewill always be taken care of by the great law of competition, whichobtains wherever any human service is to be performed for a pecuniaryconsideration. That any railway, anywhere in a republic, should be amonopoly, is not a supposable case. " Like the rest of railway men, Mr. Dillon excels in painting darkpictures of railroad catastrophes. A sample production of his art ishere presented: "One of the greatest dangers to the community in a republic is this: that it is in the power of reckless, misguided or designing men to procure the passage of statutes that are ostensibly for the public interest and that may lead to enormous injuries. Let us imagine for a moment that all railways in the United States were at once annihilated. Such a catastrophe is not, in itself, inconceivable; the imagination can grasp it, but no imagination can picture the infinite sufferings that would at once result to every man, woman and child in the entire country. Now, every step taken to impede or cripple the business and progress of our railways is a step towards just such a catastrophe, and therefore a destructive tendency. " Mr. Dillon, losing sight of all other interests, did not think that hisnonsensical mode of reasoning would apply equally well to them. Let us, for instance, imagine for a moment that all of the farms of the UnitedStates were at once annihilated. Can the imagination picture theinfinite sufferings that would at once result to every man, woman andchild in the whole country? Now, is not any step taken to impede orcripple the business of farming a step towards just such a catastrophe, and therefore of a destructive tendency? Mr. Dillon then avails himselfof an opportunity to give the people of the United States somegratuitous advice when he says: "We do not arrogate superior wisdom or intelligence to ourselves when we suggest to the people of the United States, and especially that portion of the country where railroads have been the subject of what we consider to be excessive legislation, that the rational mode of treating any form of human industry that has for its object the performance of desired and lawful service is to let it alone, and that the railway is no exception to this principle. " This is the very plea that Jefferson Davis made when he kindled theflame of treason. * * * * * In the March, 1891, number of the _Forum_, Mr. W. M. Acworth discusses, under the title "Railways under Government Control, " the working of therailway systems of the different nations. He holds that the managementof railroads which are the property of the State is, as a rule, greatlyinferior to the management of those roads which are the property ofprivate trading corporations; he assigns to the railway experts ofEngland and America the first places among the railway experts of theworld, and appears to attribute all the good in the railroad managementof these countries to the absence of State interference, and all theevil in the management of the railroads of other countries to the factthat such interference exists. He says of the railroads of England andthe United States: "In speed and accommodation, in the energy which pushes railways into remote districts, and in the skill which creates a traffic where no traffic existed before, they stand to-day in the front rank, as they have stood for the last half century. To say that they are very far from perfect is nothing; it is only to say that they are worked by human agency. Their worst enemies will scarcely deny that they are at least alive; so long as there is life there may be growth, and we may hope to see them outgrow the faults of their youth. The charge made against State railway systems is that they are incapable of vigorous life. The old adage which proclaimed that 'necessity is the mother of invention' has been re-stated of late years as the law of the survival of the fittest in the struggle for existence. If the doctrine is true, the State railway system, relieved from the necessity of struggle, must cease to be fit and will fail to survive. " While it is not intended to enter here into a defense of a State railwaysystem, it may justly be questioned whether "the State railway system, relieved from the necessity of struggle, must cease to be fit and willfail to survive. " The growth of the State system in Europe is in itselfa sufficient refutation of Mr. Acworth's theory. The mail service hasfor several hundred years been a monopoly of the government; but, whileit is far from being perfect, it remains to be demonstrated that privateenterprise could give to the public a better service in the long run. Mr. Acworth is an Englishman who in former years wrote many bitterthings concerning the abuses which he then thought he saw in themanagement of the railroads of his native country, which, according tohis own statement, are, besides those of the United States, the onlyroads in the world for whose regulation competition has been relied uponin the past. Mr. Acworth has become a convert to the _laissez faire_theory of dealing with railroads and now evinces an unusual, but perhapspardonable, zeal in the defense of his new position. In the preface tohis book, "The Railways of England, " he says upon the subject: "I have published before now not a few criticisms (which were meant to be scathing) on English railways anonymously. I find myself using, under my own name, the language of almost unvarying panegyric. This is partly to be explained by the plan of the book, which professes to set before the reader those points on each line which best merit description--its excellencies, therefore, rather than its defects. Much more, however, is it due to a change of opinion in the writer. .. . I have found in so many cases that a satisfactory reply existed to my former criticisms, that I have perhaps assumed that such an answer would be forthcoming in all; and if I have taken up too much the position of an apologist, where I should have been content to be merely an observer, let me plead as my excuse that I am only displaying the traditional zeal of the new-made convert. " Prof. Hadley, of whose work, "Railroad Transportation, its History andits Law, " mention has been made above, contributed an article to theApril, 1891, number of the _Forum_, under the title "Railway PassengerRates. " He endeavors to show that the high passenger rates of Americanrailroads are due solely to superior service. He says: "Continental Europe pays two-thirds as much as America or England and gets an inferior article. India pays still less and gets still less. The difference is seen both in quality and quantity of service. In India express trains rarely run at a greater speed than 25 miles an hour. In Germany and France their speed ranges from 25 to 35 miles an hour, and only in exceptional instances is more than 40 miles an hour. In the United States and in England the maximum speed rises as high as 50, or, in exceptional instances, 60 miles an hour. With regard to the comfort of the cars in different countries, there is more room for difference of opinion; but there can be no doubt that the average traveler in the United States, or even in the English third-class car, fares better than he would in the corresponding class on continental railroads, and infinitely better than the bulk of travelers in British India. " It may be admitted that upon the whole the speed of American and Englishrailroads is greater than that of continental roads, yet the differenceis much less than Mr. Hadley would make us believe. The fast trains ofthe Berlin and Hamburg Railroad, according to Röll's "RailroadEncyclopedia, " make the distance of 179 miles in three hours andforty-four minutes. The average speed is therefore 48 miles an hour. There are but few lines in the United States whose regular expresstrains run at a greater speed. The express trains of the Berlin andBrunswick line make 45-1/2 miles an hour. Trains are run on the Viennaand Buda-Pesth Railway at the rate of 42 miles an hour and on the Parisand Calais Railway at a rate of over 40 miles an hour. Official reportsgive the average speed of express trains in Northern Germany as 32. 2miles per hour, which is considerably more than the average speed of ourWestern trains, upon which the rates charged are twice as high as thosecharged by German roads. The average speed of the express trains inEngland was 35. 7 miles per hour in 1890, in the Netherlands 30. 7 miles, in France 30 miles, in Denmark and Southern Germany 28. 8 miles and inAustria 27. 8 miles per hour. Accurate statistics showing the averagespeed in America are not in existence, but it may well be questionedwhether the difference between the speed of American and European trainsis sufficient to justify upon that score any essential difference in therates. Mr. Hadley's statement that the average traveler in the UnitedStates, or even in the English third class, fares better than he wouldin the corresponding class on continental railroads, is far too sweepingto be true. It is certain that the Belgian, German, Austrian or Frenchsecond-class coupes are much to be preferred to the smoking and emigrantcars which in America are made to take their places. To prove that much more work is demanded of American railroads than ofEuropean railroads, Mr. Hadley presents the following table: Annual Train Miles run Service per by Trains head of Countries. Population. Annually. Population. United States (1889) 61, 000, 000 724, 000. 000 12 Great Britain (1889) 38, 000, 000 303, 000, 000 8 Germany (1889) 48, 000, 000 181, 000, 000 3-3/4 France (1888) 38, 000, 000 145, 000, 000 3-3/4 Austria-Hungary (1887) 40, 000, 000 66, 000, 000 1-2/3 India (1889) 200, 000, 000 51, 000, 000 0-1/4 And he adds: "These figures are for passenger trains and freight trainstogether, as some countries do not give statistics of the twoseparately; but the general results would be nearly the same ifpassenger trains alone could be considered. The figures show that, forevery man, woman and child, a train is run twelve miles annually in theUnited States, in Great Britain eight miles, in Germany or France alittle less than four miles, in Austria not much more than a mile and ahalf, and in British India less than a quarter of a mile. " This statement, even if correct, is certainly misleading. No allowanceis made for the greater distances and the greater average haul inAmerica, and none for our bulky raw products, which require more carroom than the manufactured goods predominating as freight in Europe. If Mr. Hadley's statement of miles run by trains annually is used inconnection with Mr. Poor's statement showing the length, for 1889, ofthe railroads of the countries given in the above table, it can be shownthat the average number of trains run annually per mile is considerablyless here than in Europe: Length of Average Number Railroad Miles run of Trains in miles by Trains per mile per Countries. (1889). Annually. Annum. United States 161, 396 724, 000, 000 4, 485 Great Britain 19, 930 303, 000, 000 15, 203 Germany 25, 360 181, 000, 000 7, 137 France 21, 910 145, 000, 000 6, 618 Austria-Hungary 15, 990 66, 000, 000 4, 127 It is seen that while the average number of trains run per mile perannum is only 4, 485 in the United States, it is 6, 618 in France, 7, 137in Germany, and 15, 203 in Great Britain. In Austria-Hungary it issomewhat less than here. It is not claimed that this is in every respecta fair argument; but it is at least as fair as Mr. Hadley's. As has beenstated before, the average earnings per train mile are larger in theUnited States than in most nations, and, excepting Sweden, railwaycapital has the highest gross earnings of any nation in the world; andwhen Mr. Hadley bases his argument in favor of higher rates for Americanrailroads than for those of Europe upon the claim that the latter securelarger train loads, he simply reasons from false premises. Mr. Hadley then continues: "But why cannot our railroad men, with our present train service, secure larger loads by making lower rates, and give us cheap service as well as plenty of it? Why cannot we secure two good things instead of one? For two reasons: First, because it is not certain that low rates will be followed by greatly increased travel; second, because such increased travel would not be so economical to handle in America as it is in Europe. It is wrong to assume that, because reductions of charges in Europe have increased travel enormously, they would have a proportionate effect in America and a corresponding advantage in American railroad economy. It is a somewhat significant fact that second-class trains at reduced rates have been extremely successful in Europe and not at all so in America. Other things being equal, the American public would be glad to have its travel at lower fares; but it cares more for comfort and speed, and for being able to travel at its own times, than for a slight difference in charge. The assumption so frequently made, that a reduction in fares would cause an enormous increase in travel in this country, is for the most part a pure assumption, not borne out by the facts. " The great increase in business which has everywhere followed reductionsin postage rates, telegraph rates and street-car fares, as well asrailroad rates, sufficiently refutes the assertion that it is notcertain that low rates would be followed by greatly increased travel. Ifthe second class has not been as successful here as in Europe this issolely due to the fact that the American railroad companies havesystematically discouraged second-class travel by forcing passengersinto filthy and over-crowded cars. The statement that increased travelwould not be so economical to handle in America as in Europe scarcelyneeds a reply. If, as Prof. Hadley says, the American public demand morefrequent trains than the people of Europe, and if these frequent trainsare not at present profitable to our railroad companies, it would seemto be plainly to their interest to hold out every inducement to thepublic to increase travel and thus fill their trains. Mr. Hadley does not aid his argument when, referring to the Hungarianzone system, he says: "The importance of the zone system in Austria andin Hungary lies in the fact that its adoption was accompanied by a greatreduction in rates. The unit rate for slow, third-class trains, whichhad previously been nearly a cent and a half a mile, was reduced to lessthan one cent. .. . The use of railroads under the new system, thoughvastly greater than it was before, is vastly less than that of awell-managed American road at American rates. " Mr. Hadley inadvertentlypresents here one of the very best reasons why our passenger ratesshould be reduced. The fact is, railroad men are opposed, and always have been opposed, toreduction of rates, and to all progressive movements that requireincreased expenditures or threaten to temporarily reduce their revenues. When the introduction of the zone system was first advocated in Hungaryit was opposed by just such men and just such arguments. No one can contradict the following facts, viz. : That the average costof European roads is much greater than that of American roads; that thenumber of railroad employes per mile is much greater there than here;that much larger sums are expended for repairing and improving theroads, and that therefore the lives of passengers are much safer inEurope than in America; and that the average speed and correspondingaccommodations of European trains, and especially those of England, Germany, France and Austria-Hungary, compare quite favorably with theaverage speed and corresponding accommodations of our roads. It is, under these circumstances, absurd to claim that the higher pricescharged by American roads are due to the greater cost of service. Mr. Hadley's labors as a railroad author have, it seems, greatlyincreased his corporation bias. In an address which he delivered beforethe American Bankers' Association at New Orleans in November, 1891, uponthe subject of "Recent Railroad Legislation and its Effects upon theFinances of the Country, " he made a number of assertions which illcomport with the fairness of a public statistician or the wisdom of aYale professor. After a few introductory remarks, Prof. Hadley made thefollowing statement: "Every one knows that railroad property has fallen in value since thepassage of the Interstate Commerce Act four years and a half ago; fewhave made any accurate estimate of the amount of that fall. Let us takethe stock of the leading railroad systems centering in Chicago as atype. Here we find an aggregate shrinkage of over $60, 000, 000, or morethan one-quarter of the par value of the stocks. Par Value. Price. Shrinkage. Apr. 4, Nov. 4, 1887. 1891. C. , M. & St. P. $30, 904, 261 93 75 $5, 560, 000 " " Preferred 21, 555, 900 122 119 647, 000 C. & N. W. 31, 365, 900 121 116 1, 568, 000 " " Preferred 22, 325, 454 148 139 2, 009, 000 C. , R. I. & P. 41, 960, 000 126 82 18, 462, 000 C. , B. & Q. 77, 540, 500 140 98 32, 567, 000 ----------- ---------- Total. $225, 651, 000 $60, 815, 000" The table shows that fifty-one million of these sixty million dollarsare the shrinkage of the Chicago, Rock Island and Pacific and theChicago, Burlington and Quincy stocks. It is surprising that Prof. Hadley should be ignorant of the real causes of this depreciation, whichare known to nearly every Granger in the West. In 1887 the Chicago, RockIsland and Pacific Railroad Company owned 1, 121 miles of road, only 172of which were outside of the States of Illinois and Iowa. In 1891 thesame company owned 2, 725 miles of road, with 1, 776 miles outside ofIllinois and Iowa and scattered through Missouri, Kansas, Nebraska, Colorado, Indian Territory and Oklahoma. In Kansas alone the Rock Islandsystem grew from two miles in 1887 to 1, 059 miles in 1891. In otherwords, to a little over a thousand miles of _good_ road the company'smanagers added nearly 2, 000 miles of poor road and a proportionateamount of new stock, and the depreciation in the company's stock whichfollowed was no greater than one should have expected under suchcircumstances. The managers of the Rock Island and the promoters ofthese new lines found the transactions to their advantage, while theoriginal stockholders of the company had to bear the imposition, ashundreds of thousands of railroad stockholders had done before them. Butneither the law of Congress nor that of any State was to blame for thisdepreciation of the Rock Island stock. Since 1891, railroad stocks have advanced on an average at least twentyper cent. , and during the last sixty days have declined abouttwenty-five per cent. , although there has been no essential change ininterstate or State legislation. It is certainly as fair to call theadvance the ultimate result of restrictive railroad legislation as toattribute to that legislation the shrinkage above referred to. Extensivespeculations similar to those just mentioned were, during the sameperiod, indulged in by the managers of the C. , B. & Q. Railroad Companyand its protegé, the C. , B. & N. , who, in addition to this, greatlyinjured their road in 1888 by the unjust provocation of the engineers'strike. So destructive were this strike and its consequences to thecompany's business that it is difficult to account for the motives ofthose who provoked and stubbornly prolonged it except upon the theorythat it played an important role in their stock manipulations. But the recent legislation of a considerable number of States has, inProf. Hadley's opinion, been still more detrimental to railroadinterests than that of Congress. He says; "In the second place, the legislatures of several States, stimulated by the example of Congress, hastened to pass in imitation, of the Interstate Commerce Act, laws which, in many instances, went far beyond their model in point of stringency. Examples are furnished by the statutes of Iowa, Maryland, Minnesota and South Carolina in 1887-88; of Florida in 1888-89, and of no less than thirteen States in 1889-90, viz. : Georgia, Iowa, Kentucky, Massachusetts, Mississippi, New Hampshire, New Jersey, North Dakota, Ohio, Rhode Island, South Dakota, Virginia, Wyoming; as well as by the recently adopted Constitution of Kentucky. The legislation of 1890-91 shows a slight reaction against the movement of the three years previous. "In two respects the State legislatures went quite beyond the scope of the Interstate Commerce Act. They tried to prescribe safety appliances to the operating department, and rates to the traffic department. Of the first of these groups little need be said, except that as a rule they have failed to accomplish any great progress toward the result in view, and have in some instances actually hindered such progress. The attempt at prescribing rates was more serious. It involved a return to the methods of the Granger legislation, fifteen years earlier, which had operated so disastrously upon the railroads and the public alike. The system of commissioners with powers to make schedules which should be at least _prima facie_ evidence of reasonable rates had, during the intervening period, never been wholly abandoned; but the powers thus conferred had been sparingly exercised. It was either left unused, as was generally the case in the North from 1877 to 1887, or the schedule rates were put so high as not to interfere with good railroad economy, of which examples are seen in Georgia and other parts of the South. But from the year 1887 onward there was a pressure upon the Commissioners to make schedules, and to make them low; and lest these boards should not be able to reflect the popular feeling directly enough, they were, in some instances, no longer to be appointed by the Governor, but elected by popular vote. The law which was most severely applied and attracted most public attention was that of Iowa. .. . The agitation against the railroads has many points in common with the land agitation in Ireland. Absentee ownership is at the bottom of the trouble in either case. Property is owned in one place and used in another, and the users, not satisfied with the conditions of use, insist on taking the business direction into their own hands. They claim the right to fix rates in Iowa for the same general reasons by which they claim the right to fix rents in Ireland. " It must be presumed that Mr. Hadley is ignorant of the fact that underthe Iowa Commissioners' tariff the gross earnings of the Iowa railroadsincreased $7, 000, 000, or more than 17 per cent. , in about three years, and their net revenue increased in proportion. Never have the railroadsor the people of Iowa enjoyed a healthier prosperity than they do atpresent. It is true that the State of Iowa denies to the railroadcompanies the right to charge what they please; but this claim does notprevent them from doing justice to the absentee owner of railroadproperty. That absentee owners of property are disposed to take undueadvantage of those who use it is illustrated in the very case which Mr. Hadley cites. So flagrant was the injustice done by the English landlordto the Irish tenant that the English Parliament was constrained tointerfere and correct it. Mr. Hadley says further: "It is seen in Iowa to-day, where, as a result of radical legislation with regard to rates, railroad construction has almost entirely ceased, the average for the years 1888-90 being less than fifty miles. " Now Professor Hadley hails from the State of Connecticut, whererailroads are permitted to make their own tariffs and where legislatorsare supposed not to be hostile to them. According to Poor's Manual, thatState had 1, 004. 02 miles of railroad in 1888, and just 2. 52 miles morein 1891, while Iowa had 8, 364 miles in 1888, 8, 436 in 1891, and 8, 505miles on January 1, 1893. Will Mr. Hadley please explain why railroadconstruction has ceased in Connecticut? Iowa has one mile of railroadfor every 227 inhabitants, and Connecticut has one for every 741inhabitants, although the per capita valuation is $473 in the latter, and only $273 in the former State. Nor have other Eastern States donemuch better than Connecticut. During the three years 1888-1891 therewere built 74 miles of railroad in New Hampshire, 50 in Vermont, 23 inMassachusetts and 9 in Rhode Island. Iowa has an area of 56, 000 squaremiles and a population of 1, 911, 896, an assessed valuation of$520, 000, 000; New England has an area of 66, 400 square miles, apopulation of 4, 700, 745, and an assessed valuation of $3, 500, 000, 000. Yet Iowa has 1, 576 miles of railroad more than all the New EnglandStates together. She has a railroad net as close as that of the EmpireState, having one mile of road to about 6-1/2 miles of territory, although the population of that State is three times as dense as hers. Nevertheless, railroad construction is at present active in Iowa, several lines of road are in the process of construction at the presentwriting, and there is every indication of still greater activity in thenear future. The _Railway Age_ of March 17, 1893, in a detailed list ofnew lines projected or under construction in the United States, givesfor Connecticut only 32 miles, while it gives for Iowa 930 miles. Mr. Hadley continues: "It is seen to some extent in the Northwest as a whole. At the close of the year 1887 the States included by Henry V. Poor in the Central, Northern and Northwestern groups had 25, 040 miles of road, while those of the South Atlantic, Gulf and Mississippi Valley had but 24, 567. To-day this relation is reversed: the Northwest has but 27, 294 miles, while the South has 30, 696. " Had Mr. Hadley taken the pains to look up the population of these groupshe would have found that the "South" is fully three times as populous asthe "Northwest, " and that therefore his figures prove nothing beyond thefact that at the present rate of gain the railroad facilities of theSouth will in a quarter of a century be equal to those of the Northwestto-day. But the argument is weak in another respect. The State in the Southerngroup that made by far the greatest gain in railroad mileage during theperiod mentioned by Mr. Hadley is Georgia, which gained about 1, 000miles in three years, yet that State prescribed rates for railroadcompanies six years before Iowa did, and has for many years exerted amore thorough control over her railroads than perhaps any other State inthe Union. The smallest increase is in West Virginia, which during theperiod given gained an average of only 69 miles per annum; and yet inWest Virginia railroads charge their own rates and usually have theirown way. Finally Prof. Hadley says: "Where are we to find the limit to such unwise action? The United States Supreme Court can do something and has shown a disposition to do something. In the Minnesota cases it repudiated the doctrine of uncontrolled rights on the part of the legislature to make rates, as emphatically as it repudiated the doctrine of uncontrolled rights on the part of agents of the corporation in the Granger cases, twelve years before. " It is evident that Mr. Hadley is as much mistaken in his interpretationof the decision of the court as he has been in his other assertions, aswill be seen from the following extract from Judge Blatchford's opinionin Budd vs. New York, in which he says, "The main question involved iswhether this court will adhere to its decision in Munn vs. Illinois. " The court first quoted from the opinion of Judge Andrew of the Court ofAppeals of New York, as follows: "The opinion further said that thecriticism to which the case of Munn vs. Illinois had been subjectedproceeded mainly upon a limited and strict construction and definitionof the police power; that there was little reason, under our system ofgovernment, for placing a close and narrow interpretation on the policepower, or restricting its scope so as to hamper the legislative power indealing with the varying necessities of society and the newcircumstances as they arise calling for legislative intervention in thepublic interest; and that no serious invasion of constitutionalguarantees by the legislature could withstand for a long time thesearching influence of public opinion, which was sure to come sooner orlater to the side of law, order and justice, however it might have beenswayed for a time by passion or prejudice or whatever aberrations mighthave marked its course. " Judge Blatchford then said: "We regard these views, which we havereferred to as announced by the Court of Appeals of New York, so far asthey support the validity of the statute in question, as sound andjust. .. . We must regard the principle maintained in Munn vs. Illinois asfirmly established. " General Horace Porter has made a contribution to the railway rateliterature by an article which appeared in the December, 1891, numberof the _North American Review_. Unfortunately many of the General'sstatements are either false or misleading. Thus, in a table which hepresents for the purpose of comparing the passenger rates of Europe withthose of the United States, he gives the regular first-class schedulerates for the United Kingdom, France and Germany and the averageearnings per passenger per mile for this country. That this is an unfaircomparison needs no further argument, especially when it is rememberedthat in Europe from 85 to 90 per cent, of all passengers are carried inthe third class at a regular rate averaging about 1-1/2 cents per mile, and that considerable reductions are made for excursion, commutation andreturn tickets. But General Porter says concerning American rates: "When we take into consideration the excursion and the commutation rates, we find first-class passengers carried as low as half a cent a mile. " Now the question arises whether American railway companies carrypassengers at such rates with or without loss to themselves. If they arecarried at a loss, an injustice is done to the regular passengers, whosefare must not only make up the loss, but yield a larger profit thanwould otherwise be necessary. If, on the other hand, a rate of half acent a mile can be made remunerative, there is certainly no justice inmaintaining rates five and six times as large on well-patronized lines. General Porter places stress upon our superior accommodations in the wayof lighting, ventilation, ice-water, lavatories, and free carriage ofbaggage, etc. , and then adds: "In this connection we must also recollect that the cost of fuel, wages and all construction materials is considerably higher here than in Europe, while the population from which the railways derive their support is much more sparse; the United States having 166, 000 miles of railway with a population of 63, 000, 000, while Europe has only 135, 000 miles with a population of 335, 000, 000. " We grant the point which the General makes on ventilation, ice-water, etc. ; but, to make the comparison a fair one, he should also havereferred to the much greater cost of European roads, to their muchgreater number of employes per mile, to the much shorter haul, to thehigher price of their fuel, to the superiority of their roadbed and thegreater security of their passengers. Moreover, whether the railroads ofa country are profitable or not cannot be ascertained by merelycomparing miles of road with square miles of territory and number ofinhabitants. British India has a population of 275, 000, 000 and onlyabout 16, 000 miles of railroad, and yet her roads are scarcely asprofitable as our own. China has 3, 000, 000 and Asia has about 4, 000, 000people to every mile of railroad, but so far their railroads have provedno bonanza. The question is not how many people there are to each mileof railroad, but rather to what extent the railroad is used by thepeople. The amount of freight carried annually by the railways of theUnited States is about 680, 000, 000 tons, or 85, 000, 000, 000 ton miles, and the number of passengers carried is about 535, 000, 000, representingan aggregate of travel of nearly 13, 000, 000, 000 miles. This shows anaverage of 1, 300 tons of freight carried one mile, and 200 milestraveled annually for each inhabitant of the nation, and a greater useof railway facilities than that of any other country in the world. Theincome of the railroads per capita is $17 in the United States, $11 inthe United Kingdom, $5 in Germany, $4 in France, and still less inItaly, Austria and Russia. The average freight haul is 63 miles inEurope and 120 miles in the United States; the average passenger haul 15miles in Europe and 24 miles in the United States. It has already beenshown that the average earnings per train mile are also larger here thanthere. Röll's Encyclopedia of Railroads for 1892 shows that in Francethe average rate for all traffic for the year 1888 was for passengers1. 45 cents per mile, and for freight 1. 14 cents per ton per kilometer, and that the nation had also received by way of free or reduced rates onGovernment business during that year benefits to the amount of$59, 000, 000. Large reductions have been made during the past year inpassenger rates. The General indulges in making the stereotyped railroad charge that "thelegislatures of several of the States have enacted laws to effect areduction of rates, the literal obedience to some of which would amountto the practical confiscation of railway property. " The General or any of his friends cannot name a road that was everconfiscated by legislation, or even seriously injured. It is a fact thatthe very legislation of which railroad managers so bitterly complain hashad a beneficial influence on railroad earnings. Thus, in Iowa, where, according to the testimony of railroad men, Grangerism has reignedsupreme during the past few years, railroad earnings increased between1889 and 1892 from $37, 000, 000 to $44, 000, 000, or more than 18 per cent. Still better results could have been secured if the railroad managershad been in sympathy with the law. There is no doubt that they wouldgladly suffer, or rather have their companies suffer, a loss of revenue, if this would lead to a repeal of the laws and restore to them the powerto manipulate rates for their own purposes. But the General comes to the main point of his article when hecomplains against "the unreasonable requirements and restrictions of theInterstate Commerce Law. " He says: "Principal among these are what is known as the 'long and short haul clause, ' which prohibits railway companies from receiving any greater compensation in the aggregate for a shorter than for a longer haul over the same line in the same direction, the shorter being included within the longer distance; and the anti-pooling clause, which prevents railway companies from entering into any agreement with each other for an apportionment of joint earnings. " If we carefully examine the railroad literature of the last four years, we find that it has concentrated its efforts toward the creation ofpublic sentiment in favor of the repeal of these two clauses of theInterstate Commerce Law. Railroad men are well aware of the fact that, with these two clauses stricken out, the Interstate Commerce Law wouldbe practically valueless, and in clamoring for their repeal they evincea persistency worthy of a better cause. The practices which theseclauses aim to prohibit cannot be defended upon any consideration ofjustice and equity, and it is folly to expect the American people tosacrifice their convictions of right to the selfish interest of acomparatively small number of persons interested in the manipulation ofrailroad stocks. The July, 1891, number of the _Forum_ contains an article on theoperation of the Interstate Commerce Law from the pen of Aldace F. Walker, formerly a member of the Interstate Commerce Commission, and nowcommissioner of the Western Traffic Association. Mr. Walker evidentlybelongs to the old school of railroad men, who have not yet accepted theGranger decision. Referring to it, he says: "This decision was not unanimous, and the reasoning presented was not so convincing as to command universal acceptance. It was at once challenged by the corporations, and has been from time to time attacked in the same tribunal; it has not yet been withdrawn, but it has been materially modified, notably in a case from Minnesota, decided in 1890, when it was established that there is a limit beyond which the State cannot go in reducing railway rates, which limit would be passed in case a State should attempt to deprive a corporation of its property, without due process of law, by fixing rates too low to permit of a fair remuneration for its use. A large debatable ground yet remains open, with a possibility that the position of the railway in Federal jurisprudence may eventually be radically modified. " The passage quoted clearly indicates that railroad men expect betterthings of the court in the future, but Mr. Walker is much mistaken insupposing the court materially modified the Granger decision, as will beseen by referring to the case of Budd vs. The State of New York, decidedin February, 1892, by the same court. Mr. Walker, unlike Mr. Depew, candidly admits the former universality ofthe evil of discrimination. He says: "In order to secure traffic, a railway official felt called upon to underbid his rival. He gave the shipper a private rate, a rebate, a free pass--anything in the shape of a concession or a favor. The land was honeycombed with special arrangements of innumerable forms, all secret, because otherwise they would have been useless, and all forced upon the carriers by the exigencies of unbridled competition. Many shippers became wealthy from such gains. Others were envious of like success. At last the public sense of justice demanded a reform. " And Mr. Walker's candor rises to a still higher pitch when he admitsthat the ingenuity of railroad managers has found ways to evade theInterstate Commerce Law. The following passage from the Commissioner'sarticle will, no doubt, be a great surprise to such law-abiding andconfiding managers as Mr. Depew: "There was nothing in the law specifically forbidding the payment of 'commissions, ' and it was found that the routing of business might be secured by a slight expenditure of that nature to a shipper's friend. Other kindred devices were suggested, some new, some old; the payment of rent, clerk hire, dock charges, elevator fees, drayage, the allowance of exaggerated claims, free transportation within some single State--a hundred ingenious forms of evading the plain requirements of the law were said to be in use. The demoralization was not by any means confined to the minor roads. Shippers were ready to give information to other lines concerning concessions which were offered them, and to state the sum required to control their patronage. A freight agent, thus appealed to, at first perhaps might let the business go, but when the matter became more serious and he saw one large shipper after another seeking a less desirable route, he was very apt to throw up his hands and fall in with the procession. " Mr. Walker is very severe on the Interstate Commerce Act, which, hesays, might in its present form "well be entitled, 'An act to promoterailway bankruptcies and consolidations by driving weak roads out ofcompetitive business. '" To remedy the evil which, in his opinion, theact causes, he favors the granting of differentials by the stronger tothe weaker roads. Such a device is simply a species of pool under a lessoffensive name. Its manifest object is to maintain rates through aconspiracy of rival railroads. Mr. Walker admits this when he says: "It operates in practice to affect a distribution of the traffic somewhat roughly, giving rise to frequent dissensions and bickerings over the 'differentials' which are allowed; but after all it has enabled the trunk lines usually to secure a better maintenance of tariff rates and a better observance of the provisions of the law against private rebates and discriminations than has been attainable in other sections of the country where different conditions make such an arrangement impracticable. It vividly illustrates, however, the necessity of some plan by which common business may be divided. " This problem, which apparently causes so much perplexity to railroadmanagers, would soon be solved if railroad abuses were done away with. So long as these abuses exist and rates are maintained by artificialmeans there will be bickering and strife for business which legitimatelybelongs to others. Mr. Walker then bewails the proscription of the pool, saying: "It may be stated without fear of contradiction that if the carriers had been left free to make arrangements among themselves upon which each line might rely for eventually receiving in some form a fair share of competitive traffic, the temptation for secret rate-cutting would have been in great measure removed and the country would have been spared most of the traffic disturbances and illegitimate contrivances for buying business which have since been periodically rife. " This argument amounts to this, that, rather than place a law upon ourstatute books which reckless railroad managers might be strongly temptedto violate, they should be permitted to combine and control the highwaysand levy _ad libitum_ upon the commerce of the country. It is a mostpreposterous proposition. The article especially condemns the long and short haul clause of thelaw. That this clause is injurious to the commerce of the country is, however, not obvious from his reasoning. Mr. Walker makes the statementthat this clause of the law "has removed from many jobbing centersimportant advantages which they previously had, and has enabled interiorcommunities, formerly of little apparent consequence, to deal directlywith distant markets. " If he means by this that this feature of the lawhas equalized shipping throughout the country, he is doubtless right. Ifhe wishes us to infer, however, that it prevents the railroad companiesfrom doing substantial justice to all, he presumes altogether too muchupon the credulity of his readers. Another article from the same author appeared under the title"Unregulated Competition Self-destructive, " in the December, 1891, number of the same periodical. He commences his article with an inquiryinto the pedigree and merit of the time-honored proverb, "Competition isthe life of trade, " and arrives at the conclusion that the phrase isfatherless and insignificant. He says: "'Competition is the life of trade;' 'Competition is the death of trade;' one phrase is as true as the other. For all that appears, it was a toss-up which of the two should become current as the expression of the general thought. " It is its general recognition that gives a truth a proverb's currency. Mr. Walker sneers at a disagreeable proverb because, like the majorityof his colleagues, he holds the masses in contempt. He gives hisestimate of popular intelligence in the following words: "Unfortunately most men do not think worthily, or do not think at all; they are ruled by phrases, and they catch the crude ideas of others as they fly. " Mr. Walker's whole argument is one in favor of the legalization of thepool, though he carefully avoids the word which grates so harshly on theAmerican ear. He makes the broad statement, without offering the leastproof in support of it, that measures have been everywhere adopted "tosubdue and ameliorate the evil results of inordinate and excessivecompetitive strife, " and then he asks: "Has not the time come for a reversal of the legislative attitude? Would it not be well for Congress, State legislatures and the judiciary to cease their futile attempts to maintain unqualified freedom of competition, and substitute therefore a recognition of the right of every industry to combine under proper supervision, and to make agreements for the maintenance of just and reasonable prices, the prevention of the enormous wastage consequent upon warlike conditions, and the preservation of existing institutions through the years to come?" Mr. Walker then proceeds to make the bold prediction that revolution andanarchy will follow if the demands of the railroad corporations are notcomplied with, saying: "Unless this course is adopted a social convulsion may fairly be apprehended, forced by the universal and necessary repudiation of existing laws and rules of decision, and by the general formation of combinations without their pale. " This is a strange threat indeed, and unworthy of a man who has held asgreat a public trust as Mr. Walker has. The article also contains thestatement that combinations do not extinguish competition. "Theyregulate it, " says Mr. Walker, "with more or less efficiency, and theyoften go so far as to suspend its operation in respect to one or moreimportant features of the strife; for example, the price paid or thetime consumed. But as long as the employer or the purchaser has achoice, so long there is competition. " Here is a sample of Mr. Walker'sirony, for the choice which the shipper has under the pool is simplyHobson's choice. Mr. Walker has also an article in the August, 1892, number of the_Forum_, the substance of which is to show that organizations amongrailroad companies, like the Western Traffic Association, are necessaryfor the purpose of restraining competition among them. He holds thatsuch competition as exists in almost all other lines of business "isradically vicious to all interests, however pleasant and desirable itmay seem to self-styled anti-monopolists, " and that "it is a calamitynot only to the owners of the roads, but to the public also. " According to his statement, the Traffic Association is simply a littleinnocent and inoffensive organization whose duty it is only to maintainrates, and he sees nothing wrong in allowing a few representatives ofcorporations to meet in secret and discuss, scheme and levy such a taxupon the commerce of this country as may suit their convenience; and heregrets that their attempts are "hampered by legislation which forbidsthe formation of pools. " In other words, he proposes to have the case incourt decided by a jury made up entirely of the parties at interest inthe case. This piece of effrontery is about on a par with the averageargument of this class of pleaders. Suppose we apply the same rule to other classes. Take the farmers, forinstance. Let them have an organization for the purpose of maintainingrates, with their representatives meeting in secret and fixing the priceof their produce and asking the Government to enforce their orders, pools and edicts, so as to afford them relief from selling corn at tencents per bushel, beef and pork at a dollar and a half per hundred, andhay at two dollars per ton, and their other produce at proportionaterates. Who would condemn such an organization more severely than theadvocates of the Traffic Association? They never find terms sufficientlyexpressive with which to condemn the Farmers' Alliance and other kindredassociations, which are organized solely for the purpose of lawfullycorrecting existing abuses and of forming a wholesome public sentiment. It is evident that some progress is being made upon this question, asMr. Walker admits that "the fortunes which have been made are seen tohave been the result of dealings in stocks and in titles, theconsequences of which, if involving wrong, are rightly charged againstthe lax legislation which has made such operations possible. " "Everyperson seeking for the services of a common carrier is entitled to knowthat he is charged no more than his neighbor who obtains the sameservice under the same conditions. " "The theory that any unjustdiscrimination or unjust preference or advantage in respect toindividuals, communities or descriptions of traffic must be suppressedby the State, has become firmly lodged in legislation. " This improvementin the sentiment of railroad men is gratifying. This gentleman, as has already been stated, was for several years amember of the Interstate Commerce Commission, a board created byCongress for the special purpose of enforcing the law which he sounreservedly condemns. No doubt Mr. Walker performed the duties of hisoffice as he understood them; but if he held then the views which heholds now, his work must have been a hindrance rather than a help to thecommission. Among financial journals, so many of which are devoted to the support ofvicious and demoralizing methods, and are ever ready to defend whateveris bad in corporation management, it is refreshing to find occasionallyone that exposes abuses and favors the earning of legitimate dividends, and it is a pleasure to quote the following from the June number, 1892, of the _Banker's Magazine_: "There are two widely differing theories concerning the management of railroads in this country; one theory is that profits should be acquired from fluctuations in the stock, and the other is that the profits should be acquired in the old-fashioned way, by performing a useful service and receiving a reward therefor, to be divided among the stockholders in the way of a dividend. These two theories are so different in their practical operation that they give rise to the most diverse consequences. Of course, many railroads are not dividend-earning, and with these the profits to the managers and those who are allied with them must come from stock fluctuations and from whatever sucking arrangements can be devised whereby their vitality or sustenance can be acquired by the favored few who are in control. Unfortunately, there are many railroads in this condition, the history of which is too well known to require description. Once in control, the way is easy to retain it and to make money by a thousand devices which ingenious and unscrupulous managers are constantly planning and putting into operation. "The consequences of the other theory are as different, both to the corporate property and to the public, as can be imagined. When a railroad is properly managed and earning dividends, a policy of development is adopted, having for its end the natural expansion of the property in harmony with the growth of the country, the needs of business and the desires of the people. The fruits of such a policy may not be apparent at once, but they inevitably come, and, when they are reaped, are enjoyed and appreciated by all. Only by such a policy can our roads ever become great, commanding the confidence of the people, and fulfilling their highest uses; in short, only by such a policy can a railroad be brought to a high degree of perfection. "The difference is clearly seen by contrasting a road of this character with one that is run by the Wall Street method for stock-jobbing purposes. By this method dividends are not regarded as of so much consequence to investors as an instrument or argument for affecting the value of the stock. In other words, if a dividend is earned and paid at all, it is chiefly as an instrument or agency for stock-jobbing purposes, and not because the road is managed primarily for this purpose. Furthermore, dividends, too often, are disregarded altogether, as well as any policy of permanent improvement or of general development. The cardinal idea always is, how can the road be maintained and manipulated so as to cause the largest variations in the stock and the most money for the managers? "Too many managers, as is well known, have made great sums for themselves and built additions long in advance of their means, and have seriously crippled their corporations by so doing. But they have made fortunes for themselves. What the great majority of mankind consider is the immediate present, and not the future. "It is undoubtedly a hard thing for those who are conducting their corporations in an honest and able manner, for the benefit of their owners, to keep still while their enemies are pounding them and glorifying those who are managing their corporations for personal and corrupt ends; but all cheap and false practices must finally lead to disaster. We hear a great deal of this kind of thing nowadays. One of the evil effects of speculation and newspaper reading is, that people have got in the way of not thinking much for themselves; of regarding as truth whatever is printed, and of not opening their eyes wide enough to discover the shallowness of the reasonings and falsehoods that are put forth at the behests of speculators, or of those who are managing corporations for speculative purposes. The American people have had an amazing experience in losses from following advice thus plentifully and freely given; nevertheless, there seem to be persons left who are willing to listen and fall into the old ways and be trapped, as so many others have been in the past. There is a considerable class, having means and nothing to do, who perhaps might just as well lose their money in poker, railroad or grain speculation as in any other way, for this furnishes about the only source of amusement to them; but, after all, there is no reason why railroads should be managed so exclusively for the amusement of this class. The time is coming, and probably is not far off, when they will get enough of it; and railroad investors will conclude that dividends for themselves are better than profits for speculators; and when they do, all stock-jobbing managers will be consigned to the limbo which is their proper destination. " This magazine is edited by Mr. Albert S. Bolles, author of severalexcellent financial works. We are much indebted to him for the soundbanking system which we now have, and which has contributed so largelyto the unexampled prosperity which this country has enjoyed for the lastthirty years. Our national banking system illustrates well how service able thecorporation may be to a people when its use is restricted by wholesomelaws to the performance of its proper functions. The old United States Bank was organized for practically the samepurposes as our present national banks, but for lack of properrestrictions its use was soon perverted to ignoble purposes. The bankmanagers showed so much partiality in the distribution of their favorsand accommodations, and meddled in politics to such an extent, that thepeople became disgusted with it, and a renewal of its charter wasrefused. Mr. Clay clearly saw how dangerous a great money power might become toour country, and, in opposing the extension of the bank's charter, said: "The power to charter companies is one of the most exalted attributes of sovereignty. In the exercise of this gigantic power we have seen an East India Company created, which is in itself a sovereignty, which has subverted empires and set up new dynasties, and has not only made war, but war against its legitimate sovereign! Under the influence of this power we have seen rise a South Sea Company, and a Mississippi Company, that distracted and convulsed all Europe, and menaced a total overthrow of all credit and confidence, and universal bankruptcy. " Can we afford to ignore the lessons of history? Mr. Henry Clews makes some spicy and pertinent observations on railroadmen's methods in an article which recently appeared in the _RailwayAge_. Mr. Clews seems to have but little confidence in the averagerailroad director. He advises stockholders to exercise constantvigilance and defensive conservatism, "lest they become the instrumentsby which unscrupulous and crafty directors work out schemes that are inreality nothing but frauds or robbery. " And then he adds: "In estimating corporate acts we must never forget that, while the best of men will bear watching as to their individual dealings with others, they need to be doubly watched when they sit around a corporation board and vote as to transactions in respect of which none of them can be called to personal account. Temptations attack with enormous force when the gains are prospectively great and the risk of penalty inappreciable or non-existent. " Mr. Clews also tells us how roads are wrecked by their boards ofdirectors. "In one case, " he says, "the stock of a leading railway, which in 1880 sold at 174, in 1884 sold at 22-1/2, and in 1885 at 22. This vast shrinkage of value was not owing to panic or to stringency ofmoney, nor did it arise from a diminution of traffic on the originalline; but it was because consolidation had been pushed to an extreme bythe directors of the corporation, so much so that the entire systemyielded no dividends; a fleet and useful animal had been loaded downwith dead wood and rubbish till he could scarcely crawl; barren acreshad been added to an originally fruitful farm until the whole estatecould hardly pay taxes; a mass of rotten apples had been thrown into themeasure with sound fruit, and buyers refused the whole as a mere heapof corruption. And it was generally believed that the men whoperpetrated this mischief under the names of 'construction, ' 'requisiteconsolidation, ' 'absorption of necessary branches, ' etc. , had made agreat deal of money by it and had not made it honestly. But it was alldone pursuant to legal forms and by boards of directors, so that thedefrauded stockholders were without remedy. " Mr. Clews then gives us a more detailed account of the way in whichbranch roads are built and absorbed, viz. : "Given a useful, well constructed, dividend-paying road, a body of people with some capital and political influence, aided by some of the directors of this prosperous line; construct a branch road to some outside point; the more important such point the better, but that is of small consequence. The road gets itself built; it is bonded for more than it cost, and it cost twice as much as it ought, since the constructors were all together in the ring and have favored each other. Then the capital stock is fixed at so much, and this is mostly distributed among the constructors. The road then, swelled to a fictitious price of three or four to one, and not worth anything to start with, is ripe for absorption and consolidation. Its directors and those of the main line meet, confer and vote the measure through. They all profit by it, more or less, but their profits are enormously in excess of the trifling losses due to the shrinkage of values of the shares of the main line. A director of the main line may perhaps lose $20, 000 on a thousand shares, but what is this when compared to a gain of hundreds of thousands in his holdings of the branch road, whose liabilities are assumed by his victimized corporation? And such a director would not be equal to the demands of his covetousness if he had not sold thousands of shares short, in anticipation of the fall which the transactions of himself and his associates were inevitably bound to produce. " Mr. Clews concludes his article with the following passage: "The profits realized on the speculative constructions are enormous and have constituted the chief source of the phenomenal fortunes piled up by our railroad millionaires within the last twenty years. It is no exaggeration to characterize these transactions as direct frauds upon the public. They may not be such in a sense recognized by the law, for legislation has strangely neglected to provide against their perpetration; but morally they are nothing less, for they are essentially deceptive and unjust, and involve an oppressive taxation of the public at large for the benefit of a few individuals who have given no equivalent for what they get. The result of this system is that, on the average, the railroads of the country are capitalized at probably fully 50 per cent. In excess of their actual cost. The managers of the roads claim the right to earn dividends upon this fictitious capital, and it is their constant effort to accomplish that object. So far as they succeed they exercise an utterly unjust taxation upon the public by exacting a compensation in excess of a fair return upon the capital actually invested. This unjust exaction amounts to a direct charge and burden on the trade of the country which limits the ability of the American producer and merchant to compete with those of foreign nations and checks the development of our vast natural resources. In a country of 'magnificent distances' like ours the cost of transportation is one of the foremost factors affecting the capacity for progress; and the artificial enhancement of freight and passenger rates due to this false capitalization has been a far more serious bar to our material development than public opinion has yet realized. The hundreds of millions of wealth so suddenly accumulated by our railroad monarchs is the measure of this iniquitous taxation, this perverted distribution of wealth. This creation of a powerful aristocracy of wealth, which originated in a diseased system of finance, must ultimately become a source of very serious social and political disorder. The descendants of the mushroom millionaires of the present generation will consolidate into a broad and almost omnipotent money power, whose sympathies and influence will conflict with our political institutions at every point of contact. They will exercise a vast control over the larger organizations and movements of capital; monopolies will seek protection under their wing, and by the ascendancy which wealth always confers they will steadily broaden their grasp upon the legislation, the banking and commerce of the nation. " These are strong words, but they come from a man whose thirty years'experience in Wall Street enables him to speak intelligently upon thissubject and who certainly cannot be accused of being prejudiced againstrailroad men or corporate investments. In a recent number of his _WeeklyFinancial Review_ Mr. Clews said of the railroad stock market: "Judgment passes for little in estimating the future of many securities, for the market is almost wholly under the control of comparatively few persons, whose operations must inevitably influence the value of thousands of millions of stocks and bonds. Never in the history of Wall Street was the value of such an enormous aggregation of securities so absolutely under the control of so small a circle as at this time. Such a state of affairs cannot be considered satisfactory; hence not only is speculation likely to be unhealthily stimulated, but the future of these combinations gives birth to a variety of uncertainties which, while they may elevate prices, will certainly not add to their stability. " If the silly claim of railroad men, that Western people do not invest inrailroad securities on account of their unprofitableness, needed anyanswer, the above words would furnish it. The May, 1893, number of the _North American Review_ contains an articleentitled "A Railway Party in Politics, " by Mr. H. P. Robinson, editor ofthe _Railway Age_. Mr. Robinson belongs to that class of reformers whocan see but one side of a question, and only a short-sighted view ofthat. He is as zealous as a new convert, and is expert, in the wardpolitician's way, in defense of the worst abuses practiced by railwaymen. He says: "That the right to 'regulate' the railways, which is vested in the State, has now been carried in the West to a point not only beyond the bounds of justice, but beyond its constitutional limits, and that it would soon be impossible for any railway company in the West to keep out of bankruptcy unless some vigorous and concerted action were taken to arouse public opinion, and to compel a modification of the present policy. "It is easy to see how much strength such a party, if formed, would possess. According to the reports of the Interstate Commerce Commission there were in the immediate employ of the railways of the United States a year and a half ago 749, 301 men, all or nearly all voters, which number has now, it may be assumed, been increased to about 800, 000. There are, in addition, about one million and a quarter shareholders in the railway properties of the country; and in other trades and industries immediately dependent upon the railways for their support there are estimated to be engaged, as principals or employes, over one million voters more. These three classes united would give at once a massed voting strength of some three millions of voters. There are also, in the smaller towns especially, and at points where railway shops are located, all over the country, a number of persons, small tradesmen, boarding-house keepers, etc. , who are dependent for their livelihood on the patronage of railway employes, and whose vote could unquestionably be cast in harmony with any concerted employes' movement. Moreover, unlike most new parties, this party would be at no loss for the sinews of war or for the means of organization. The men whom it would include form even now almost a disciplined army. With them co-operation is already a habit. While the financial backing and the commercial and physical strength of which the party would find itself possessed from its birth would be practically unlimited. .. . "For the present it seems to them better to believe that the people--those people who are not railway men--are acting now only in ignorance, and that as soon as they see the truth they will, by their own instinctive sense of justice, re-mould their opinions and their policy without political coercion. "At the same time there has already come into existence in some of the Western States a movement which has its significance and its practical influence. This is what is called the Railway Employes' Club movement. It started in Minnesota, at a small meeting of railway employes held in Minneapolis in 1888. From that meeting the movement grew, and made a certain feeble effort, not entirely unsuccessful, to influence the State election in the fall of that year. By the State election of 1890 the movement had grown and was better organized, and the Employes' Club did exercise considerable influence in the election of certain of the State officers and certain members of the State legislature in that year. "From Minnesota the movement spread to Iowa, and there is no contradiction of the fact that the railway employes' vote was one of the strongest forces in the State election of the fall of 1891. It also overflowed into Kansas, Nebraska, Missouri and Texas. Had the election of last November been normal it is probable that the effect of the Railway Employes' Club vote would have been as visible in two or three of those States then as it had been in Iowa in the preceding year. But in the deluge which occurred all trace of the smaller streams and currents was obliterated. Had the members of the clubs not taken the precaution to do considerable work in the local nominating conventions of both parties they would be compelled to confess that their campaign of 1892 was a failure. .. . "So far the clubs have admitted and will admit of no negotiations with the State committees of other parties. They hold their own meetings and decide for themselves that such and such a candidate is inimical to their interests as railway employes, and such and such a man is their friend. Then they go to the polls and vote--voting in the main their normal party ticket, scratching only a man here and a man there, their attention being chiefly centered upon members of the boards of railroad commissioners and of the State legislatures. "In Minnesota in 1890 their weight was thrown chiefly in favor of Republicans. In Iowa in 1891 it was given to Democrats. In all States the men whom they oppose are those who have made themselves conspicuous as 'Granger' and anti-railway politicians. The keynote of the movement and the one plank in the platform of the clubs is that the extreme anti-railroad legislation of late years has reduced the earnings of the companies to a point at which they are unable any longer to keep full forces on their payrolls or to pay such wages as they should, and that by this legislation the railway employes are necessarily the immediate sufferers. .. . "A railway party is therefore already in existence. .. . And moreover, though accidentally only, it is working forcibly in behalf of railway interests as a whole. .. . "Meanwhile Mr. A. F. Walker, the chairman of the Joint Committee of the Trunk Line and Central Traffic Associations, prophesies that if things go on as they are going now, before long 'the managers of the railways will be chiefly receivers. ' In the year 1891 receivers were appointed for twenty-six companies in the United States, representing $84, 479, 000 of capital, and twenty-one companies, with 3, 223 miles of road, with a capitalization of $186, 000, 000, were sold under foreclosure. "It is doubtful whether the result which Mr. Walker foretells would be regarded as a calamity by the 'uninformed public opinion of the West. ' That Minnesota railroad commissioner was quite sure of the public applause before he made his classic declaration that he proposed to 'shake the railroads over hell' before he had done with them, and the Governor of Iowa, who announced that he did not care if 'every d--d railroad in the State went into bankruptcy' before the expiration of his term of office, knew that the sentiment would have the sympathies of his constituents. This attitude of the Western mind is, of course, largely explained by the fact that the people of the West do not as a rule own railway securities. In two States (the only two in the West in which, so far as I am aware, the figures have been compiled) out of 27, 645 stockholders in the lines within the State borders only 359 are residents of the States. If the other 27, 286 were also residents of these States (that is to say, if 27, 286 of the present residents were also stockholders in the railways), it is probable that the ferocity of the public opinion in these States against railways would be materially modified. " It is evident that Mr. Robinson has not been as successful in organizingsmall tradesmen, boarding-house keepers, employes and shareholders intoa new party as he contemplated, notwithstanding "it was at no loss forthe sinews of war. " He attempts to show that this movement originated with the employes, butit is too well known that the employes who organized the movement wereunder pay of the railroad companies and received their instructions fromthe railroad managers. The statement which Mr. Robinson attributes tothe Governor of Iowa undoubtedly originated in the mind of one who islaboring to modify the ferocity of "the uninformed public opinion of theWest. " No Governor of Iowa ever made any such statement, nor everentertained any such sentiment. It is a sheer fabrication. There are a number of standard text-books of law which are indispensableto the student of railroad questions desiring to go back to firstprinciples. Only a few of them can be mentioned here. I. F. Redfield, in his "Law of Railways, " says concerning the necessityfor railroad supervision: "Railways being a species of highway, and in practice monopolizing the entire traffic, both of travel and transportation, in the country, it is just and necessary and indispensable to the public security that a strict legislative control over the subject should be constantly exercised. " Regarding the original character of the railway as a common highway, Redfield says: "The Railways Clauses Consolidation Act provides, in detail, for the use of railways by all persons who may choose to put carriages thereon, upon the payment of the tolls demandable, subject to the provisions of the statute and the regulations of the company. The view originally taken of railways in England evidently was to treat them as a common highway, open to all who might choose to put carriages thereon. But in practice it is found necessary for the safety of the traffic that it should be exclusively under the control of the company, and hence no use is, in fact, made of the railway by others. " As to the questionable financial expedients so frequently resorted to inbuilding American railways, this author says: "This is not the place, nor are we disposed, to read a homily upon the wisdom of legislative grants, or the moralities of moneyed speculations in stocks on the exchange or elsewhere. But it would seem that legislation upon this subject should be conducted with sufficient deliberation and firmness so as not to invest such incorporations with such unlimited powers as to operate as a net to catch the unwary, or as a gulf in which to bury out of sight the most disastrous results to private fortunes, which has justly rendered American investments, taken as a whole, a reproach wherever the name has traveled. " The opinion is expressed in this work that under certain circumstancesrailroad securities should be aided by State credit, and is supported bythe following argument: "Here we have no national funded stock in convenient sums for small investment, and which, being sure, is really a great blessing to the mass of those who wish to invest moderate sums as a protection against age or calamity. In those countries where such opportunities exist, it removes all temptation to invest small sums in these enterprises, which, however necessary for the public, such small owners can but poorly afford to aid in carrying forward, and which consequently should in justice either be guaranteed or owned by the State, or at all events aided by State credit, when they become indispensable for the public convenience. " Upon the subject of eminent domain Redfield says: "That railways are but improved highways, and are of such public use as to justify the exercise of the right of eminent domain, by the sovereign, in their construction, is now almost universally conceded. " Kent says in his "Commentaries on American Law": "The right of eminent domain, or inherent sovereign power, gives to the legislature the control of private property for public uses, _and for public uses only_. .. . So, lands adjoining New York canals were made liable to be assumed for the public use, so far as was necessary for the great object of the canals. .. . In these and other instances which might be enumerated, the interest of the public is deemed paramount to that of any private individual; and yet, even here, the constitutions of the United States and of most of the States of the Union have imposed a great and valuable check upon the exercise of legislative power, by declaring that private property should not be taken for public use without just compensation. .. . It undoubtedly must rest, as a general rule, in the wisdom of the legislature to determine when public uses require the assumption of private property; but if they should take it for a purpose not of a public nature, as if the legislature should take the property of A and give it to B, or if they should vacate a grant of property, or of a franchise, under the pretext of some public use or service, such cases would be gross abuses of their discretion, and fraudulent attacks on private right, and the law would clearly be unconstitutional and void. " Concerning the construction of corporate powers Kent lays down thefollowing rule: "The modern doctrine is to consider corporations as having such powers as are specifically granted by the act of incorporation, or as are necessary for the purpose of carrying into effect the powers expressly granted, and as having no other. The Supreme Court of the United States declared this obvious doctrine, and it has been repeated in the decisions of the State courts. No rule of law comes with a more reasonable application, considering how lavishly charter privileges have been granted. As corporations are the mere creatures of law, established for special purposes, and derive all their powers from the acts creating them, it is perfectly just and proper that they should be obliged strictly to show their authority for the business they assume, and be confined in their operations to the mode and manner and subject matter prescribed. " As to the duties of common carriers he says: "As they hold themselves to the world as common carriers for a reasonable compensation, they assume to do and are bound to do what is required of them in the course of their employment, if they have the requisite convenience to carry and are offered a reasonable and customary price; and if they refuse without just ground, they are liable to an action. " Judge Cooley, in his very able work, "Constitutional Limitations, "refers to the so-called vested rights of corporations and the abusegrowing out of them as follows: "It is under the protection of the decision in the Dartmouth College case that the most enormous and threatening powers in our country have been created, some of the great and wealthy corporations actually having greater influence in the country at large, and upon the legislation of the country, than the States to which they owe their corporate existence. Every privilege granted or right conferred--no matter by what means or on what pretense--being made inviolable by the Constitution, the Government is frequently found stripped of its authority in very important particulars, by unwise, careless or corrupt legislation; and a clause of the Federal Constitution whose purpose was to preclude the repudiation of debts and just contracts protects and perpetuates the evil. " The late President Garfield, in one of his legislative speeches, calledattention to the fact that Chief Justice Marshall pronounced thedecision in the Dartmouth College case ten years before the steamrailway was born, and then said: "I have ventured to criticise the judicial application of the Dartmouth College case, and I venture the further opinion that some features of that decision, as applied to the railway and similar corporations, must give way under the new elements which time has added to the problem. " Charles Fisk Beach, Jr. , in his recent work entitled "Commentaries onthe Law of Private Corporations, " well defines what constitutesdedication to a public use. He says: "Whenever any person pursues a public calling and sustains such relations to the public that the people must of necessity deal with him, and are under a moral duress to submit to his terms if he is unrestrained by law, then, in order to prevent extortion and an abuse of his position, the price he may charge for his services may be regulated by law. When private property is affected with a public interest it ceases to be _juris privati_ only. This was said by Lord Chief Justice Hale more than three hundred years ago in his treatise _De Portibus Maris_, and has been accepted without objection as an essential element in the law of property ever since. " Treating of the fiduciary position of directors and officers ofcorporations, the same author says: "The directors, officers and agents of a corporation are held to the general rule of law resting 'upon our great moral obligation to refrain from placing ourselves in relations which ordinarily excite a conflict between self-interest and integrity. ' The directors and officers are the agents of the company, and while acting in that capacity for it cannot deal with themselves to the detriment of the corporation. All contracts of that character are voidable at the option of the corporation. " And further he says: "A director whose personal interests are adverse to those of the corporation has no right to act as a director. As soon as he finds he has personal interests which are in conflict with those of the company he ought to resign. " T. Carl Spelling, in his treatise on "The Law of Private Corporations, "says of pooling arrangements: "Courts long ago exercised jurisdiction to regulate rates of _quasi_ public corporations, and on the same principle will refuse to enforce pooling contracts between railroad and gas companies. Such contracts are void as against public policy. .. . There is substantial harmony between the English and American definitions of monopoly, the two countries agreeing that contracts entered into by and between two or more corporations, the necessary result of whose performance will crush and destroy competition, are illegal. " Upon the subject of eminent domain Mr. Spelling remarks: "That the legislature may thus select any agency it sees fit for the exercise of eminent domain, and also that it may determine what purposes shall be deemed public, are propositions too deeply rooted in the jurisprudence of this country to admit now of doubt or discussion. Making an application of this doctrine to railway operations, conceding it to be settled that these facilities for travel and commerce are a public necessity, if the legislature, reflecting the public sentiment, decide that the general benefit is better promoted by their construction through individuals or corporations than by the State itself, it would clearly be pressing a constitutional maxim to an absurd extreme if it were to be held that the public necessity should be only provided for in the way which is least consistent with the public interest. .. . The power of eminent domain being an inherent element of sovereignty, it cannot be divested out of the State or abridged by contract or treaty so as to bind future legislatures. Nor can the right be divested by private contract. " Concerning State control of corporations the same author says: "The subordination of all private interests to the purposes of government, subject only to the condition that the object to be accomplished shall be one in which the public has an interest, is no longer an open question. In its general bearing this principle is too well settled and uniformly recognized--underlying the adjudications by courts of all cases involving constitutional provisions--to require more than a mere statement. " And again he says: "Nor is it longer necessary to seek a justification of the common practice of regulating the rates of charges and general management of railroads on the ground that they have received valuable franchises of a public nature and had important powers of sovereign character conferred upon them. That may be an important political consideration, and as such may strengthen the argument in favor of the right; but the right itself rests upon firmer ground, and upon other considerations than that of pecuniary consideration derived from the State. The State may regulate their business, not because they are corporations, nor yet because they are corporations of a particular kind, but because they, like the individuals of which they are composed, are subject to the laws which say that when one devotes his property to a use in which the public has an interest, he in effect grants to the public an interest in that use, and must submit to be controlled by the public for the common good to the extent of the interest he has thus created. " CHAPTER XI. RAILROADS AND RAILROAD LEGISLATION IN IOWA. The first survey for a railroad in the State of Iowa was made in thefall of 1852. The proposed road had its initial point at Davenport andfollowed a westerly course. It was practically an extension of theChicago and Rock Island Railroad, which was then being built betweenChicago and the Mississippi River. On the 22d day of December, 1852, theMississippi and Missouri Railroad Company was formed, its object beingto build, maintain and operate a railroad from Davenport to CouncilBluffs. The articles of association were acknowledged before John F. Dillon, notary public, and filed for record in the office of theRecorder of Scott County, on the 26th of January, 1853, and in theoffice of the Secretary of State on the first day of February following. In 1853 the Mississippi and Missouri Railroad Company entered into anagreement with the Railroad Bridge Company of Illinois for theconstruction and maintenance of a bridge over the Mississippi at RockIsland. The work was commenced in the fall of that year, and the bridgewas completed on April 21, 1856, it being then the only bridge spanningthe Mississippi River. The first division of the Mississippi andMissouri Railroad, extending from Davenport to Iowa City, was completedon the first of January, 1856, and was formally opened two days later. Abranch line to Muscatine was completed shortly thereafter. On the firstday of July the State of Iowa had in all sixty-seven miles of railroad, bonded at $14, 925 a mile, which at that time probably represented thetotal cost of construction. The earnings of these sixty-seven miles ofroad during the six months following July 1, 1856, amounted to $184, 193, or $2, 749 per mile, which was equal to an annual income of about $5, 500per mile. On the 15th of May, 1856, Congress granted to the State of Iowa certainlands for the purpose of "aiding in the construction of railroads fromBurlington, on the Mississippi River, to a point on the Missouri Rivernear the mouth of the Platte River; from the city of Davenport, Iowa, byway of Iowa City and Fort Des Moines, to Council Bluffs; from Lyons Citynorthwesterly to a point of intersection with the main line of the IowaCentral Air Line Railroad near Maquoketa, thence on said line running asnear as practical to the forty-second parallel across the State; andfrom the city of Dubuque to the Missouri River near Sioux City. " Thegrant comprised the alternate sections designated by odd numbers andlying within six miles from each of the proposed roads. Provision wasalso made for indemnity for all lands covered by the grant which werealready sold or otherwise disposed of. The wisdom of the land-grant policy has been questioned. When thesegrants were made it was believed by many that railroads would not andcould not be built in the West without such aid. While others did notshare this opinion, they at least supposed that land grants wouldgreatly stimulate railroad enterprise and lead to the early constructionof the lines thus favored. The land grant of the Mississippi and Missouri Railroad was a meredonation for that part of the line which was already completed at thetime the grant was made; and the extension of this line, as well as theconstruction of the other lines to which the grant applied, was notmade as fast as had been anticipated. The price of all Government landslying outside of the land-grant belts was $1. 25 per acre. To reimbursethe public treasury for the loss resulting from these grants, the priceof lands situated within the land-grant belts was advanced to $2. 50 peracre, practically compelling the purchasers of the even-numberedsections of land, instead of the Government, to make the donation to therailroads, it being supposed that the benefits resulting to thoseregions from the immediate construction of railroads wouldcorrespondingly enhance the value of the alternate sections of landreserved by the Government. Designing men soon saw the advantages whichthe situation offered. They combined with their friends to organizecompanies for the construction of the land-grant roads, built a smallportion of the proposed line, to hold the grant, and then awaitedfurther developments, or rather the settlement of the country beyond. There are those who believe that the doubling of the price of Governmentland within the belt of the proposed land-grant roads greatly retardedimmigration and with it the construction of roads. They hold that, hadno grant whatever been made to any railroad company and had equalcompetition in railroad construction been permitted, the Iowa throughlines, instead of following, would have led, the tide of immigration. It has been seen that in 1856 the Mississippi and Missouri Railroad wascompleted as far as Iowa City. On the second day of June of that yearits Board of Directors asked the Governor of the State to convene theGeneral Assembly in extra session, to consider the disposition whichshould be made of the recent Congressional grant. This urgency mightlead one to suppose that the company was anxious to extend its line atthe earliest opportunity. The General Assembly was convened, and theland given to the State by Congress for the purpose of aiding in theconstruction of a railroad from Davenport to Council Bluffs was given tothe Mississippi and Missouri Railroad Company. The act was approved bythe Governor on July 14, 1856, and three days later the company"assented to and accepted the grant. " It then executed mortgage aftermortgage, and built a branch line through quite a populous territory, from Muscatine to Washington, but the main line made very slow progress. In 1865 the bonded debt of the company amounted to $6, 851, 754, althoughthe line was completed only to Kellogg, in Jasper County, about fortymiles east of Des Moines. In spite of the fact that the cost ofoperating the road had from the beginning varied but little from 60 percent. Of its gross receipts, its president, in a circular letter to thestock-and bondholders, dated October 20th, 1865, made the statement thatthe company was "driven to the necessity of selling the road orreorganizing. " In 1866 suit was brought in the Circuit Court of theUnited States for the District of Iowa for the foreclosure of thecompany's mortgages, and a decree of foreclosure was entered on the 11thday of May of that year. The property was sold on the 9th day of Julyfollowing at Davenport, and was purchased by the Chicago, Rock Islandand Pacific Railroad Company, which was incorporated in this State a fewweeks previous to the sale, for the purpose of acquiring the railroadsbuilt by the Mississippi and Missouri Railroad Company with all itsappurtenant property, "and all the rights, privileges and franchisesgranted by the act of Congress of May 15th, 1856, to the State of Iowa, and by the State of Iowa granted to the said Mississippi and MissouriRailroad Company, and when so acquired to maintain and operate the saidrailroad. " It is a significant fact that all the corporators of the newcompany, except one, were directors of the bankrupt company. On the 20thof August, 1866, the Chicago, Rock Island and Pacific Company of theState of Iowa consolidated with the Chicago, Rock Island and PacificRailroad Company of Illinois, and conveyed all its property, powers andfranchises to the consolidated company. The validity of theconsolidation was questioned by a large number of stock-and bondholders, and the courts were appealed to to issue injunctions restraining theconsolidated company from extending its line or expending any moneyobtained through the sale of its securities. In this predicament thecompany turned to the Iowa legislature for protection. Anxious to securethe early completion of the road, the Twelfth General Assembly, by anact approved February 11th, 1868, recognized the consolidated company, and resumed and granted to it "all right or interest" which the Statehad in the lands previously granted to the Mississippi and MissouriRailroad Company. The act expressly provided, however, that the Chicago, Rock Island and Pacific Railway Company should "at all times be subjectto such rules, regulations and rates of tariff for transportation offreight and passengers as may from time to time be enacted and providedfor by the General Assembly of the State of Iowa, " and that if thecompany should neglect to comply with any of the requirements of theact, it should forfeit to the State all its franchises and corporaterights acquired by or under the laws of the State, and all lands grantedto aid in the construction of its road. The line was completed toCouncil Bluffs in June, 1869. The lands in aid of the construction of a railroad running across theState, as nearly as practicable along the forty-second parallel, weregranted by the General Assembly to the Iowa Central Air Line on the 14thof July, 1856, but as this company failed to fulfill the conditions ofits grant, it was, on the 17th of March, 1860, transferred to the CedarRapids and Missouri River Railroad Company. This company completed theroad to Marshalltown in 1862, to Nevada in 1864, to Boone in 1865, andto Council Bluffs in the fall of 1867. The Burlington and Missouri River road reached the Missouri River but afew months later. Ten years after this company had received its grant, its line had only been completed as far as Albia, in Monroe County. In1867 the road was built little more than half across the State. But itmanaged not to be far behind its two rivals on the north in reaching theMissouri River. At first sight it might seem as if these companies had all at oncebecome awake to their obligations. When it is remembered, however, thatin 1869 the junction of the Union Pacific and Central Pacific railroadswas effected, and thus a continuous line across the continent formed, the conclusion lies near that the haste with which the three Iowaland-grant roads were completed was simply the result of a strife forthe large amount of through business which the completion of the Pacificroute promised to bring to them. No such inducement existed for the Dubuque and Sioux City Company, andtwelve years after receiving its grant it had not yet built half of itsline. In his message to the Twelfth General Assembly, delivered January14, 1868, Governor Stone said: "Under the provisions of the act adoptedby the General Assembly, at its extra session (in July, 1856), this (theDubuque and Sioux City) company became the beneficiary of the grantdesigned to secure the construction of a railroad leading from Dubuqueto Sioux City, and this valuable donation was accepted from the State, with all the terms and conditions imposed. A large portion of this granthas already been absorbed by the company, in various ways, by pretendedsales and incumbrances. This road has been constructed to Iowa Falls, adistance of 143 miles from Dubuque, but I am unable to discover anyreliable evidence of earnest intention on the part of this company toconstruct the line to its terminal point on the Missouri River. " The Governor further recommended that the General Assembly pass an actresuming the control over these lands. At about the same time anagreement was effected between the Iowa Falls and Sioux City RailroadCompany (which was organized in the fall of 1867) and the Dubuque andSioux City Railroad Company, by which the latter transferred to theformer its land grant for the unfinished portion of the Dubuque andSioux City road. This agreement was confirmed by the General Assembly, through an act approved April 7, 1868. The road was completed to FortDodge in August, 1869, and to Sioux City a year or two later. The entireline was then leased to the Illinois Central. The land grant to this line of road embraced over 1, 000, 000 acres of thefinest lands of the State. We can appreciate the magnitude of thisdonation when we consider that, had these lands been sold at only $8 peracre, the proceeds would have paid the whole expense of building andequipping the road from Dubuque to Sioux City. The lands granted to theC. , R. I. & P. R. R. Were sold at an average price of over $8 per acre, and those of the B. & M. At over $12 per acre. Among the other important land grants is that made to the McGregorWestern Railroad Company. This company was the successor of theMcGregor, St. Peters and Missouri River Railroad Company, which wasorganized in 1857 for the purpose of constructing a railroad fromMcGregor to the Missouri River. The construction of the road wascommenced in 1857 at McGregor. Large local subscriptions were takenalong the proposed line, the writer being one of the subscribers. Workwas continued the next year until much of the heavy grading had beendone, when the road was allowed to go through the process offoreclosure, like many other roads built in the West at that time. Theold stock was completely wiped out, and new owners came into possessionof the property, reorganizing under the name of the McGregor WesternRailway Company. Nearly all the early investments of Iowa people werethus confiscated by the same class of men who now cry out loudly againstconfiscatory measures. By an act of Congress approved May 12, 1864, theState of Iowa was granted, for the use and benefit of the McGregorWestern Railroad Company, every alternate section of land designated byodd numbers for ten sections in width on each side of the proposed road. The act contained the condition that in the event of the failure of saidMcGregor Western Railroad Company to build twenty miles of said roadduring each and every year from the date of its acceptance of the grantthe State might resume the grant and so dispose of it as to secure thecompletion of the road in question. The McGregor Western RailroadCompany failing to comply with the conditions of the grant, the GeneralAssembly on the 27th day of February, 1868, resumed the lands and on the31st day of March of the same year regranted them to the McGregor andSioux City Railway Company. The act specially provided that the companyaccepting the grant "shall at all times be subject to such rules, regulations and rates of tariff for the transportation of freight andpassengers as may from time to time be enacted and provided for by theGeneral Assembly of the State of Iowa, and further subject to theconditions, limitations, restrictions and provisions contained in thisact and in the acts of Congress granting said lands to the State ofIowa. " It also contained the condition that at least twenty miles ofroad should be built by the company every year and that the whole roadshould be completed to the intersection of the then proposed railwayfrom Sioux City to the Minnesota State line by the first day ofDecember, 1875. The McGregor and Sioux City Railway Company also failing to comply withthe terms of the grant, the lands were again resumed by the GeneralAssembly on March 15th, 1876, and regranted to the McGregor and MissouriRiver Railroad Company upon the condition that it complete the road tothe intersection of the Sioux City and St. Paul Railroad on or beforethe first day of December, 1877. But the State found itself again disappointed, and two years later theGeneral Assembly for the third and last time resumed its grant and thenconferred it upon the Chicago, Milwaukee and St. Paul Railway Companyupon the express conditions that it complete the road to Spencer on orbefore the first day of January, 1879, and to Sheldon within a yearthereafter, and that the road should at all times be subject to Statecontrol. The road was completed to Sheldon without delay, and on the30th of November, 1878, the Governor of the State certified to theSecretary of the Interior that the Chicago, Milwaukee and St. PaulRailway Company had completed its road from Algona to Sheldon incompliance with the conditions of the original grant and the laws of theState. It thus took over twenty years to complete this road. Ten years afterits construction had commenced it had only reached Calmar in WinneshiekCounty. In 1869 the road was completed to Clear Lake and in 1870 toAlgona. This point remained its terminus until it passed into the handsof the Chicago, Milwaukee and St. Paul Railway Company. The State of Iowa has not derived that benefit from the large landgrants made to its railroads which her people had a right to expect. Inspite of these grants roads were built only when there was reason tobelieve that they would be immediately profitable to their owners. Theland grants enriched the promoters of these enterprises much more thanthey did the State in whose interest the grants were presumed to bemade. As a rule they enabled scheming men to hold the selected territoryuntil a railroad through it promised to be a safe and profitableinvestment, and to avoid the payment of taxes on their millions of acresof land, which in the meantime became very valuable. Other roads werebuilt at an early day without Government aid. They were pushed forwardby the current of immigration until the threatened competition of roadsfavored by these grants checked their progress. The Chicago, Iowa andNebraska road may be cited as a fair illustration. It was projected onthe 26th of January, 1856, in the town of Clinton, to be built fromClinton to the Missouri River via Cedar Rapids. It was opened to De Wittin 1858 and completed to Cedar Rapids the following year. The road was82-1/2 miles long and was built entirely with private means, receivingneither legislative aid nor local subsidy. It is more than probablethat this road would at an early day have been completed to the MissouriRiver, had it not feared the rivalry of the subsidized Cedar Rapids andMissouri road. The total number of acres of land granted by Congress to aid theconstruction of Iowa roads is 4, 069, 942. A fair idea of the value ofthese lands may be obtained from the fact that the Chicago, Rock Islandand Pacific Railroad Company sold over half a million acres of its landsat an average of $8. 68 per acre, and the Chicago Burlington and Quincysold nearly 350, 000 acres at an average of $12. 17 per acre. But land grants form only a small part of the public and privatedonations which have been made to Iowa roads. Including the railroadtaxes voted by counties, townships and municipalities, the grants ofrights of way and depot sites and public and private gifts in money, these roads have received subsidies amounting to more than $50, 000, 000, or enough to build 40 per cent. Of all the roads of the State. There isno doubt that the contributions of the public toward the construction ofthe railroads of Iowa is several times as large as the actualcontributions of their stockholders for that purpose. The people of Iowa were from the first very favorably disposed towardsrailroads. Every inducement was held out to railroad builders to comehere and help to multiply the tracks for the iron horse. They came andbrought with them many abuses which since the first introduction ofrailroads had gradually been developed in other States. The contrast between the old and the new mode of transportation was sogreat, and the public appreciated so highly the superior conveniencesafforded by the latter, that for years the abuses practiced by the earlyrailroads were scarcely noticed, or, if they did attract the attentionof the public, they appeared more like necessary features of the newsystem of transportation than like abuses. The evil gradually increased, but for years no attempt was made to check its growth. The railroadmanagers construed this failure of the people to interfere with, or evenprotest against, their unjust practices as a quasi-sanction of theircourse, and soon claimed to do by right what they had formerly done bysufferance. The evils increased until the patience of the people finallybecame exhausted. While the State thus for years dealt very leniently with the railroadcompanies, the laws of Iowa had from the beginning of railroad buildingemphasized the principle of State control. This principle was assertedin the very first railroad act ever passed in the State. Section 14 ofchapter I. Of the acts of the extra session of the Fifth GeneralAssembly, regranting to the various railroad companies the lands grantedto the State by Congress for railroad purposes, provides that "railroadcompanies accepting the provisions of this act shall at all times besubject to such rules and regulations as may from time to time beenacted and provided for by the General Assembly of Iowa. .. . " In 1866 anattempt was made in the General Assembly to regulate rates, but theAttorney-General, to whom the question of constitutionality wassubmitted, held in his opinion that it was not in the power of thelegislature to prescribe rates for railroad companies. This opinionprovoked much indignation among the people of the State, and led to theexpression of a sound public opinion by legislative acts which could notbe misunderstood. When the Twelfth General Assembly (in 1868) regranted to the Chicago, Rock Island and Pacific Railroad Company the lands originally grantedto the Mississippi and Missouri Company, it only did so upon thecondition that "said railroad company, accepting the provisions of thisact, shall at all times be subject to such rules, regulations and ratesof tariff for transportation of freight and passengers as may from timeto time be enacted and provided for by the General Assembly of the Stateof Iowa. .. . " The same restricting clause, known as the Doud Amendment, was added to all other land grant acts passed by the Twelfth andsubsequent General Assemblies, and the various companies willingly andgladly accepted it. The abuses of which the people of Iowa complained were far from beingconfined to their State. They were practiced throughout the Northwest, and the demand for reform was as loud in Minnesota, Wisconsin andIllinois as it was in Iowa. In 1871 laws were passed in Illinois andMinnesota fixing maximum charges for the transportation of freight andpassengers and prohibiting discriminations. The railroads claimed that aState did not have the right to prescribe rates and refused to be boundby these laws. Instead of modifying their policy, they became daily morearrogant. Discriminations which had before been practiced under the veilof secrecy, or which had been defended by railroad managers asexceptions to the general rule made necessary by a peculiar combinationof circumstances wholly beyond their control, were now openly anddefiantly practiced by several of the larger roads. The Chicago, Milwaukee and St. Paul Railroad Company, in its effort to annihilate arival, went so far as to openly announce to the public its intention toentirely disregard distance as a factor in rate-making. It graduallybecame the general rule to wage war against rivals at competitivepoints and to "recoup" by charging excessive rates at non-competitivepoints. Every encouragement was thus given by the railroads to theGranger movement, which spread in less than two years over the wholeNorthwest. In the fall of 1873 Iowa elected a Granger legislature, like Minnesota, Wisconsin and Illinois. The wildest predictions were made by railroadmen as to the extremes to which the Granger legislature would go, but itconfined itself to enacting a law establishing an officialclassification and fixing maximum rates for all railroad companies. Thelaw was approved March 23, 1874, and went into effect on the 4th of Julyfollowing. This law in no case compelled companies to carry freight at alower rate than they had voluntarily carried it in the past. Many of therates in force at the time of the passage of the act were considerablylower than the corresponding maximum rates fixed by the legislature. Theaverage rates fixed by the law were higher than the rates at which therailroads had previously carried a large portion of correspondingfreight. The revenues of the road were not even curtailed by this law;on the contrary, by equalizing rates, _i. E. _, by leveling up the ratesgiven to favored places and favored individuals and leveling down theexorbitant rates exacted from the public at non-competitive points, therailroad companies were enabled to effect an increase in their totalrevenue. The Granger law remained in force until 1878. Its constitutionality wastested by the railroad companies in the Supreme Court of the UnitedStates, but this high tribunal held that rate-making was a legislativeand not a judicial function, that it was within the province of theState legislature to prescribe rates for the transportation ofpassengers and freight wholly within the State, and that for protectionagainst abuses by legislatures the people must resort to the polls, andnot to the courts. The Granger laws have been and are still severely criticised by thoseopposed to the principle of State control and by the ignorant. It isnevertheless true that those laws were moderate, just and reasonablywell adapted to remedy the evils of which the public complained. It hasbeen the policy of most railroad men to attack them as crude, intenselyradical and socialistic. The obloquy heaped upon them was the work ofdesigning men who desired to continue their impositions upon the people. Mr. Charles Francis Adams, however, admits that the Granger method wasprobably as good a method as could have been devised of approaching menwho had thoroughly got it into their heads that they, as commoncarriers, were in no way bound to afford equal facilities to all, and, indeed, that it was in the last degree absurd and unreasonable to expectthem to do so. The Iowa law was imperfect in detail, and yet its enactment proved oneof the greatest legislative achievements in the history of the State. Itdemonstrated to the people their ability to correct by earnestness andperseverance the most far-reaching public abuses and led to an emphaticjudicial declaration of the common-law principle that railroads arehighways and as such are subject to any legislative control which may bedeemed necessary for the public welfare. Defeated in the courts, the railroad managers now endeavored to makeodious the new law which deprived them of the power to manipulaterailroad interests to their personal advantage. By complying with onlypart of its letter and none of its spirit, they contrived to createhardships for certain interests and localities. Instead of charging inall cases reasonable rates, as the spirit of the law demanded, theywould frequently charge the maximum rates permitted under the law, andwhen they by this practice succeeded in damaging certain interests, theywould point to the Granger law as the source of all existing railroadevils. So, likewise, when they were asked by their patrons to reduce ahigh rate, they would plead the legislative schedule in excuse of theirfailure to comply with the request. When the legislature of 1878convened, the railroad managers appeared before it and pleadedsubmissively for a repeal of the Granger law and the establishment of acommissioner system. They claimed that they were ready and willing tosubmit to all reasonable regulation, but that a maximum tariff law wasprejudicial both to the best interests of the roads and those of thepublic. They further asserted that the people had grown tired of thismanner of regulating railroad charges and earnestly desired a change ofpolicy; that the interference of the State with the railroad businesshad injuriously affected certain industrial interests and had greatlyretarded railroad construction by driving capital and promoters ofrailroad enterprises from the State. These statements would indeed haveargued strongly in favor of a repeal of the law if they had been basedon facts. There had been, however, no expression of publicdissatisfaction during the campaign preceding the session of the GeneralAssembly. There were doubtless individuals and even communities to whomthe law had been made so odious that they felt they had but little tolose by a change, but the masses of the people believed that the law wasbased upon just principles and desired its perfection rather than itsrepeal. As to the claim that railroad construction had been checked byhostile legislation, statistics prove that during the five yearsfollowing the great panic of 1873 Iowa fared no worse in this respectthan her sister States east, west or south. The arguments produced by the railroad managers no doubt influenced somemembers of the General Assembly; by far the greater number of them, however, realised that the failure of the law to bring the expectedrelief was not due so much to its own imperfections as to the absence ofa power to enforce it. The writer, with others, was convinced that astrong and conscientious commission would be a much more potent agencyto secure reasonable rates for the shipper than a maximum tariff lawwithout proper provisions for its efficient enforcement; they, in short, preferred a commission without a tariff law to a tariff law without acommission. The question became the subject of many animated debates inboth houses of the General Assembly, but the commissioner system at lastprevailed. The act establishing a Board of Railroad Commissioners, anddefining their duties, was approved on the 23rd of March, 1878, and wentinto force a few days later. The act empowered the commission toexercise a general supervision over all railroads operated in the State, to inquire into any neglect or violation of the laws of the State by anyrailroad corporation or its officers or employes, to examine the booksand documents of any corporation, to investigate complaints of shippersthat unreasonable charges had been made by railroad companies, and tomodify any charge which they might deem unreasonable. It was also madethe commissioners' duty to make an annual report to the Governordisclosing the working of the railroad system in the State, the officersof each company being required to make annual returns to the board forthis purpose. Though the enactment of this law was a surprise to the people, theyaccepted it in good cheer, and determined to give it an honest trial. The law was extensive in its scope and stringent for that time, and, ifstrictly enforced in letter and in spirit, promised to be, and wouldhave been, entirely sufficient for the thorough control of railroadcorporations. Nevertheless, in the course of time it became apparent that either thelaw had not lodged sufficient authority in the commission or thecommission did not make use of the authority which the law had giventhem. In spite of the commission, the railroad companies maintainedpools and charged extortionate and discriminating rates, in directviolation of the law. It is true the commissioners righted many a wrong. In investigating the complaints of shippers against railroad companiesthey often rendered valuable services to those who had neither the meansnor the inclination to prosecute their rights in the courts of law; butas they held that they could only pass upon individual charges, and didnot have the power to revise the companies' tariffs, the companies werevirtually in a position to become guilty of more extortions in one daythan the commission could investigate in a year. Moreover, the railroadcompany might be ordered by the commission to return an overcharge to acertain shipper, but this did not prevent it from continuing theexcessive charge. If the overcharged shipper again wanted relief it washis privilege to again apply to the commission, and to continue thistedious process until either his or the commissioners' patience becameexhausted. The people soon found that the new system of control wasalmost as inadequate as that which it had displaced. Some attributed theweakness of the commission to its personnel, others to the law. Thereis no doubt that the commission might have accomplished more than itdid. It was hoped by some that as the commission gained in experience itwould gain in influence, and that railroad evils would graduallydiminish. But they were disappointed in their expectations. Every yearseemed to add to the grievances of the public. Success greatlyemboldened the railway companies. Discriminations seemed to increase innumber and gravity. At many points in the western part of the Statefreight rates to Chicago were from 50 to 75 per cent. Higher than frompoints in Kansas and Nebraska. A car of wheat hauled only across theState paid twice as much freight as another hauled twice the distancefrom its point of origin to Chicago. Minnesota flour was hauled adistance of 300 miles for a less rate than Iowa flour was carried 100miles. Certain merchants received from the railroad companies a discountof 50 per cent. On all their freights and were thus enabled to undersellall their competitors. The rate on coal in carload lots from Cleveland, Lucas County, to Glenwood was $1. 80 per ton, and from the same point toCouncil Bluffs only $1. 25, although the latter was about thirty mileslonger haul. Innumerable cases of this kind could be cited. There wasnot a town or interest in the State that did not feel the influence ofthese unjust practices. Many of the rates complained against, it istrue, were beyond the direct control of the State commission, but therewas an impression among well-informed shippers that if the commissionhad the power to fix local rates and exercised it judiciously, therailroad companies would soon find it to their interest to be asreasonable in making through rates for Iowans as they expected thecommission, to be in prescribing local tariffs. The demand of the people for more equitable rates and a more thoroughcontrol of the railroad business increased from year to year. Repeatedattempts were made in the General Assembly to secure the passage of anact looking to that end, but, owing to shrewd manipulations on the partof the railroad lobby, every attempt was defeated. There always was, ofcourse, a large number of members who represented districts not wellsupplied with railroad facilities. These, as a rule, honestly opposedrestrictive legislation, believing that such legislation would checkbuilding, and that, on the other hand, competition could be relied uponto correct abuses. Of those members who had less positive convictionsmany were retained as railroad attorneys and were thus made serviceableto the companies. Other members with political ambition were nattered orintimidated into subjection, and bribes in disguise, such as passes andspecial rates, were not unfrequently resorted to to strengthen therailroad following in both houses of the General Assembly. Railroad corruption did not pause here. It is a notorious fact thatlarge sums of money were paid to venal papers of both parties inconsideration of an agreement on their part to defend transportationabuses and exert their influence against progressive railroadlegislation. The vilest means were often resorted to by these sheets toobtain their end. Public men who had the courage to avow theiropposition to existing railroad abuses or to favor a more perfect systemof State control of railways were misrepresented, ridiculed, traducedand denounced as demagogues and socialists by hypocritical editors, whoprostituted their political influence as long as they enjoyed railroadstipends, and who at intervals became converts to the cause of thepeople for the purpose of extorting from the railroad companies a newand increased subsidy. But truth can not long be suppressed. The massesof the people may be imposed upon for a time, but even the shrewdestrogue will eventually be compelled to surrender. In time even ratherunsophisticated voters learned to place a true estimate upon the motivesof the editors, whose policy, as one of them expressed it in theauthor's presence, was "controlled by the counting-room. " Railroad politicians gradually lost their influence, and the symptoms ofpublic discontent greatly increased. In the political campaign of 1887State control of railroads became one of the main issues. Both of thegreat political parties in their platforms had declared themselves veryemphatically in favor of such legislation as would bring railroadcorporations under complete State control, and with very few exceptionsthe various legislative districts had nominated only such men ascandidates for legislative offices as were known to be in thoroughaccord with the masses of the people upon the railroad question. The election resulted in an even more complete defeat of the railroadforces than had been generally anticipated. Yet no hasty step was takenwhen the General Assembly convened. A large number of billscontemplating railroad reforms in various ways were introduced, but thematerial presented was carefully sifted by the railroad committees and acommittee bill was framed which incorporated the best features of themall. The committees listened patiently for weeks to the arguments of therepresentatives of both the railroads and the shippers. Never before had so formidable a railroad lobby assembled at the StateCapitol. The danger signal had been raised, and not only were the greatpolitical manipulators of the State called into requisition, but expertsfrom adjoining States joined them in besieging the legislature. Thedogs of war were let loose from all quarters. A legion of hirelings werezealous to show their servility and loyalty to their lords. The dailyand weekly papers of the State in the service of railroad companiesteemed with arguments from the pens of railroad attorneys, and theircolumns were profusely supplemented with editorials copied fromprominent corporation papers like the New York _Tribune_, New York_Times_, New York _World_, Albany _Evening Argus_, Boston _Advertiser_, and others from various parts of the country. These papers, attempting to disguise the motives that prompted them tocome to the defense of the Wall Street interest, affected the positionof disinterested and impartial observers. They condemned the proposedmeasures as wild and socialistic, and they painted in dark colors thedisasters to railroad property, the injustice to its owners, andmisfortunes to the people of Iowa, that would follow their adoption. Especially did they bewail the losses that would fall upon the widowsand orphans who had confidingly invested all of their hard earnings inthis property. They never uttered a word of condemnation, but entirely ignored ordefended the abuses by which the stockholders were robbed at one end ofthe line and the patrons were imposed on at the other. Many of these papers were notified that their statements were altogethererroneous, but they would not admit a line to their columns in relationto the matter that indicated any other disposition than completesubserviency to the interests of Wall Street. There were, however, an unusual number of strong men in this GeneralAssembly, and this extraordinary display of railroad forces only tendedto impress more strongly upon them the necessity of curbing the railroadpower, and their best energies were concentrated upon the subject, witha firm determination to deal with it in a manner dictated by reason andexperience. So well did the bill which was finally adopted by the committee reflectthe general sentiment of the members of the General Assembly that not asingle vote was cast against it in either house upon its final passage. Since the adjustment of business under this law, there has been lessfriction between the people and the railroads than before for thirtyyears, and so satisfactory has it proved to all that no one, not even arailroad man, has to this day asked the legislature to repeal the law orany part of it. The act contains no new principle of railroad control. By far the greater part of its provisions were taken from the old law. Nearly every one of its features may be found either in the InterstateCommerce Act or upon the statute books of other States. It provides thatcharges must be reasonable and just, that no undue preference oradvantage shall be given to any railroad patron, and that equalfacilities for interchange of traffic shall be given to all roads; itprohibits pooling, a greater charge for a shorter than longer haul, theshorter or any portion of it being included in the longer, anddiscrimination against any shipping point. It requires that schedules ofrates and fares shall be printed and kept for public inspection, andthat no advance shall be made in rates or fares once established exceptafter ten days' public notice; and it empowers the Board of RailroadCommissioners to make and revise schedules for railroads, the ratescontained in such schedules to be received and held in all suits as_prima facie_ reasonable maximum rates. The act further providespenalties and means of enforcement. It must not be supposed that by the passage of this act the legislaturedisclaimed the right to fix absolute rates; it simply chose thisexpedient because in the present tentative stage of rate regulation itseemed most efficient. There has been much misunderstanding concerning the Iowa law. Manysuppose that the Iowa commissioners have power to make confiscatoryrates for the railroads, while in fact they can only name maximum rateswhich shall be deemed and taken in all courts of the State as _primafacie_ evidence that they are reasonable and just maximum rates untilthe railroads show that they are not. They are at liberty to go intocourt any day and show this, if they are able. They are, however, careful not to undertake it, for no one knows better than they do thatthe rates fixed by the commissioners are liberal for the railroads. There are nine States, besides Iowa, in which the power to fix rates hasbeen conferred upon railroad commissioners. This feature of the law wastherefore far from being a novel one, yet no provision of the act was, previous to its passage, so furiously opposed, or subsequent to it sostubbornly resisted as this. Railroad managers realized that a surrenderof the right to make their own rates was virtually a surrender of thepower to practice abuses. Soon after the passage of the law the commissioners commenced the workof preparing schedules of the rates for the roads. They endeavored to dojustice to both the railroad companies and their patrons by affording afair compensation to the former and at the same time giving relief tothe depressed interests represented by the latter. Their rates were notas low as the special rates that had at various times been granted tofavorite shippers, but were a fair average of the various rates in vogueat the time. While the schedule was under consideration, the railroadmanagers were given frequent hearings, in which they endeavored toimpress their views upon the commissioners and to obtain many importantconcessions, which they urged as essential to the welfare of therailroad interests. Their views guided the commission to such an extentthat it was generally supposed that the schedule as finally adoptedwould be accepted by the railroad companies without protest. The schedule of the Iowa commission has been sharply criticised by Mr. Stickney in his "Railway Problem. " He finds in it inconsistencies andconfusion, due, as he charges, to faulty mathematics. But it is claimedby the commission, and Mr. Stickney should know, that whenevermathematics were ignored in the construction of the schedule it was doneat the earnest and persistent solicitation of the railroad managers, who, it seems, were more interested in maintaining their interstaterates than in the consistency of the Iowa schedule. The rates were published, as required by law, and June 28, 1888, wasfixed as the day on which they were to take effect. A few days previousto this date the companies asked that the taking effect of the newtariff be postponed a week. When this request was granted by thechairman of the commission, the railroad managers took advantage of thecourtesy by enjoining the commissioners in the Federal court fromenforcing it. Several months later the commissioners modified their schedule by theadoption of the Western Classification. Again the railroad managersasked the court for an injunction, but this time met with a refusal. After many suits for penalties had been instituted against them, andmany more threatened, they adopted the new schedule, but endeavored toinaugurate a policy of retaliation by reducing their train service anddischarging a large number of employes, and in many ingenious wayscontinued their seditious course with a determination characteristic ofa band of insurrectionists. But the impetus which railroad trafficreceived under the operation of the commissioners' schedule was suchthat they soon found it necessary to restore to the service its formerefficiency. The Railroad Commissioners' report shows that while the number ofemployes was 24, 642, and their yearly compensation was $14, 212, 500 in1889, in 1892 there were 30, 492 employes, and their yearly compensation$18, 070, 915. The increase in both the gross and net earnings of Iowa lines has beenremarkable, as shown in the following table gathered from thecommissioners' reports: Gross Earnings, Net Earnings, Year. Total. Total. Per Mile. 1888-89 $37, 369, 276 $11, 861, 310 $1, 421 1889-90 41, 318, 133 12, 798, 430 1, 522 1890-91 43, 102, 399 14, 463, 106 1, 720 1891-92 44, 540, 000 14, 945, 000 1, 777 It was claimed by railroad men that the effect of Iowa legislation wouldbe particularly disastrous to her local roads, which had no opportunityto make up on through business the losses incurred in the local traffic. The Burlington, Cedar Rapids and Northern was particularly cited as aline which would have to go into bankruptcy under the new law. Itsearnings commenced to increase, however, immediately after the adoptionof the commissioners' schedule, and at the end of the first year theywere large enough to change this line from a Class "C" to a Class "B"road. They continued to increase, and in 1891 its gross earnings onsubstantially the same mileage were 36 per cent, and its net earnings 64per cent. Larger than they had been in 1888. The increase continued andenabled the company to make a dividend to its stockholders February 1, 1893, it being the first dividend ever made by the company. It is a goodillustration of what the Iowa law has done for weak railroads. It hasagain changed class and is now a Class "A" road. It is seen that the fears, or rather the pretended fears of the railroadmanagers, that the legislature of Iowa would bankrupt her railroads, were entirely groundless. As a result of the law railroads have beenable to increase their gross earnings as well as their profits. Theyhave been enabled to give employment to a larger number of men, andthere has been no occasion for them to carry out the dishonest threat todecrease the wages of their employes. Had it not been for theirincreased earnings in Iowa, the losses recently sustained in otherStates by several of the through lines would have made it impossible forthem to declare the dividends which they did. Under her beneficial railroad policy Iowa has prospered wonderfully, andher railroads have been more prosperous than when they were allowed tohave their own way. The commissioners' tariff has made jobbing andmanufacturing profitable where it was unprofitable before. It has addedto our industries and our commerce, and has made new business for thepeople as well as the railroads. It has contributed to the increase inthe value of our farms and factories and their products, and the timewill come when wise railroad managers, like the majority of formerslaveholders of the South, would not resurrect the past if they could. In fact, honorable managers now acknowledge that they would not if theycould. The railroad companies are at present making a systematic effort toweaken the Iowa commission, but if they should succeed in doing so, thepeople, under our system of electing the commissioners, can readilycorrect the evil. Other States have much experience similar to that of Iowa. Nebraska hasjust adopted a maximum tariff law for the control of her roads. It will, of course, be resisted by the railroad managers of that State. The State of Texas is not so productive in proportion, but is muchgreater in extent than Iowa, and upon the whole resembles it much in itsprominent characteristics. Both are thrifty, progressive States, with nolarge commercial or manufacturing centers where their people can easilyorganize to protect their financial interests. The people of Texas endured patiently the abuses so prevalent inrailroad management until a few years since they enacted a railroad lawsimilar to that of Iowa. The Wall Street managers of the Texas railroadsare at the present time using all of their familiar methods to influencethe people of that State to repeal their law. The following letterserves to show the spirit with which they are approached: "23 BROAD STREET, NEW YORK, November 30, 1891. James B. Simpson, Esq. , Dallas, Tex. "DEAR SIR: Yours of the 26th is received and contents carefully noted. Very likely you have valuable franchises, or what would be valuable in almost any other state than Texas; but while there are many places in Texas where we would like to build some railroads--mostly short ones--we cannot do anything so long as the disposition exists that now seems to in Texas; that is, to do all the harm they can do this kind of property, and I think my views are shared by all people who have money to invest. No one is disposed to create property which, after being created, is not to be controlled by its ownership. Of course, we all expect to be subject to the police regulations and to pay the taxes of any State even as other property, but whenever anything is done beyond that it checks this kind of improvement, and where it approaches so near confiscation as the sentiment of Texas tends it entirely prevents capital from being invested. "I think there is no road in Texas that is to-day earning its operating and fixed charges. Every road, I think, has been or is in the hands of a receiver, excepting our great east and west line, which is supported by business going entirely through the State, which business could also be sent another way, and would be so sent, excepting that we believe the people of Texas will some time take a sober second thought and treat the railroads as they do other kinds of property. When that time comes I shall be ready to talk to you about your franchises, if it comes in my day, and I believe it will, as I think no other people are suffering from an unwise policy persistently pursued as are the people of your State. "Yours truly, C. P. HUNTINGTON. " "Now, in the name of all the gods at once, Upon what meat doth this our Cæsar feed, That he hath grown so great?" It was but a few years ago when this Mr. Huntington was keeping a smallretail store in the city of Sacramento, and he exhibited then no greaterability, except perhaps that he was a little more venturesome, thanthousands of others engaged in the same occupation; subsequently heengaged, with several others, in the Central Pacific Railroad scheme, and received from the bounties of our generous Government as his shareof the profits in that enterprise several million dollars, which sum hasever since been continually swelled by the exercise of a power scarcelyinferior to the power of taxing the property of the Pacific Coast. Hehas been so successful for years in manipulating Congressmen and Statelegislatures and shaping the policies of States that he now considers itimpertinent and short-sighted for a people to take steps to limit hislevies upon them. It is to be hoped that the boycotting and intimidatingmethods resorted to will have no more effect upon the people of thatState than they had on the people of Iowa. Iowa is the queen among the States of the Union. No other State has solittle waste land or is so productive. Her annual output of stapleproducts amounts to hundreds of millions of dollars in value. Her peopleare intelligent, progressive and just. None are governed more by theprecepts of the golden rule, or are more disposed to render unto Cæsarthe things that are Cæsar's. She can well be proud of the progress shehas made in State control of railroads. Let no backward step be taken. CHAPTER XII. THE INTERSTATE COMMERCE ACT. The Constitution of the United States was adopted nearly fifty yearsbefore the locomotive made its appearance. Had the steam railroad beenin existence in 1787 and been as important an agency of commerce as itis to-day, there is every reason to believe that the railroad questionwould have received the special attention of the framers of thatinstrument. It is a well-known fact that the "new and more perfectgovernment" had its origin in the necessities of commerce, and while thefuture exigencies of trade were beyond the reach of the most speculativemind, the provisions of the Constitution relating to the subject ofinterstate commerce were made broad and far-reaching. Section 8 ofArticle I. Of the Constitution provides that "the Congress shall havepower . .. To regulate commerce with foreign nations, and among theseveral States, and with the Indian tribes . .. And to make all lawswhich shall be necessary and proper for carrying into execution theforegoing powers and all other powers vested by this Constitution in theGovernment of the United States, or in any department or officerthereof. " If any doubt ever existed as to the import of the phrase "to regulatecommerce, " it has been entirely removed by the decisions of the SupremeCourt. In the Passenger cases, 7 Howard, 416, the court said: "Commerce consists in selling the superfluity; in purchasing articles of necessity, as well productions as manufactures; in buying from one nation and selling to another, or _in transporting the merchandise_ from the seller to the buyer to gain the freight. " And again, in the Philadelphia and Reading Railroad vs. Pennsylvania, the Supreme Court said: "Beyond all question the transportation of freights or of the subjects of commerce for the purpose of exchange or sale is a constituent of commerce itself. This has never been doubted, and probably the transportation of articles of trade from one State to another was the prominent idea in the minds of the framers of the Constitution when to Congress was committed the power to regulate commerce among the several States. .. . It would be absurd to suppose that the transmission of the subjects of trade from the seller to the buyer, or from the place of production to market, was not contemplated, for without that there could be no consummated trade with foreign nations or among the States. " Chief Justice Marshall, in Gibbons vs. Ogden, 9 Wheaten, 196, construedthe words "power to regulate" as follows: "This power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution. " It is a strange fact that during the first eighty years of theGovernment's existence Congress did not exert its power to regulate theconduct of common carriers engaged in interstate transportation. Thefirst act regulating such carriers was passed in July, 1866. Itauthorized railroad companies chartered by the States to carrypassengers, freights, etc. , "on their way from any State to anotherState, and to receive compensation therefor, and to connect with roadsof other States so as to form continuous lines for transportation of thesame to the place of destination. " The passage of this act, it should beremembered, was urged by the railroad companies themselves. Seven yearslater an act was passed providing that "no railway within the UnitedStates, whose road forms any part of a line or road over which cattle, sheep, swine or other animals shall be conveyed from one State toanother, or the owners or masters of steam, sailing or other vesselscarrying or transporting cattle, sheep or swine or other animals fromone State to another, shall confine the same in cars, boats or vesselsof any description for a longer period than twenty-eight consecutivehours, without unloading the same for water, rest and feeding, for aperiod of at least five consecutive hours, unless prevented from sounloading by storm or accidental causes. " Every violation of this act was made punishable by a penalty of from$100 to $500. Though Congress had asserted the right to regulate commerce among theStates, it had made previous to 1873 very limited use of that power. Inthe midst of the Granger movement the Senate of the United States passedon the 26th day of March, 1873, the following resolution: "_Resolved_, That the Select Committee on Transportation Routes to the Seaboard be authorized to sit at such places as they may designate during the recess, and to investigate and report upon the subject of transportation between the interior and the seaboard; that they have power to employ a clerk and stenographer, and to send for persons and papers. .. . " The committee, under the chairmanship of Mr. Windom, discharged theirduty with great fidelity, and submitted their report to the Senateduring its next regular session. They declared that the defects andabuses of the then existing systems of transportation were insufficientfacilities, unfair discrimination and extortionate charges. As theprincipal causes of such excessive rates they assigned stock watering, capitalization of surplus earnings, construction rings, generalextravagance and corruption in railway management, and combinations andconsolidations of railway companies. The committee were of the opinionthat the promotion of competition would not permanently remedy theexisting evils, and laid it down as a general rule that competitionamong railways ends in combination and in enhanced rates. As expedientand practical remedies for the existing evils they recommended thefollowing measures: 1. Direct Congressional regulation of railway transportation, under thepower to regulate commerce among the several States. 2. Indirect regulation and promotion of competition, through the agencyof one or more lines of railway, to be owned and controlled by theGovernment. 3. The improvement of natural water-ways and the construction ofartificial channels of water communication. The report was accepted and considered, but there the matter rested, sofar as the practical results were concerned. In 1878 Mr. John H. Reagan, of Texas, introduced in the House ofRepresentatives a bill for an act to regulate railroad companies engagedin interstate commerce. This may be said to have been the first realinterstate commerce bill before Congress. It was a progressive, thoroughand well-planned measure, but failed to receive the approval of Congressbecause a majority of its members considered it too radical a measure. The bill contained many of the provisions of the present InterstateCommerce Act, including the anti-pooling and the long and short haulclauses; but instead of creating a commission it lodged in the courts, both State and Federal, the power to enforce the law. Other bills were introduced from year to year, but during a period ofnine years none of them drew sufficient votes to make it a law. Congressmay be said to have been divided into three camps upon the railroadquestion, viz. : those who favored the system of regulation proposed byMr. Reagan, those who favored the commissioner system and those who wereopposed to every mode of Federal regulation of interstate commerce. Inthe meantime, the inactivity of Congress caused considerablerestlessness among the people, and the demand for action became louderevery year. The issue entered into politics, and a number of WesternCongressmen owed their failure to be re-elected to their indifference orenmity to Federal railroad legislation. On March 21st, 1885, under authority of a resolution adopted by theSenate of the United States, the President of the Senate appointed aselect committee to investigate and report upon the subject of theregulation of the transportation of freight and passengers between theseveral States by railroad and water routes. Senator Cullom, ofIllinois, became its chairman. The committee examined a large number ofwitnesses, including railroad managers and shippers, addressed lettersto the railroad commissioners of the several States, to boards of trade, chambers of commerce, State boards of agriculture, Patrons of Husbandry, Farmers' Alliances, etc. , and made every effort to obtain the opinionsof those who had given special attention to the transportation problem. The report of the committee was submitted to the Senate on January 18, 1886. Concerning the abuses of railroad transportation it differed butlittle from that of the Windom committee. The report declared publicityto be the best remedy for unjust discrimination and recommended thatthe posting of rates and public notice of all changes in tariffs berequired. It also recommended that a greater charge for a shorter than alonger haul be made presumptive evidence of an unjust discrimination, and that a national commission be established for the enforcement of anylaws that might be passed for the regulation of interstate commerce. Upon the question of pooling the report stated: "The committee does not deem it prudent to recommend the prohibition of pooling, which has been urged by many shippers, or the legalization of pooling compacts, as has been suggested by many railroad officials and by others who have studied the question. .. . The majority of the committee are not disposed to endanger the success of the methods of regulation proposed for the prevention of unjust discrimination by recommending the prohibition of pooling, but prefer to leave that subject for investigation by a commission when the effects of the legislation herein suggested shall have been developed and made apparent. " The report was accompanied by a bill representing "the substantiallyunanimous judgment of the committee as to the regulations which arebelieved to be expedient and necessary for the government and control ofthe carriers engaged in interstate traffic. " The bill was before Congress for more than a year, receiving severalimportant amendments before its final passage in both houses. It wasapproved by the President on the 4th day of February, 1887, and tookeffect sixty days after its passage, except as to the provisionsrelating to the appointment and organization of an Interstate CommerceCommission, which took effect at once. The act contains twenty-four sections, but is by no means cumbersome. Itis, in many respects, the most important piece of legislation that hasbeen had in Congress for the past twenty years. It applies to commoncarriers engaged in the transportation of passengers or property whollyby railroad, or partly by railroad and partly by water, when both areused, under a common control, management or arrangement, for acontinuous carriage or shipment from one State or Territory of theUnited States, or the District of Columbia, to any other State orTerritory in the United States or the District of Columbia, or from anyplace in the United States to an adjacent foreign country, or from anyplace in the United States through a foreign country to any other placein the United States. It prohibits unjust and unreasonable charges, special rates, rebates, drawbacks, undue or unreasonable preferences, advantages, prejudices and disadvantages, as well as all discriminationsbetween connecting lines. It makes unlawful a less charge for a longerthan for a shorter haul over the same line, in the same direction, theshorter being included within the longer distance, except when speciallyauthorized by the Interstate Commerce Commission. It prohibits pools, requires schedules of freight rates and passenger fares to be kept inall depots and stations, permits no advance in the rates, fares andcharges once established, except after ten days' public notice, andmakes it unlawful for common carriers to charge either more or less thanschedule rates. It also requires them to file copies of all schedules, traffic contractsand joint schedules with the Interstate Commerce Commission, as well asto make them public when directed by the commission, and prohibitscombinations to prevent the carriage of freight from being continuousfrom the place of shipment to the place of destination. It makes commoncarriers liable for all damages to persons injured by violations of theact, and specially provides that any court before which such a damagesuit may be pending may compel any director, officer, receiver, trusteeor agent of the defendant company to appear and testify in the case, andthat the claim that any such testimony or evidence may tend to criminatethe person giving such evidence shall not excuse such witness fromtestifying, but that such evidence or testimony shall not be usedagainst such person on the trial of any criminal proceeding. It likewisesubjects such officers and employes of a railroad company as may beguilty of aiding or abetting in violations of the act to fines notexceeding $5, 000 for each offense. These provisions are covered by the first ten sections of the act. Section 11 establishes the Interstate Commerce Commission, to becomposed of five commissioners appointed by the President by and withthe advice and consent of the Senate. It provides that the commissionersfirst appointed shall continue in office for the term of two, three, four, five and six years, respectively, from the first of January, 1887, the term of each to be designated by the President, and that theirsuccessors shall be appointed for terms of six years, except that anyperson chosen to fill a vacancy shall be appointed only for theunexpired term of the commissioner whom he shall succeed. No more thanthree commissioners may be appointed from the same political party, andthe President has the power to remove any commissioner for inefficiency, neglect of duty or malfeasance in office. Authority is given to thecommission to inquire into the management of the business of all commoncarriers subject to the provisions of the act and to require theattendance of witnesses and to invoke the aid of any court of the UnitedStates for that purpose. Section 13 authorizes any person, firm, corporation or association, anymercantile, agricultural or manufacturing society, any body politic ormunicipal organization to file complaints against any common carriersubject to the provisions of the act, with the commission, whose duty itis made to forward a statement of the charges to such common carrier andcall upon him to satisfy the complaint or answer the same in writing, and to investigate the matters complained of, if the complaint is notsatisfied. The commission is also charged with the duty of making suchinvestigations at the request of State or territorial railroadcommissions and may even institute them at its own motion. Section 14requires the commission to make a report in writing of any investigationit may make and to enter it of record and furnish copies of it to thecomplainant and the common carrier complained of. Section 15 makes itthe commissioners' duty, when it is found that any law cognizable by ithas been violated by a common carrier, to serve notice on such carrierto desist from such violation and to make reparation for an injury foundto have been done. If any lawful order or requirement of the commissionis disobeyed by a common carrier, it becomes their duty and is lawfulfor any company or person interested in such order to apply by petitionto the Circuit Court of the United States sitting in equity in thejudicial district in which the common carrier complained of has itsprincipal office, and the court has power to hear and determine thematter speedily and without the formal pleadings and proceedingsapplicable to ordinary suits, and to restrain the common carrier fromcontinuing such violation or disobedience. It is further provided bythis section that on such hearings the report of the commission shall beaccepted as _prima facie_ evidence. Section 17 regulates the proceedings of the commission. A majorityconstitute a quorum for the transaction of business. The commission mayfrom time to time make or amend rules for the regulation of proceedingsbefore it. Any party may appear before it and be heard in person or byattorney, and every vote or official act of the commission must beentered of record and its proceedings made public upon the request ofeither party interested. Section 19 provides that the principal office of the commission shall bein Washington, but that for the convenience of the public it may holdspecial sessions in any part of the United States. Section 20 authorizes the commission to require annual reports from allcommon carriers subject to the provisions of the act, to fix the timeand prescribe the manner in which such reports shall be made, and torequire from such carriers specific answers to all questions upon whichthe commission may need information. Section 21 excepts from the operation of the act the carriage ofproperty for the United States, State or municipal governments, or forcharitable purposes, or for fairs and expositions; also the issuance ofmileage, excursion and commutation tickets, the giving of reduced ratesto ministers of religion, the free carriage by a railroad company of itsown officers and employes, and the exchanging of passes or tickets amongthe principal officers of railroad companies. The sections not noticed are of minor importance, relating to annualreports, salaries, appropriations of funds, etc. The act was amended on March 2, 1889, but the amendments made did notmaterially affect its principal provisions. When the law was passed its friends well realized that its success wouldgreatly depend on the character of the commissioners whom it wasincumbent upon the President to appoint. It was feared that if therailroad influence should control these appointments, the power tosuspend the long and short haul clause would be the chief and perhapsthe only power exercised by the commission. There was great danger thatthe office of Interstate Commerce Commissioner might become a sinecurefor servile railroad lawyers, as similar State officers had been before, and that a public trust might be turned into an additional corporationagency for evil. The selection of the commissioners, and especially thatof Judge T. M. Cooley, of Michigan, was greatly to the credit ofPresident Cleveland. A man of unquestionable integrity, an eminentjurist and close student of railroad affairs, Judge Cooley wasparticularly well qualified for the office of chairman of the InterstateCommerce Commission, which he occupied for nearly five years with signalfitness, and from which he only retired to the sincere regret of theAmerican people. Under Judge Cooley's leadership the commission has beenmore than a purely executive board. It was under the Constitution not inthe power of Congress to clothe the Interstate Commerce Commission withfull judicial authority without giving its members, like other Federaljudges, tenure for life, instead of a term of years. The inherent forceof the commission's decisions in its interpretation of the law made themin many cases virtually the equivalent of judicial rulings. A few of the most important decisions of the commission may be mentionedhere. Construing the long and short haul clause, they held that, in caseof complaint for violating this section of the act, "the burden of proofis on the carrier to justify any departure from the general ruledescribed by the statute, by showing that the circumstances andconditions are substantially dissimilar. " They also decided that "when agreater charge in the aggregate is made for the transportation ofpassengers or the like kind of property for a shorter than a longerdistance over the same line in the same direction, the shorter beingincluded in the longer distance, it is not sufficient justificationtherefor that the traffic which is subjected to such greater charge isway or local traffic and that which is given the more favorable rates isnot; and that it is not "sufficient justification for such greatercharge that the short-haul traffic is more expensive to the carrier, unless when the circumstances are such as to make it exceptionallyexcessive, or the long-haul traffic exceptionally inexpensive, thedifference being extraordinary and susceptible of definite proof; northat the lesser charge on the longer haul has for its motive theencouragement of manufactures or some other branch of industry, nor thatit is designed to build up business or trade centers. " Upon the question of publicity of the railroad business the commissionheld that, as the books of the defendant carriers, as to rates charged, facilities furnished and general movements of freight, are in the natureof semi-public records, the officers and agents of defendant carriersought to give promptly to a complainant any statement of facts calledfor, if such statement may probably have importance on the hearing. Judge Brewer's opinion as to what constitutes a reasonable rate wasevidently not shared by Judge Cooley and his colleagues, for in the caseof the New Orleans Cotton Exchange vs. The Cincinnati, New Orleans andPacific Railway Company the commission decided that the fact that aroad earns but little more than operating expenses cannot be made tojustify grossly excessive rates, and that "wherever there are more roadsthan the business at fair rates will remunerate, they must rely uponfuture earnings for the return of investments and profits. " In anothercase the commission hold that "in fixing reasonable rates therequirements of operating expenses, bonded debt, fixed charges anddividend on capital stock from the total traffic are all to beconsidered, but the claim that any particular rate is to be measured bythese as a fixed standard, below which the rate may not lawfully bereduced, is one rightly subject to some qualifications, one of which isthat the obligations must be actual and in good faith. " The rules governing the proper construction of classification sheetswhich the commission has laid down are founded upon common sense andjustice. They say: "A classification sheet is put before the public for general information; it is supposed to be expressed in plain terms so that the ordinary business man can understand it and, in connection with the rate sheets, determine for himself what he can be lawfully charged for transportation. The persons who prepare the classification have no more authority to construe it than anybody else, and they must leave it to speak for itself. " In defining what is legitimate traffic the commission made the followingdecision: "The transportation of traffic under circumstances and conditions that force a low rate for its carriage or an abandonment of the business, but which affords some revenue above the cost of its movement, and works no material injustice to other patrons of a carrier, is to be deemed legitimate competition. When, however, its carriage is at a loss and imposes a burden on like traffic at other points and on other traffic, it is to be deemed destructive and illegitimate competition. " It has been shown in a former chapter that the weaker oil refiners havebeen discriminated against by the railroads, which permitted theStandard Oil Company to use their own tank cars in the shipment of oiland charge its competitors excessive rates for like shipments inbarrels. Complaint being made of this discrimination, the commissionheld that it is properly the business of a carrier by railroad to supplyrolling stock for the freight he offers or proposes to carry, and that"if the diversities and peculiarities of traffic are such that this isnot always practical, and the consignor is allowed to supply it forhimself, the carrier must not allow its own deficiencies in thisparticular to be made the means of putting at unreasonable disadvantagethose who may use in the same traffic all the facilities which itsupplies. " A most important ruling of the commission is that relating to the passabuse. Complaint was made that the Boston and Maine Railroad Companyissued in the States of Maine, New Hampshire, Vermont and Massachusettsfree passes to certain classes of persons, among them "gentlemen longeminent in the public service, higher officials of the States, prominentofficials of the United States, members of the legislative railroadcommittees of the above named States, and persons whose good will wasclaimed to be important to the defendant. " The commission decided thatsuch a discrimination is unwarranted, that a carrier is bound to chargeequally to all persons, regardless of their relative individual standingin the community, and that the words "under substantially similarcircumstances and conditions" relate to the nature and character of theservice rendered by the carrier, and not to the official, social orbusiness position of the passenger. It is a notorious fact that the practice of issuing free passes topublic officials and other influential persons has been more or lessindulged in by nearly every railroad in the country up to the presenttime. It is to be hoped that this ruling of the commission will beenforced in such a manner as to put an end to this intolerable abuse. The Interstate Commerce Commission has been equally efficient in itsadministrative capacity. From the very first it called attention to thegreat advantage of having one classification of freight throughout thecountry, and it has since labored diligently to unify the variousclassifications in use. As the commission in this undertaking is onlyarmed with the armor of moral suasion, it is a difficult task; but thereis little doubt that the accomplishment of this great reform is only aquestion of a few years. Iniquities in classifications and rates areconstantly pointed out by the commission and corrected by the companies. Moreover, the annual reports of the commission, not to mention its veryexcellent statistical data, diffuse much useful information and dispelmany delusions. Thus the fourth annual report of the commission says: "A stranger to the law might infer, from some public addresses and pamphlets which have assumed to discuss this subject, that the railroad companies were prohibited from carrying the necessities of life over long distances at very low rates, unless their rates on other subjects of transportation for shorter distances were made to correspond. Indeed, instances have been pointed out in which it was said that certain articles of commerce could not now be transported for long distances, because, by reason of this provision, they would not bear the charges that must under compulsion of law be imposed upon them. Among such instances has been mentioned the granite industry of New England, as to which it has been said that valuable manufactories have ceased to be profitable because it has now become impossible for the proprietors to obtain from the railroad companies the nominal rates for the transportation of their products which they formerly enjoyed, since it is now, by the long and short haul clause, made criminal for the companies to give such rates. "A complaint of this nature is not to be met by argument, because it is baseless in point of fact. The instance mentioned may safely be assumed to be chosen rather from regard to the need of an attack upon the law than from any belief in the justice of its application. The prohibition of the fourth section, so far as concerns this article of commerce, or any other that can be named, will have no application whatever until it is made to appear that elsewhere upon the lines of the road conveying it there is property of the same kind, for transportation by the same carriers in the same direction, upon which the carriers are disposed to making greater charges in the aggregate for the shorter hauls. "The wheat of the extreme West, it is also said, can no longer have the nominal rates which were formerly made for transportation to the seaboard, but this assertion is also without point or applicability, unless it is shown that the carriers are not only disposed to give such rates, but propose to make up for the consequent losses to themselves by the imposition of greater charges in the aggregate for the carriage of the like grain when offered for carriage by growers in the States nearer the seaboard. Nominal rates impartially made as between shippers of like articles in the same direction and under like circumstances and conditions are as admissible now as they ever were. " The same report contains a rather pointed reply to Judge Brewer's rulingin the Iowa rate cases, viz. , that, "where the rates prescribed will notpay some compensation to the owners, then it is the duty of the courtsto interfere and protect the companies from such rates, " and thatcompensation implies three things: "Payment of cost of service, intereston bonds and then some dividends. " The commission reviews this stupidrule as follows: "The effort has sometimes been made to indicate a rule which must constitute the minimum of reduction in all cases, and it has been said that rates must not be made so low that the carriers would be left unable to pay interest on their obligations and something by way of dividend to stockholders, after maintaining the road in proper condition and paying all running expenses. This comes nearer to a suggestion of a rule of law for these cases than any other that has come to the knowledge of the commission. But it is so far from being a rule of law, that it is not even a rule of policy, or a practical rule to which any name can be given, and to which the carriers themselves or the public authorities can conform their action. In the first place, when we take into consideration the question of the condition of roads and of equipment, the proper improvements to be made, the new conveniences and appliances to be considered and made use of, if deemed desirable, and the innumerable questions that are involved in the matter of running expenses, it is very obvious that there can be no standard of expenses which the court can act upon and apply, but that the whole field is one of judgment in the exercise of a reasonable discretion by the managing powers or by the public authorities in reviewing their action. It is to be borne in mind that there are many roads in the country that never have been and in all probability never will be able to pay their obligations and to pay dividends, even the slightest, to their stockholders. .. . If the rule suggested is a correct one, and must be adhered to by the public authorities, then it is entirely impossible that those who operate these roads can prescribe excessive charges, since it is impossible to fix any rates that would bring their revenues up to the point of enabling them to pay any dividends. .. . But the rule suggested would also be one under which those roads would be entitled to charge the most which, instead of being built with the money of the stockholders themselves, had been constructed with money borrowed; the larger the debt the higher being the rates that would be legal. If a road were out of debt so that it had no bonds to provide for, it must content itself with such rates as would pay some dividend to its stockholders. If the road were in debt, though it perhaps served the same communities, it might be entitled to charge rates 50, or possibly 100 per cent higher. .. . But over and beyond all this the attempt to apply the rule suggested would be absolutely futile for the reason that the rates prescribed for one road would necessarily affect all others that either directly or indirectly came in competition with it. " It is no exaggeration to say that the annual reports of the commissionstand unexcelled as dauntless, clear, concise and instructive publicdocuments. It may also be asserted that whatever success has so farattended the Interstate Commerce Law, that success is in a great measuredue to the tact, courage and ability of the men who, in the past, havebeen the guiding spirits of the commission. Efforts will be made by railroad managers in the future, as they havebeen made in the past, to weaken the commission by securing theappointment of men servile to the railroad interest as members of thatbody. Mr. Depew says that "all railroad men are politicians, and active ones. "This is true as to manipulating managers and will continue to be so justas long as we allow such extraordinary powers to be exercised by them. The saloon men are politicians, and active ones. There is not a city ortown in this broad land that is not in danger of falling under theirsway unless their offensive efforts are resisted. The old United StatesBank managers were politicians, and active ones. They perverted thetrust reposed in their hands to such an extent that the indignation ofthe people was aroused, and under the lead of a stern old patriot thebank was swept out of existence. Shall we restrain corporationmanagement within proper limits and make corporations serve the publicwelfare, or shall we let the abuses go on until the people, under thelead of another Jackson, demand emphatically the application of someremedy, for better or for worse? Perhaps Government ownership, perhapssomething else. Nations, like individuals, should profit by theexperience of the past. The Interstate Commerce Commission, in their sixth annual report, say, concerning the Interstate Commerce Law: "It was scarcely possible that it should be so complete and comprehensive at the outset as to require no alteration or amendment. Those who are familiar with the practices which obtained prior to the passage of this law, and contrast them with the methods and conditions now existing, will accord to the present statute great influence in the direction of necessary reforms and a high degree of usefulness in promoting the public interest. "Whoever will candidly examine the reports of the commission from year to year, and thus become acquainted with the work which has been done and is now going on, will have no doubt of the potential value of this enactment in correcting public sentiment, restraining public injustice and enforcing the principle of reasonable charges and equal treatment. Imperfections and weaknesses which could not be anticipated at the time of its passage have since been disclosed by the effort to give it effective administration. The test of experience, so far from condemning the policy of public regulation, has established, its importance and intensified its necessity. The very respects in which the existing law has failed to meet public expectation point out the advantages and demonstrate the utility of Government supervision. .. . "Of this much we are convinced: The public demand for Government regulation and the necessity for legal protection against the encroachments of railroad corporations have not been diminished by the experience of the last six years. The act to regulate commerce was not framed to meet a temporary emergency, nor in obedience to a transient and spasmodic sentiment. The people will not tolerate a return to the injustice and wrong-doing which inevitably occurs when no correction is undertaken and no regulation attempted. The evils of unrestricted management will not be permanently endured, and legal remedies will continue to be sought until they are amply provided. The present statute, however crude and inadequate in many respects, was the constitutional exercise of most important powers and the legislative expression of a great and wholesome principle. Its fundamental and pervading purpose is to secure equality of treatment. It assumes that the railroads are engaged in a public service, and requires that service to be impartially performed. It asserts the right of every citizen to use the agencies which the carrier provides on equal terms with all his fellows, and finds an invasion of that right in every unauthorized exemption from charges commonly imposed. "The railroad is justly regarded as a public facility which every person may enjoy at pleasure, a common right to which all are admitted and from which none are excluded. The essence of this right is equality, and its enjoyment can be complete only when it is secured on like conditions by all who desire its benefits. The railroad exists by virtue of authority proceeding from the State, and thus differs in its essential nature from every form of private enterprise. The carrier is invested with extraordinary powers, which are delegated by the sovereign, and thereby performs a governmental function. The favoritism, partiality and exactions which the law was designed to prevent resulted, in large measure, from a general misapprehension of the nature of transportation and its vital relation to commercial and industrial progress. So far from being a private possession, it differs from every species of property, and is in no sense a commodity. Its office is peculiar, for it is essentially public. The railroad, therefore, can rightfully do nothing which the State itself might not do if it performed this public service through its own agents instead of delegating it to corporations which it has created. The large shipper is entitled to no advantage over his smaller rival in respect of rates or accommodations, for the compensation exacted in every case should be measured by the same standard. To allow any exceptions to this fundamental rule is to subvert the principle upon which free institutions depend and substitute arbitrary caprice for equality of right. "The spirit of the law is opposed to usages so long continued and so familiar that their unjust and demoralizing character has not been clearly perceived, but it is a long step towards such regulation of the agencies of transportation as will make them equally available to all without discrimination between individuals or communities. It can hardly be the fault of those who are charged with its administration if the beneficial aims of this statute have not been fully attained and compliance with its provisions not completely secured. A better understanding of its purpose and an educated public sentiment, aided by the needful amendments which experience suggests, will fully vindicate the policy of Congress in undertaking to bring the great transportation interests of the country into general harmony with its requirements. "It affords us gratification to add that many railroad managers of the highest standing now concede the necessity for Government regulation, and avow themselves in favor of such further enactments as will make that regulation effective. " CHAPTER XIII. THE RATE QUESTION. Railroad managers frequently make the assertion that the average freightrates charged in the United States are lower than those usually chargedin European countries and that this fact is in itself sufficient proofthat they are too low. A comparison of the transportation problem ofEurope with our own will show this argument to be fallacious. While from $25, 000 to $30, 000 a mile is a very liberal estimate of theaverage cost of American roads, the average cost of European railroads, owing to their expensive rights of way, substantial road-beds and heavygrades, is probably not less than $75, 000 per mile. British railwaycompanies have laid out for the purchase of land, for right of way anddepot accommodations an amount about equal to the entire average cost ofAmerican roads for the same number of miles. For instance, the Southeastern Company paid $20, 000; the Manchester andLeeds Company, $30, 750, and the London, Birmingham and Great Western, $31, 500 per mile. The first Eastern Counties line paid even $60, 000 permile for land through an agricultural district. As nearly as can beascertained, the average cost of the right of way of railroads was over$20, 000 for the United Kingdom. In Belgium the average cost of the rightof way was $11, 000. It was lower, however, in the other countries of theEuropean continent. The topography of the country through which the English railways arebuilt is such as necessitated enormous expenses for heavy embankments, cuttings, viaducts, tunnels and bridges, and in some cases increased thecost of the roads to fabulous sums. The Lancashire and Yorkshire Railwayactually cost $260, 000 per mile for the whole of its 403 miles. Europeanroads have been built in a much more permanent manner and have terminalfacilities whose cost is far beyond any sum paid for such purposes inthis country. In Great Britain, moreover, the expenses of contests andof procuring charters have been very great and have probably averaged$3, 000 per mile. English railway men charge Americans with having indulged instock-watering to a greater extent than any other people in the world. This is probably true, yet the English have not been dull students ofthis art, and they are far from free of having indulged in this luxury. Much of their railroad stock was issued in a wasteful manner andrepresents no actual investment, and it is safe to say that from 30 to40 per cent. Of their present railroad capitalization is water. If upon the above basis both European and American railroads are toyield an interest of 4-1/2 per cent. On the actual investment, theformer will have to earn at least $2, 250 per mile more than the latter, and this difference equals about 50 per cent. Of the average operatingexpenses of American roads per mile. Labor is cheaper across theAtlantic, but this difference is more than equalized by the employmentof a much larger number of men per mile, as the following table willshow: Countries. No. Of men employed Average wages Wages paid per mile. Per annum. Per mile. United Kingdom 18 $335 $6, 000 Belgium 22 210 4, 620 Russia 15 240 3, 600 Germany 14 250 3, 500 France 14 220 3, 080 United States 5 555 2, 625 The London and Northwestern Railway is 1, 793 miles long and has over55, 000 employes, or over 30 per mile. The Lancashire and YorkshireCompany employs over 42 per mile. The train men of Europe work less hours and earn less per capita fortheir employers than do the train men of this country. The averageannual gross earnings per employe on sixteen of the leading lines ofGreat Britain, as shown by Mr. Jeans, appear to be $975 against $1, 600on fifteen leading lines of the United States, while the average netearnings per employe are $465 on the British lines against $720 on theAmerican lines; making a difference in favor of this country of 70 percent. In gross earnings and 53 per cent. In net earnings. If Americanlabor is more expensive, it is also more efficient than labor iselsewhere. It must also be considered that the average haul in Europe is much lessthan the average haul in the United States. It has always beenmaintained by the railroad companies, and very justly, too, that theterminal charges are as important a factor of freight rates as is thecost of carriage. The terminal charges are the same for atwenty-five-mile haul as for a thousand-mile haul; they form acomparatively large part of the total charges for the former and a verysmall part of the total charges for the latter. It is thereforemanifestly unjust to compare the rates per ton per mile of Europe withthose of the United States without making due allowance for thedifference in the length of their average hauls. All other things beingequal, a fair comparison between the freight rates of differentcountries should be based upon hauls of equal length. There is another consideration which should not be lost sight of. Thecommodities in the United States which contribute principally to thelong haul are raw products. The universally low rates of thesecommodities greatly lower the general average. In Europe, on the otherhand, manufactured goods predominate as long-haul freight, and basedupon increased risk and increased cost of carriage, considerably swellthe general average of freight charges. The railroads of the UnitedStates also do more business per train mile than those of any othercountry excepting perhaps Austria, Russia and India. This shouldcertainly enable them to do business for less than it is done bytransatlantic lines. In addition to all this, a number of European countries, particularlyFrance, require their railroads to perform large services, such as thecarrying of the mails and the transportation of the officers andemployes of the Government, gratuitously, and to carry soldiers atreduced rates. Another factor in the equation should be considered. European roads arebuilt, equipped and all permanent improvements wholly made at theexpense of the stock- and bondholders, while in this country they arepartially constructed at the expense of the patrons of the road. In theformer case the capitalization of the road represents what has been paidby the stock- and bondholders, and in the latter, not only what theyhave paid, but large contributions paid from the income of the road andfrom public and private donations. It will thus be seen that railroad rates ought to be lower, and evenmuch lower, here than in Europe. If it _is_ true that the average rateper ton per mile is lower in America than across the Atlantic, this ischiefly due to the fact that water transportation has forced downthrough (or long-haul) rates and has thus lowered the general average. This reduction was by no means made voluntarily by the railwaycompanies, but was forced upon them. Where in the United States waterdoes not exist, as in local traffic, rates are usually much higher thanin Europe. The reduction in freight rates was brought about by a number ofinventions which greatly lowered the cost of both the construction andthe operation of railways. Through the introduction of the steam shovel, of the wheel-scraper, of improved rock-drills, and of other labor-savingmachines, as well as by a general improvement in the methods of grading, the cost of grading has been reduced from 25 to 50 per cent. , andrailroad bridges are now built at one-third of their former cost. Owingto Bessemer's great invention, steel rails can at the present time bebought for one-half of what iron rails cost ten or fifteen years ago, and about one-third of the cost twenty years ago. According to David A. Wells, the author of "Recent Economic Changes, " the annual producingcapacity of a Bessemer converter was increased fourfold between 1873 and1886, and four men can now make a given product of steel in the sametime and with less cost of material than it took ten men ten years agoto accomplish. A ton of steel can now be made with 5, 000 pounds of coal, while it required twice that quantity in 1868. When it is consideredthat rails and tires made of steel last three times as long as thosemade of iron, permit greater speed, carry a much larger weight, andrequire less repairs, the importance to the railroad interests of theimprovements made in the manufacture of steel can hardly beoverestimated. Similar reductions have been made in the car and machineshops. An average train to-day probably costs no more than one-half asmuch as it did twenty years ago. Mr. Wells, in the work just mentioned, says: "In 1870-'71 one of the leading railroads of the Northwestern United States built 126 miles, which, with some tunneling, was bonded for about $40, 000 per mile. The same road could now (1889) be constructed, with the payment of higher wages to laborers of all classes, for about $20, 000 per mile. " A great saving has also been made in the consumption of coal. Underfavorable circumstances a loaded freight car can now be propelled a milewith one pound of coal. A similar economy of fuel has, through theimprovement of their engines, been effected in ocean steamers. Theinvention of the compound engine has reduced the expense of runningabout one-half, while it has doubled the room left for the cargo. Thestatement has recently been made that a piece of coal half as large as awalnut, when burned in the compound engine of a modern steamboat, drivesa ton of food and its proportion of the ship one mile on its way to aforeign port. Furthermore, the invention of the air-brake has materially reduced thenumber of train men formerly necessary to safely manage a train, just asthe introduction of steam-hoisting and other machines, both upon docksand vessels, has greatly decreased the number of men employed upon themercantile marine. There is certainly much similarity between the railroad and thesteamboat as agencies of transportation. Whatever fuel and labor-savingcauses operate on one must necessarily operate upon the other. When we, therefore, find that the ocean rates are only from one-third toone-fourth of what they were thirty years ago, we are justly surprisedto see railroad rates maintained as high as they are. Operating expenseshave been greatly reduced and passenger travel has largely increasedduring the past twenty years, but reductions corresponding in thepassenger rates of the United States have not been made. It is, nevertheless, no easy matter always to determine what arereasonable rates. It is easier to tell what rates are unreasonable. Rates are unreasonable that bring an income in excess of sufficient tokeep the road in proper condition, to pay operating expenses, includingtaxes and a fair rate of interest on the amount, not includingdonations, actually invested in the road. The patrons of a road shouldnot be taxed to pay interest on their own donations, or on publicdonations, to the road, as the donations were made for the benefit ofthe public, and not for the benefit of private individuals. A rate whichmay appear reasonable to the carrier is apt to be regarded as too highby the shipper; and, again, one that seems reasonable to the shipper isdenounced as too low by the railroad man. Each is tempted to consultonly his own interests and to disregard the just claims of the otherside. Thus, while the shipper will claim that his rates ought to be lowenough to enable him to compete with other shippers more advantageouslylocated than he is, the railroad manager will demand a rate which wouldenable him to declare high dividends on largely fictitious values. Theowners of roads which were built merely for purposes of speculation orblackmailing insist on being permitted to charge exorbitant rates tobring up their earnings to the level of those roads for whoseconstruction there was a legitimate demand. It is a settled principle of common law that all rates must bereasonable, but no uniform rule has as yet been adopted by which thequestion of reasonableness is to be determined. The doctrine laid downby Judge Brewer, that "where the rates prescribed will not pay somecompensation to the owners, then it is the duty of the courts tointerfere and protect the companies from such rates, " and that"compensation implies three things: cost of service, interest on bonds, and then some dividends, " is absurd. A question is never settled untilit is settled right, and this rule is certainly open to very seriousobjections. A road may be bonded for several times its cost or its realvalue, it may be managed with such recklessness or extravagance that itsoperating expenses may be twice what they would be under a careful andeconomical management, yet under this rule the shipper must pay thepremium which bond-watering and bad management command. The generalenforcement of such a rule would place the public at the mercy ofscheming railroad manipulators. No matter to what extent the business ofa road may increase, a reduction of rates can always be prevented by theissue of new bonds and the doubling of the already lordly salaries ofits managers. Again, under the operation of this rule a road whichentirely suffices to do the business between two points may beparalleled by another and the public be compelled to pay excessive ratesto maintain both. It might be said that the public cannot be forced topatronize any road, that if it would not withdraw its patronage from theold line, the new line would soon become bankrupt, and that in such anevent its owners, and not the public, would be the sufferers. Thisargument may be met by the statement that, aside from the fact thatconcerted action among a large number of people can never be secured, few roads rely for their support solely upon local business, and thatany loss which the older road sustains from encroachments by its rivalupon its through traffic it is compelled to make up by raising its ratesupon its local business. It is the almost inevitable consequence whenone road is paralleled by another that the business which waspreviously done by one road will be nearly equally divided between thetwo, and under the rule laid down by Judge Brewer the public will becalled upon to pay the operating expenses and the interest on the bondsof both, together with such dividends on the stock as the financieringability of their managers may secure. The better judgment seems to bethat to determine what are reasonable rates is not a question forjudicial adjudication. The Interstate Commerce Commission, in their fourth annual report, assert that "there can be no standard of expense which the courts canact upon and apply, but that the whole field is one of judgment in theexercise of a reasonable discretion by the managing powers, or by thepublic authorities in reviewing their action. " Their views upon thissubject are still more definitely stated in the following wordscontained in the same report: "An attempt is made to give authority to the courts to interfere by the suggestion that property or charter contract rights, or both, are involved in the matter of fixing rates, and therefore that it is not possible the conclusions of administrative boards should be final. This is an endeavor, by the mere use of words, to confer jurisdiction upon the courts where the substance is altogether wanting. Property or contract rights are involved in these cases precisely as they are in numerous other cases of the exercise of power under the police authority of the State, either by the State itself or by its municipalities. " These views cannot fail to commend themselves to any unprejudiced mind. It is a well-established fact that all officials will, if permitted, extend their jurisdiction, and judges are no exception to the rule. Itwas therefore but natural that the courts should attempt to solve theproblem of railroad rates. The attempt so far has been fruitless, nor will it be otherwise as longas the courts persist in approaching with abstract legal maxims aquestion which, above all things, requires the light of experience andthe exercise of sound discretion. The question of railroad rates willnever be satisfactorily settled until it is definitely referred toexpert administrative State and National boards empowered and preparedto meet the many contingencies that will always arise in thetransportation business. It is not difficult to account for the inability of the courts toproperly adjudicate the question of reasonable rates. The legislature, or a board to which it has delegated its power, prescribes for arailroad company a classification and tariff. The company claims thatthe rates so fixed are unreasonably low and applies to the courts forredress. Now, if the rates were based upon the cost of service only, it might, perhaps, be possible for a court to determine whether the prescribedrates are adequate or not. But even in such a case the question wouldarise whether the capitalization and the operating expenses of the roadare not excessive, and its determination would require expert knowledgeand sound discretion rather than legal lore. However, since the cost ofservice is not the only, and with railroad men not even an essential, factor in rate-making, it is evident that the rates upon singlecommodities can not be reviewed upon their individual merits, but thetariff must, in the judicial determination of the question whether it isreasonable or not, be viewed as a whole. But as it is impossible toforetell what effect a readjusted tariff would have on the revenues of aroad, even courts are forced to admit that an actual trial of the tariffis necessary to establish its merits or demerits. If the complaining company were as anxious to give the new tariff a fairtrial as it usually is to demonstrate to the satisfaction of the courtthat it is devoid of every principle of justice, such a test might beaccepted by the public as a reliable basis of judicial procedure. Butrailroad managers are not only striving to perpetuate their own highrates, but to show to the public that freight tariffs not emanating froma railroad company's office are of necessity crude and unjust to thecarrier. They know that if they should succeed in convincing the publicthat administrative boards are incapable of dealing with that question, they might for years to come be left in undisputed possession of thepower to make their own rates. This is certainly for the railroadmanager a prize worth contending for, and no sacrifice is too great forhim to make when there is any hope of ultimate victory. Being absolutelyuncontrolled in his action, he finds it an easy matter, by temporarilydiverting business from his line, by the increase of operating expensesand by repressing growing industries, and in many other ways, to curtailthe business of his road and diminish its revenues. He can court lossesin a thousand different ways discernible neither to the courts nor thegeneral public. In short, it is in the power of any railroad manager tomanipulate such a trial in his own interest, and, if determined, toobtain a verdict against any tariff not of his own making. This policywas pursued by several Iowa roads subsequent to Judge Brewer's decisionthat the alleged unreasonableness of the Iowa commissioners' tariff mustbe established by an actual trial, and was persevered in until the suitwas withdrawn. But even if the competency of the courts to properly determine suchquestions were admitted, there would still exist one serious objectionto their jurisdiction. Courts necessarily move slowly, while alldifferences arising between the public and the railways, and especiallythose concerning rates of transportation, require prompt and decisiveaction. There are no fixed conditions in commerce. It is a kaleidoscopeconstantly presenting new phases. Competition at home and abroad, tariffduties, the condition of the crops and a thousand other influencesaffect it and may require a prompt readjustment of the tariff. So longas railroad companies are permitted to resort to injunctions and effectother delays rendered possible through the machinery of the courts, toprevent for years the enforcement of tariffs prescribed byadministrative authorities, so long will the public be at their mercy. So long as they have nothing to lose and everything to gain by ajudicial contest, it will be their policy to delay through the courtsthe enforcement of any tariff, whether prescribed by legislature or byan authorized commission, that falls below their standard. It is not tobe understood that the acts of railroad commissioners should never besubject to a judicial view. If such boards clearly exceed theirauthority or are otherwise guilty of maladministration, if they violateconstitutional rights, then railroad companies, if injured by theiracts, should be permitted to seek redress in the courts; but they shouldnot be permitted to nullify an official tariff by legal maneuvers. It isclearly not within the province of the courts to make rates or to laydown rules to be followed by those to whom the law has delegated thepower to make them, nor should the courts aid the railroads in anyattempt to nullify an official tariff that has been legally promulgated. A tariff prepared by sworn and disinterested officials is more likely tobe just than one prepared by interested railroad men, and railroadcompanies should be compelled to adopt it and continue it in use untilit is amended or revoked by legal authority. Individual shippers are powerless as against strong corporations. Railroads apply to the courts for what they are pleased to term redress, and in the meantime refuse with impunity to accept an official tariff;but the shipper has no protection: he must pay their rates or go out ofbusiness. What reason can be assigned why the weaker should thus bediscriminated against? A promulgation of a tariff prepared by acommission is equivalent to a declaration on the part of these officialsthat the rates or some of the rates charged by the railroads areunreasonably high. The railroad, in applying to the courts forprotection, claims that the tariff prescribed by the commission isunreasonably low. Both tariffs are therefore impeached, one being thatof an interested private company, the other that of a disinterestedpublic board. It is evident that, even if the people should see fit togive the courts jurisdiction in such controversies, one of these tariffsmust temporarily prevail pending the decision of the court, and soundpublic policy and justice to the patrons of the road certainly requirethat the official tariff be recognized by the courts and made to berespected by the railroad company until it is proved to be unreasonableand is set aside by lawful authority. It is claimed by railroad men that they should be allowed to make theirown tariffs because rate-making is so intricate a subject that none butrailroad experts can do it justice. If this were so the courts would beeven less competent to review a schedule of rates than a State orNational commission would be to make one. Courts cannot be expected tohave expert knowledge in all matters that are likely to be broughtbefore them. They must rely upon the testimony of expert witnesseswhenever technical questions are involved in the determination of cases. The identical sources of information from which courts draw areaccessible, or may be made accessible, to a commission, which has theadditional advantage that its members may be selected with specialreference to their fitness for the duties which they will be called uponto perform and are expected to devote their whole time to the settlementof questions arising in the transportation business. Such a commissioncan practically be made a court with jurisdiction over all mattersconnected with railroad business. The railroad manager, no doubt, isthoroughly familiar with the wants and desires of his company; but itmay fairly be presumed that he is less familiar with the needs of thepublic than a railroad commission whose members are in constantcommunication with the people, patiently listen to the complaints ofshippers, court and receive suggestions as to needed changes inclassification and rates, and study the relative advantages of thedifferent sections and different interests of the State or the countryas regards transportation. A railroad freight agent, on the contrary, isdisposed to think that shippers ought to be satisfied with any ratelower than those charged fifty years ago for carting or other crudemethods of transportation. He regards their views and suggestions aschimerical and not worthy of any notice, and does not even hesitate toinform them that rate-making is a branch of the railroad business whollybeyond their comprehension, and ought not to be meddled with or eveninquired into by the public. The general freight agent is the employe ofa company which rates his usefulness solely by his ability to constantlyincrease its revenues, and he invariably proceeds upon the theory thatthe best tariff is that which comes nearest imposing upon each commodityoffered for carriage the maximum transportation tax that it will bear. Aman who entertains such opinions cannot be supposed to be able to dojustice to the shipper, and should not be permitted to act as arbitratorin rate controversies between the public and the company whose employeand advocate he is. Nor have we any reason to hope for a change in thepresent tariff policy of railroads. History has sufficientlydemonstrated the fact that reforms must come from without. As long ashuman nature remains as it is, railroad officials will, if permitted, arrange tariffs in the interest of the men who give them employment, forif they did otherwise their services would soon be dispensed with. Afreight tariff should be in the nature of a contract between the carrierand the shipper, and the assent of both parties ought to be essential toits validity. But as it is impracticable for all the parties interestedto meet for the purpose of effecting an agreement, the power to makerates has in several States wisely been conferred upon railroadcommissioners, and there is a strong tendency in others to adopt thesame policy. Such boards have every opportunity to obtain anyinformation needed for the efficient and faithful discharge of theirduties. They can hear the representatives of the railroads as well asthose of the shippers, investigate carefully disputed points, summonexperts and witnesses, and obtain official information relating toclassifications and rates from every State in the Union, and, ifnecessary, from every quarter of the civilized world. The assertion maysafely be made that, with experience, a commission acquires more expertknowledge relating to the business of rate-making than a railroadmanager. If there is any mystery connected with the business ofrate-making which has so far been in the sole possession of railroadmen, it is to their interest to initiate the commissioners into theirprofound secrets. It will be their privilege to enlighten thecommissioners as to the actual cost of their respective lines, the costof every branch of the railway service, and as to a thousand othermatters which the public has both a desire and a right to know. If, after a schedule of rates has been prepared, and before it ispromulgated, railroad men can suggest any improvement in it, they shouldhave the privilege to do so; or if, after giving it a fair trial, theyshould be prepared to show that any rate is unreasonably low andinjurious to them, their complaint should be carefully investigated, and, if found well grounded, the wrong should at once be righted. But the same privileges should be extended to shippers. Their rights andtheir welfare should be guarded as sacredly as those of the railroadcompanies. They should have the same opportunity to examine a proposedschedule before its promulgation and protest against any feature of itwhich they may regard prejudicial to their interests, and theirstatements should receive the same consideration as is accorded to thoseof representatives of the railroad companies. So, likewise, whenshippers prove to the satisfaction of the commission that a rate hasoutlived its reasonableness, their complaints should at once beinvestigated, and if their cause is found to be a just one, the tariffshould be so amended as to give them relief. The labors of a board of railroad commissioners are onerous, and theirresponsibility is great. No uniform rule can be laid down for theirguidance in the fixing of rates, yet there are a few fundamentalprinciples which should always be adhered to. The cost of serviceshould invariably be an important factor of a rate. Railroads should notbe compelled to carry any commodity for less than the actual cost ofmoving it, nor should rates be fixed greatly in excess of such cost ofservice. The carload should be the unit of wholesale shipments. Since itcosts the railroad company as much to move ten carloads of freight whichbelong to one shipper as it costs to move ten carloads belonging to tenshippers, no advantage beyond the general carload rate should be givento the large shipper. The difference in the rates between shipments inless than carload lots ought to be determined solely by the differencein the cost of carriage and handling. Where shipments are made incarload lots, the loading and unloading is usually done by the shipperand consignee, cars are loaded to their full capacity, and no loading orunloading of shipments at intermediate points is necessary. It istherefore but just that the consignor and consignee should have thebenefit of the reduced cost of such shipments. Raw materials, andespecially coal and lumber and kindred articles, the transportation ofwhich requires neither an expensive rolling stock nor warehouseaccommodations nor speedy movement, and in which the risk of loss ordamage is insignificant, should be carried at the lowest rate possible. Such a policy will tend to foster other interests, which will developbusiness for the road and will build up remote sections of the country, and will often enable railroads to carry large quantities of thesecommodities at times when they would otherwise be nearly idle. Thereshould be a uniform classification throughout the country, based uponconsiderations of justice and equity instead of railroad tradition. Sucharticles should be classed together as resemble each other as concernsbulk, weight and risk, or what is virtually the same, cost of carryingand handling. It may be safely assumed that a rate which has been madeand used by railroad companies is remunerative. If it is claimed byrailroad men that it is not, the burden of proof should rest upon them. A rate may also be considered remunerative to a road if other linessimilarly situated have voluntarily adopted it. A schedule finally mustbe considered reasonable if it enables the company for which it isprescribed to earn under efficient and economical management sufficientto maintain its road in proper condition and a fair rate of interestupon a fair valuation of its road. Property is never worth more thanwhat it can be duplicated for, and railroad property is no exception tothe rule. If there has been a depreciation in the property of a company, it should not demand dividends upon values which no longer exist. Norcan the same returns be conceded to railroad property as to privatecapital. Its investment is permanent and well secured, if it is honestlyand intelligently made; and its dividends are net returns after thepayment of all expenses, including taxes, cost of management andmaintenance. The three per cent. Bonds of the United States Governmentfind a ready sale at prices above par. Were there less speculation andmore honesty and stability in railroad management, railroad securitiesyielding a revenue of from 2-1/2 to 4 per cent. On the actual investmentwould be eagerly sought after by conservative capitalists. Rate-making requires honesty of purpose, intelligence and discretion, qualities as likely to be found among the servants of the people asamong those of corporations. A commission may err, but its errors arenot likely to prove as detrimental to the railroad companies as theextortionate and discriminating rates imposed by railroad managers haveproved to the interests of the public. Railroad managers acknowledge noobligation except that of earning dividends for their companies, whilethe members of a railroad commission, on the contrary, are responsiblefor their acts to the people, with us the source of all government andall power. To question the justice and sincerity of the people, or todeny the efficacy of such a control, is to deny the wisdom of populargovernment. Railroads might be permitted to reduce their rates below the officialtariff, but they should be required to give at least thirty days' noticeof such a change, to enable shippers to prepare for it. The companiesshould not be permitted, however, to raise rates again without obtainingthe commissioners' consent and giving at least two months' notice of theproposed advance. Sudden fluctuations in rates are a fruitful source ofdisaster in those branches of business in which the cost oftransportation forms an important factor in the price of commodities, and are as unjust and unwarrantable as would be fluctuations in importduties. As long as they are tolerated there can be no reliable basis forbusiness calculations or contracts. There is little doubt that, weresuch regulations enforced, railroad wars, so demoralizing to thebusiness of the country, would soon belong to the things of the past, and a far-reaching assurance of future welfare would be given to thecommercial, manufacturing and all other legitimate interests of thecountry. It should always be kept in view by the rate-making power thatthe railroad company, like the gas company, the water company and thestreet car company, is acting in the capacity of a public agent, and therate of compensation should be fixed by public authority. CHAPTER XIV. REMEDIES. The railroad in America is still in its infancy, both as regards extentof mileage and methods of operation. In 1860 the United States had inround numbers 30, 000 miles of road; in 1870 this number had increased to53, 000; in 1880 to 93, 000, and in 1890 to 167, 000. It will thus be seenthat the average increase during each of those three decades was nearly80 per cent. Should this rate of increase continue during the next threedecades there would be in the present territory of the United States alittle over three hundred thousand miles in 1900, 550, 000 miles in 1910and close to one million miles in 1920, or about one mile of road forevery three miles of territory. It is not likely that the rate ofincrease of the past will continue in the future; but even if thisshould be reduced from 80 to 40 per cent. It would be less thanfifty-five years when the railroad mileage of the United States wouldreach the million point. Even this might seem an extravagant estimate, but it must be rememberedthat there are already a number of States in the Union with a railroadmileage closely approaching this proportion. The District of Columbiahas one mile of road for every 3. 39 square miles of territory, NewJersey for every 3. 79, Massachusetts for every 3. 96, and Connecticut forevery 4. 96 square miles. Ohio, Pennsylvania, Rhode Island and Illinoisfollow with one mile of railroad for every 5. 14, 5. 20, 5. 57 and 5. 59square miles of territory, respectively, and Indiana, New York, Delawareand Iowa are not far behind them. It should also be borne in mind that many of the through lines havedouble, some triple, and some even quadruple tracks, which, if takeninto the account, would increase the mileage much more; and stillrailroad construction in most of these States is far from being at astandstill. The United States will eventually be able to sustain acloser net of railways than any country in Europe, and we may restassured that the time will come when the fertile prairie States of theNorthwest will have a mile of railroad for every square mile ofterritory. In view of the future magnitude of the transportation interest theimportance of placing its control and management early upon soundprinciples should not be under-estimated. Abuses crept into railroadmanagement in the past, not because the men who controlled it werenecessarily worse than men engaged in other pursuits, but because theStates failed to provide adequate legislation for the control of thisnew social and commercial force, and the license enjoyed by railroad mengradually turned into serious evils what seemed at first only harmlesspractices. It cannot be denied, however, that the absence of restraintin time attracted to the business unscrupulous men whose sharp practicesfrequently forced their colleagues of better conscience to do what theirsense of honor and justice condemned. These evils and abuses haveincreased with the growth of the railroad system, and nothing short ofthe sovereign power can now correct them. It is incumbent upon the statenot only to correct the evils of the past, but to base legislativecontrol of railroads upon principles so wise and so broad as to endurefor ages, permitting the unlimited growth of the system and at the sametime insuring commercial liberty and prosperity to the generations tocome. As it is always easier to tear down than to build up, so it is likewiseeasier to point out evils than it is to provide proper remedies fortheir cure. Almost any one can criticise existing conditions, but itrequires wise and constructive statesmanship to propose practicalmeasures which will bring about desired improvement. The apparentmagnitude of the work of correcting the evils and abuses connected withthe transportation business, many of which have been in vogue for morethan a generation, has discouraged many from seriously undertaking it. And yet we shall find the problem by no means a difficult one, if weproperly analyze it and go to the root of the evil. Prof. Bryce, in hiswork "The American Commonwealth, " refers to the fact that the people ofthis country have been equal to the task of solving the gravest problemswhich have been presented to them, and we need have no doubt of theirability to solve the railroad problem. Railroad regulation does notrequire the adoption of any new principle of law. If the common law isrightly applied and provision is made for its strict and systematicenforcement, it will meet every condition that is likely to arise in thetransportation business. It should always be remembered that therailroad is an improved highway, and the principal reason for which itis built is to accommodate the people and promote their welfare, and notto serve the selfish ends of a few individuals, and that privatecompanies were permitted to build and operate it only because the Statebelieved that the public interests could best be served in this way. It is one of the duties of the State to facilitate transportation byestablishing highways. These highways may be built by the State directlyor through municipalities or even private corporations. Thus, underauthority derived from the State, cities lay out, construct andmaintain streets within their limits. But these streets become publicand are always subject to State control. The same rule applies toturnpikes and ferries. Although the State transfers to an individual ora company its right to maintain a ferry or to build and maintain aturnpike, and to compensate itself for its outlay by the collection oftolls, the ferry and turnpike nevertheless remain highways, subject tothe control of the State. The railroad partakes of two natures, that of a highway and that of acommon carrier. Railroad companies therefore enjoy the privileges andassume the duties of both. The State justly exercises in behalf of suchcompanies the right of eminent domain, _i. E. _, the right of thesovereign to apply private property to public use; but it cannotrightfully appropriate private property for private use, even if legalcompensation were to be made for it. It is only upon the theory thatrailroads are highways, constructed for the public good and subject topublic control, that the State has authorized railroad companies to takeprivate property for their own use by paying for it a reasonablecompensation. A railroad may even take possession of and intersect apublic road for the purpose of carrying on its functions. But while thesovereign may exercise the right of eminent domain, it cannot delegateit to any individual or number of individuals, except to its agents, performing its functions and being bound to comply with any rule whichmay be prescribed for the public good. Under the common law theindividual is entitled to as full use of the railroad as he is of thecommon highway. If he is not allowed to put on his own vehicle, thisrestriction is simply due to the fact that the people believe that thebusiness can be done most safely, most economically and mostefficiently by one company or a limited number of companies operatingthe road for a reasonable compensation. Nor does this restriction differmaterially from that which the law has placed upon the use of the commonroad. Without legislative sanction no one has a right to put upon it ateam of elephants or a locomotive and train of cars, or other strangemotors, and thereby obstruct the public travel. These restrictions mightbe removed by the legislative power, and there is also no doubt thatunder the common law the State has the right to permit the independentuse of the railroad track by any person having motive power and carsadapted to it. The persons and freight transported on the railroad aretaxed to maintain it, while in the case of the common road this tax isplaced upon the people and the adjoining property. How to collect thetax necessary to sustain the road is simply a question of public policy, and it cannot be collected in any case except with the expressedpermission of the State. If a company is permitted by the State tooperate a railroad it should only be permitted to collect such tolls asare just and reasonable, and what is just and reasonable should bedetermined by the sovereign State, and not by the operating company. Therailroads of the United States collect from our people in round numbersa transportation tax of eleven hundred million dollars annually. Thistax is equal to a levy of $17 per head, or $85 per family; it is aboutas large as all our other taxes combined. In the State of Iowa itamounts to about $22 per head, or $110 per family, and is two andone-half times as large as all the State, county, school and municipaltaxes collected within her borders. When we consider how thoroughly other public charges are hedged about, by careful restrictions and limitations, and with what caution theamount to be collected is fixed after thorough public discussion, byagents of the people selected by them to serve only for short periods, and that those who collect and disburse the funds are under oath andbonds for a faithful performance of their duty, is it not preposterousto permit agents appointed by a few interested persons, and oftenserving for a long term of years, without any responsibility to thepublic, to fix the rate of this tax, and to collect and disburse theimmense sums levied for the support of these highways without anysupervision or restraint? The Government might as well lease the post-office, waterways and thecollection of import duties to the highest bidder and permit the lesseesto reimburse themselves by the collection of such tolls as they mightsee fit, without any governmental restraint whatever, their franchisesenabling the operating companies to tax each individual, each localityand each letter, parcel or article as they saw fit. How long would thepeople of this country endure such a condition of things? The collectionof taxes has been farmed out, but not by any civilized nation in moderntimes. History shows that this system of taxation has always beenproductive of the gravest abuses, and prejudicial to the public welfare. As has already been shown, the railroad is an improved highway, and therailroad company in operating it is doing a public business and not aprivate business, and therefore it should be governed by rulesapplicable to public business, and not such as are applicable to privatebusiness. It is admitted by all that for the services which it performsthe operating company should receive a reasonable compensation; but tosay what a reasonable compensation is, how it shall be collected, and toprescribe rules regulating the business of the public carrier, issolely the right and the duty of the State. The people have neverpermitted the rate of any other public charge to be fixed by thebeneficiary. Why, then, should privileges be conceded to one beneficiarywhich are denied to all others? The assertion is often made by railroad managers that railroadtransportation is a private business as much as any other branch ofcommerce. It is not likely that these same managers would wish to havetheir argument carried to its logical conclusion, for, should the courtsat any time take their view, they would be under the necessity ofdeclaring null and void all their charters, which were granted to themupon the assumption that the railroad was a highway operated under theauthority and control of the State by private companies for the publicgood. If, on the other hand, railroad managers are, for their ownprotection, forced to recognize the public character of railroads, theycan no longer question the right of the State to so control theirbusiness as the public good may demand. And this shows the absurdity ofthe claim often made by railroad managers, that, as long as the ratescharged by them are reasonable, the State has no right to interfere withtheir business, or, in other words, that they may discriminate betweenindividuals and localities, and that they may legally practice athousand other abuses as long as individual shippers find it beyondtheir power to prove that they have been charged exorbitant rates. Charles Fisk Beach, Jr. , in his "Commentaries on the Law of PrivateCorporations, " lays it down as a general principle of law that "wheneverany person pursues a public calling and sustains such relations to thepublic that the people must of necessity deal with him, and are under amoral duress to submit to his terms if he is unrestrained by law, then, in order to prevent extortion and an abuse of his position, the price hemay charge for his services may be regulated by law. " And applying thisprinciple to common carriers, and especially railroads, this authorsays: "The sovereign has always assumed peculiar control over common carriers as conducting a business in which the public has an interest, and in the case of railway carriers an additional basis of governmental control is grounded in the extraordinary franchise of eminent domain conferred upon these companies. For corporations engaged in carrying goods for hire as common carriers have no right to discriminate in freight rates in favor of one shipper, even when necessary to secure his custom, if the discriminating rate will tend to create a monopoly by excluding from their proper markets the products of the competitors of the favored shipper. " If railroads had no obligations or advantages beyond those of othercommon carriers, such as stage lines and steamship companies, theirdiscriminations might be less objectionable, but, as keepers of thetoll-gates of the public highways, they are no more at liberty toregulate their own business regardless of the public welfare than weretheir predecessors, the toll-collectors stationed along the publicturnpikes and canals. As such public tax-collectors they are bound togive equal treatment to all persons and places. Although the business of constructing and keeping in repair the turnpikeroads was, as a rule, left to private persons, and the promoters of suchenterprises were permitted to reimburse themselves for their outlay bythe collection of tolls, their schedules of tolls were prescribed by theState and their business was placed under the supervision of publicofficers, whose duty it was to see that neither extortion nordiscrimination was practiced in the collection of these tolls, and thatthe private management of a public business did not become the source ofabuse. The State thus insisted upon exercising a restraining influenceover the business of turnpike companies because it realized the dangerof entrusting the management of a semi-public business to companiesorganized solely for private gain, with officers responsible only totheir stockholders, who, under ordinary circumstances, could be reliedupon to measure the usefulness of an employe by his ability tocontribute to the increase of the annual dividends. It will scarcely beclaimed, even by railroad men, that since the days of turnpikes andstage-coaches corporations have become more unselfish and their officersless servile. The temptations have increased, while human frailtyremains the same. Of course, if we consult the railroad managers as to the best policy tobe adopted for the future control of railroad companies, we shall beinformed that we have already gone too far in railroad legislation, thatnearly all the present evils of transportation of which the public andthe railroad companies complain may be traced to legislativerestrictions, and especially to certain features of the InterstateCommerce Act. They reluctantly admit that this act has been instrumentalfor good inasmuch as it has corrected some of the abuses that formerlyexisted, but they insist that several of its provisions are too radicaland do infinitely more harm than good, both to the railroad companiesand the people; that these obnoxious provisions ought to be repealed, and that under such restrictions as would still remain railroadcompanies ought to be permitted to manage their own business. If weinquire what modification of the Interstate Commerce Act the railroadsdesire, we find that if the act were amended in conformity with theirwishes there would be little of it left that is of value. But thefeatures which are specially obnoxious to them are the long and shorthaul and the anti-pooling clauses. They even go so far as to demand thatthe Government should not only permit pooling, but should use its strongarm to enforce all pooling contracts which railroad companies might seefit to enter into. This means, in other words, that the Governmentshould enforce an agreement to restrict competition, which is made indirect violation of the common law, and aid the companies in maintainingsuch rates as they see fit to establish. If the railroad manager iscross-examined and forced to confess the truth, he will have to admitthat what he really desires is freedom from all restraint, or, if publicopinion will not tolerate this, then only law enough in letter tosatisfy a public clamor and permit him to violate its spirit, and tothen trust to him and the future to bring it into disrepute and causeits repeal. Some shrewd managers have recently expressed a willingness to submittheir pooling arrangements to a public commission for approval, beforethey should go into effect. This is objectionable on the ground thatthey would then, more even than before, endeavor to control the makingof the commission. It is far safer to absolutely prohibit pooling andall devices used as a substitute for it. No necessity for poolingexists, and no good reason can be given why it should be permittedunless complete government control is established. State control of railroad transportation is as essential to the welfareof the companies as it is to that of the public. The history of the pasttwenty years has shown that railroad companies are utterly unable toregulate their relations with each other. They either cannot arrive atan understanding, and then the stronger companies resort to hostilitiesto bring the weaker ones to their terms; or, when an agreement has beenreached among them, they find themselves unable to enforce it. Anarchythen reigns supreme, until finally a truce is patched up, to be againfollowed by evasions, defiance and "war. " The nature of the railroadbusiness is in fact such that, in the absence of strict State control, it is impossible for a conscientious manager to retain the business towhich his road is naturally entitled, and do full justice to both thepatrons and the stockholders of his road. Efforts have been made againand again by railroad companies to regulate their affairs and adjusttheir difficulties by resorting to pools, agreements, associations andcombinations, formed with all the ingenuity of which men are capable, and supported by penalties and fines; but the unscrupulous railroadmanager has always found a way to violate or subvert the agreement. There is a disposition among railroad companies to arrogate all thepowers of sovereignty. They want to make their own laws, impose finesand declare war, and often go even so far as to openly defy the power ofthe State that has given them their existence. When railroad managers are shorn of the power to practice abuses, theyare at the same time deprived of the many advantages they now have tospeculate in railroad securities and enrich themselves at the expense ofthe public and of other railroad stockholders. The great fortunes ofthis country have been amassed within a few years, and chiefly frommanipulations of railroad property. If the people permit these practicesto go on without restraint but a few years more, the property of thenation will be largely under the control of a few bold adventurers. Thegreat fortunes of Europe which it has required centuries to accumulateare already outstripped by the "self-made" millionaires of this country. However persistently railroad managers may assure the people that abusesin the transportation business have been reduced to a minimum and thatmore stringent legislation will be an evil, it is a fact that many ofthe graver railroad abuses are still practiced and that much morereformation is needed in railroad management, or in railroadsupervision, or in both, to make the railroad what it was designed tobe, a highway operated for the public and open to all upon equal andequitable terms. The virtual ruler of the United States is public opinion. It is thepower that controls the legislative as well as the executive andjudicial departments of the Government. Enactments of legislatures andof Congress and decisions of the courts, even of the Supreme Court ofthe United States, not in harmony with an intelligent and determinedpublic opinion, cannot endure, and executives not in accord with themasses of the people cannot long retain public confidence or officialauthority. Under these circumstances no reform movement has any prospect of successunless it is supported by public opinion. It should therefore be theprincipal endeavor of all advocates of railroad reform to create publicopinion in favor of the measures proposed by them. With an intelligentpublic on the alert, the Government may be relied upon to pursue ahealthy and progressive railroad policy. Unfortunately, there are timeswhen public opinion upon great questions is dormant, while pecuniaryinterests, like the force of gravity, never suspend their action. Toarouse the masses at such times, we must rely largely upon an honest, independent and courageous press, not influenced by gift or patronage. Many plans have been proposed for a better control of railroads. Some ofthese are merely theoretical; others have been tried in part, and a fewhave been tried in their entirety, but under circumstances radicallydifferent from those surrounding us. A system which may be well adaptedto a monarchy with a centralization of governmental powers wouldprobably prove a failure here, when brought in contact with theprinciples of dual sovereignty and local rule. Unless a revolutionshould change our system of government, a dual system of railroadcontrol will always be necessary in the United States; for it is not atall likely that the individual States will ever voluntarily give uptheir right to regulate commerce carried on within their respectiveborders. On the other hand, the common welfare requires that thecommerce which is carried on between the States should not be hamperedby local interference, but should be regulated only by Congress. Ourexperience as a nation has shown that such a quality of sovereignty isnot inconsistent with strength or efficiency, nor need it be productiveof rivalry or friction. The fact that a certain mode of railroadmanagement has been successful elsewhere is not sufficient proof that itwould be successful here, nor is the fact that it has not beensuccessful elsewhere sufficient proof that it would not be successfulhere. The more the conditions which exist here resemble those underwhich it was tested, the greater is the probability that it can beadapted to our circumstances. Independent thought and action is anessential element of progress, yet it is the part of wisdom to profit bythe speculation and experience of others. The following are the principal methods that have been tried or proposedfor the control and management of railroads: _1. Publicity of the railroad business. _ It is held by some that the secrecy with which railroad business is atpresent transacted is the source of all evils. It is contended that ifrailroads were required to report to the public every item of income andexpenditure, discrimination and extortion, as well as bribery andcorrupt subsidizing, would soon cease. If the companies were compelledto render an account of all receipts, special rates and drawbacks couldnot safely be granted by railroad managers, or, if granted, would soonlose their charm for recipients, for it would be but a short time untilothers would demand and even exact the same privileges. An attorneywould, as a member of the legislature, be slow to accept a retaining feeif the amount of such fee were made known to his constituents. Publishers would hesitate to apply for railroad subsidies if thecompanies were compelled to render periodically an itemized account ofsuch expenditures, and railroad companies would, under similarcircumstances, hesitate to pay subsidies, for the subsidized journalwould soon be without patrons. If the items annually expended uponrailroad lobbies were reported, these lobbies would soon be frowned, oreven hissed, out of legislative halls. There can be no doubt that fulland complete publicity in railroad business would correct a large numberof existing abuses, and it should therefore be insisted upon as one ofthe first and essential features of railroad reform. It is questionable, however, whether railroad managers are so sensitive to public opinionthat publicity could be relied upon as a cure for all railroad evils. Towhat extent it is desirable to supplement publicity by other measuresof State control will be considered hereafter. It will, of course, be urged by railroad managers that the State has noright to pry into the privacy of their business and that they should beguaranteed the same protection against intrusion that is enjoyed byother branches of business. To this we must reply that not even banks orinsurance companies are permitted to conduct their business as private, and that controlling the highway and levying a transportation tax uponevery article of commerce passing over it is essentially public businessand unquestionably subject to public control. Every citizen is as muchinterested in it as he is in the transactions of the custom-house, or ofthe public treasury, and any transaction of a railroad manager thatshuns public inspection can be set down as a public evil and should besuppressed. It may safely be laid down as a general rule that therefusal of a railroad company to give publicity to its transactions ispresumptive evidence of wrong. The people are not alone interested insuch publicity. Stockholders have likewise a right to be protectedagainst the sinister manipulations of dishonest managers, and publicityfurnishes them the best guarantee of honest management. Stockholders should attend the meetings of their companies and shouldobtain full knowledge of the management of their affairs. If they willmake thorough examination and get at bottom facts the chances are thatcontracts will be found with owners of patents, white lines, blue lines, refrigerator car lines, coal companies, ferry companies, manufacturingcompanies, packing companies and other kindred organizations, by whichhundreds of millions of dollars are diverted from the treasuries of therailroad companies to the pockets of influential persons connected withthe management of the roads. It has recently come to light that the officers of a Pennsylvaniarailroad company, during fifteen years, by some means of secret rebatesand other allowances, have taken about $100, 000, 000 out of the treasuryof the company and distributed it as largesses to about half a dozeniron and steel establishments. This is a method of getting wealthy at the expense of others not unknownto many another great fortune accumulated in the last twenty years. Railroad discriminations have been a fruitful source of those grossinequalities in wealth distribution which now agitate society and callpeople's parties and the like into existence. The modern millionaireappears to be an entirely natural creation. Perhaps this money taken inspecial rates from the Pennsylvania railroad's treasury, or, rather, from the pockets of the road's other patrons, and of the men who mayhave sought, without special rates, to compete with the favored ones intheir business, only to be crushed in financial ruin, will be spent in apraiseworthy way, in accord with the principles of "the gospel ofwealth. " What we need now is the gospel of distribution of facilitiesfor the accumulation of wealth, as well as the gospel of distribution ofgreat fortunes. Whether inspired by a bull or a bear interest or neither, all willconcede the ability of Mr. Henry Clews to picture the evils of railroadmanagement; and his lack of generosity in accrediting ability or honestyto legislators who are called upon to provide remedies for the wrongsthat he so well depicts will not deter me from indorsing the followingstatement made by him in a magazine article which is pertinent to thisdiscussion: "One great difficulty that present railroad legislators have to contend with is the evil methods of railroad building and extension. A great deal of the mileage of the last two years has been premature, and doubtless for speculative purposes. Most of it has been constructed, however, by old companies who had good credit to float bonds and could raise all the money required. Hence there has been but little financial embarrassment arising from the too rapid construction. But people are beginning to find out that a great deal of this building has been in the interest of speculative directors and their friends, who, for a mere song, had bought up barren lands considered worthless because there was no means of transportation. But these lands soon become immensely valuable for sites of villages, towns and cities. The construction companies, by which these roads were generally built, raised the cost to the highest possible figures, in order, I fear, to make dividends for the construction stockholders. It is noteworthy that the directors connected with these construction schemes have been exceedingly prosperous, while the stockholders of the roads have grown poor in an inverse ratio. The dividends of the latter have disappeared. The new mileage, much of which, I apprehend, has been made on this principle, was about twenty-one thousand miles, which is greater than the entire mileage of Great Britain. There should be additions to the Interstate Law, or a special law regulating the methods of construction companies, which are probably doing more to demoralize the railroad system--and doing it very insidiously, too--than any other factor connected with these great arteries of the country's prosperity. "Legislative reform is greatly needed in the matter of railroad reports, especially for the safety of investors, and to prevent speculative abuses among railroad officials and their friends and favorites. There should be statements issued annually, or perhaps more frequently, upon the truth of which everybody might rely. These should be sworn statements, and should bear the signatures of at least three of the directors. These directors should be required to call to their aid expert accountants, and should have placed at their disposal all the books of the company or corporation and all the other papers necessary to verify the accuracy of their report. The correctness of the statement, when issued, would then be a foregone conclusion, and an investor in London, Paris or Berlin could buy or sell on his own judgment, an experiment which, under existing arrangements, might prove very costly. It is proverbial that a railroad statement now is defective in the most essential particulars, and, to put it mildly, usually covers a multitude of sins. According to one plan approved by railroad companies, the statement published to-day, for instance, is made to show a surplus of many millions, but there is nothing said about an open construction account to which the surplus is debtor. On this favorable showing (with this _suppressio veri_) the stock goes up and the insiders quickly unload upon the investment public. The following statement, which comes out six months later, shows that the surplus has been used to settle the construction indebtedness. The surplus has disappeared; consequently the stock suffers a serious decline. Those who bought on the strength of the large surplus sell out, on being informed of its distribution. Then the inside sharks come forward again and purchase at reduced prices, probably at a depreciation of from ten to fifteen points or more, and keep their stock until the next periodical appearance of the bogus surplus. Thus the insiders grow rich, while the outsiders become poor. The only remedy for this abuse is a sworn statement at regular intervals, and if the directors should commit perjury they would render themselves liable to State prison. If a few of them should be tempted to fall into the trap, and be made examples of in this way, nothing would do more to work a speedy reform in this contemptible method of book-keeping. "I would also suggest a change in the character of the directors. Those usually chosen for this office now are men who have vast interests of their own, more than sufficient to absorb their entire time and thoughts. They are selected mainly on account of their high-sounding names, to give tone to the corporation and solidify its credit, in order that the lambs of speculation may have proper objects in whom confidence can be reposed and no questions asked. The management of the affairs of the corporation is frequently intrusted to one man, who runs the business to suit his own individual interests. " We can appreciate the force of the above remarks when we consider thatlast year seventy-five companies realized a gross income of$846, 888, 000, which is equal to about 80 per cent. Of the total incomereceived by all of the railroads of the United States. _2. Free competition upon all railroads. _ Mr. Hudson, in his excellent work, "The Railways and the Republic, "recommends the following remedy: "Legislation should restore the character of public highways to the railways, by securing to all persons the right to run trains over their tracks upon proper regulations, and by defining the distinction between the proprietorship and maintenance of the railway and the business of common carriers. " Mr. Hudson proposes to leave the track in the possession of its presentowners, but to permit any individual or company to run, upon the paymentof a fixed toll, trains and cars over it, under the control of atrain-dispatcher stationed at a central point. This train-dispatcher isto be notified by telegraph of the movement of each train, and is togive his orders to the officers in charge of each train, as to whatpoints they are to go, where to pass one train and where to wait foranother. Each transportation company is to own, load and forward its owntrains; it is to be required to run its regular train on schedule timeor to have it follow another train as an extra. They are to be liable totheir shippers as well as to the railway company for all damages causedby their neglect, while the railroad company is to be held responsiblefor the condition of its track. It will not be necessary to go into thedetails of Mr. Hudson's plan. Suffice it to say that he proposes toestablish free competition in the railway business by making the use ofthe railway track as free as that of the turnpike or canal, subject onlyto such control on the part of the public train-dispatcher as theparamount considerations of speed and safety may require. The adoption of Mr. Hudson's plan would simply be a return to the firstprinciple of railroad transportation. It has already been shown that thefirst English charters permitted the public to use their own vehiclesand motive power upon the railroad track, but that shippers andindependent carriers could not avail themselves of these provisions ofthe early charters because it was in the power of the railroad companiesto make their tolls prohibitory. There is but little question as to thepracticability of Mr. Hudson's plan from a purely technical standpoint, and its adoption might be advisable if it should be demonstrated that amonopoly of the track is inconsistent with the operation of the railwaysfor the public good. It is seriously doubted, however, whether suchideal competition as Mr. Hudson desires to bring about could be securedexcept at the expense of true economy. Concentration, or, rather, consolidation in the railroad business has, under proper legalrestriction, always resulted in a saving of operating expenses, andusually in a reduction of rates. Any step in the opposite direction, whatever other merits it may possess, is in the end not likely to givelower rates. If it is a settled principle that railroads are onlyentitled to a fair compensation for their services, it must be evidentthat what would be a fair compensation for the same or similar servicesto a large, well-organized, well-regulated and well-managed companycannot be sufficient compensation to an individual carrier or a smallcompany, whose expenses will always be comparatively larger than thoseof its better-equipped rival. Monopoly and extortion need notnecessarily be synonymous. In fact, States and municipalities in theirpublic works often prefer monopoly to competition as the cheaper of thetwo. Nevertheless, should it ever be found that monopolies cannot bereconciled with justice and economy, a return to the first principles ofrailroading may become advisable. _3. State ownership and management. _ A number of European states, notably Prussia, France and Belgium, aswell as Australia, British India and the British colonies in SouthernAfrica, have adopted government ownership of railroads. The motiveswhich led to this step in the various countries differ greatly. While inEurope military and political considerations predominated, in Africa andAustralia it was more the want of private capital and energy which ledthe government to engage in railroad enterprises. There has in most ofthese states been a desire to avoid the evils usually connected withprivate management. The experiment of state ownership and management ofrailroads has been longest tried in Belgium, and with the best results. With an excellent service the rates of the Belgian state roads are thelowest in Europe. Their first-class passenger tariffs are, next to thezone tariff recently adopted on the state roads of Hungary, the lowestin the world, and are, for the same distance, lower than those ofAmerican roads. In Prussia the state service, upon the whole, is alsosuperior to that of private companies, and is probably equal to thepublic demand. In France the government only owns and operates lessimportant lines, but furnishes upon these a more efficient and cheaperservice than private companies would either be able or disposed tofurnish. The oft-repeated statement of those opposed to governmentregulation to the contrary notwithstanding, government ownership andmanagement of railroads is a decided success in Europe, Mr. Jeans saysof state railroads: "Notwithstanding the superior financial result, the lines worked by the state are those kept in the best order, and the working of which gives the greatest satisfaction to the commercial world and the public in general as regards regularity of conveyance, cheapness of transit and the comfort of travelers. " It is difficult to see how any unbiased person can travel on any of thestate roads of Europe without coming to the same conclusion. Statemanagement offers certainly some decided advantages to the public. Aboveall, the business of the roads is not conducted for the pecuniaryadvantage of a few, but for the common good. Commerce is not arbitrarilydisturbed to aid unscrupulous managers in their stock speculations. Newlines are not built for speculative purposes, but for the development ofthe country. Rates are based more upon the cost of service than uponwhat the traffic will bear, and the ultimate object of the state'spolicy is not high profits, but a healthy growth of the country'scommerce, while the sole aim of a private company is to get the largestrevenue possible. The permanent way of the state road is kept in bettercondition, the public safety and convenience being paramountconsiderations. Rates are stable and uniform, instead of beingchangeable and discriminating, and all persons and places are as equalbefore the railroad tax collector as before the law. It may be laid downas a general rule that under private management of railroads effortswill be made to secure the highest rates possible, while it is the aimof the Government to grant the lowest rates possible. Mr. Jeans provesby statistics that the cost of maintenance of way is generally higher onthe state lines, and that traffic expenses are higher on the lines ofprivate companies. In commenting upon this difference he says: "It might easily be contended, and even proved beyond all doubt, that the first characteristic is a result of the better condition in which the state keeps the permanent way; and, so far as this is the case, the public convenience, safety and general advantage are promoted. "The highest range of traffic expenses on companies' lines undoubtedly argues greater laxity of management, since, as we have already shown, this is one of the most elastic of items, and may be either very high or very low, according as economy or extravagance is the prevailing system. .. . The experience of Continental Europe points unmistakably to the exercise of greater economy in state management. " Judge Dillon, of the United States Court, in his order appointing Hon. J. B. Grinnell receiver for the Central Railroad of Iowa, in 1876, said: "The railroads in the hands of the court--and in the circuit there are eight or ten--have all been run with less expense, and have made more money, than when they were operated by the companies; and we hope and believe under your supervision that this road will prove no exception, and that the property will be worth more at the end of the litigation. " Upon Mr. Grinnell's resignation, after nearly three years of service, Judge Grant said, in asking for the discharge of his bondsmen: "I concur entirely in the opinion of the State commissioners that he has very much improved the condition of the road, and he left it in far superior condition to that in which he received it. " Yet Government ownership and management of railroads also has itsdrawbacks. It is claimed by some that such management is more expensivethan that of lines owned by private companies. It has already been shownthat the permanent way is kept in better condition by the state than byprivate corporations. In Russia, Germany, Austria-Hungary, France andItaly the state expends from 15 to 30 per cent. More for the maintenanceof the permanent way than the private companies. It is perhaps also truethat the rank and file of railroad employes fare, on an average, betterunder government than they do under private management; but, as anoffset to this, it should be remembered that quite a saving is effectedby the state in the salary account of general officers. The people willnot consent to pay the manager of a railroad line a salary six times aslarge as that of a cabinet officer, and provide at the same timesinecures for his sons, brothers, nephews and cousins. It is furthermore claimed that, as government is organized, it cannot, all other things being equal, respond to the demands of commerce aspromptly as private companies. This feature, however, may be anadvantage to the country at large rather than a detriment. But thestrongest argument that can be produced against state ownership ofrailroads is that under a democratic form of government it might exert ademoralizing influence in politics. The 1, 700 railroad companies of theUnited States have at present an army of about 800, 000 employes. Thisnumber is constantly increasing, and it is more than probable thatbefore the end of the present century it will have reached a million. When it is considered what importance is at present attached to thepolitical influence of a hundred thousand Federal officers, it is notsurprising that conservative citizens should hesitate to add to theranks of these officeholders a six or seven times larger force. Dangerous as the railroad influence now is in politics, it would be tentimes more dangerous if under a system of Government managementconsiderations of self-interest should induce a million railroademployes to act as a political unit and political parties should viewith each other in bidding for the railroad vote. Could our civilservice ever be so organized as to divest it entirely of politicalpower, state management of railroads might still offer the best solutionof the railroad problem. Mr. T. B. Blackstone, president of the Chicago and Alton RailroadCompany, has recently created somewhat of a surprise by declaring infavor of Government ownership of railroads. That Mr. Blackstone'sprogramme will eventually receive the approval of a large number of hiscolleagues there can be but little doubt. With the people wide-awakeupon this subject, the opportunities for railroad speculation arelessening, and the scheme to early unload the railroads of the countryon the Government at a highly inflated value speaks well for thefinancial farsightedness of its author. Mr. Blackstone proposes to haverailroad stockholders do here what the former owners of the telegraphdid in Great Britain, _i. E. _, dispose of their property to theGovernment, at a price representing several times its original cost oreven several times the cost of duplication. Mr. C. Wood Davis, formerly general freight and passenger agent of oneof the leading roads east from Chicago, is one of the best informed andclearest-headed writers upon the railroad question. He has, after muchexperience and long study, been converted to the advocacy of nationalownership as a solution of the railroad problem. In a recent articlepublished by the Arena Publishing Company, entitled "Should the Nationown the Railways?" he presents the objections and advantages of nationalownership. He says: "The objections to national ownership are many, that most frequently advanced, and having the most force, being the possibility that, by reason of its control of a vastly increased number of civil servants, the party in possession of the Federal administration at the time such ownership was assumed would be able to perpetuate its power indefinitely. .. . This objection would seem to be well taken, and indicates serious and far-reaching results unless some way can be devised to neutralize the political power of such a vast addition to the official army. .. . In the military service we have a body of men that exerts little or no political power, as the moment a citizen enters the army he divests himself of political functions; and it is not hazardous to say that 700, 000 capable and efficient men can be found who, for the sake of employment, to be continued so long as they are capable and well behaved, will forego the right to take part in political affairs. If a sufficient number of such men can be found, this objection would, by proper legislation, be divested of all its force. .. . "2. That there would be constant political pressure to make places for the strikers of the party in power, thus adding a vast number of useless men to the force, and rendering it progressively more difficult to effect a change in the political complexion of the administration. "That this objection has much less force than is claimed is clear from the conduct of the postal department, which is unquestionably a political adjunct of the administration; yet but few useless men are employed, while its conduct of the mail service is a model of efficiency after which the corporate-managed railways might well pattern. Moreover, if the railways are put under non-partisan control, this objection will lose nearly, if not quite, all its force. "3. That the service would be less efficient and cost more than with continued corporate ownership. This appears to be bare assertion, as from the very nature of the case there can be no data outside those furnished by the government-owned railways of the British colonies, and such data negative these assertions; and the advocates of national ownership are justified in asserting that such ownership would materially lessen the cost, as any expert can readily point out many ways in which the enormous costs of corporate management would be lessened. With those familiar with present methods, and not interested in their perpetuation, this objection has no force whatever. "4. That with constant political pressure unnecessary lines would be built for political ends. This is also bare assertion, although it is not impossible that such results would follow; yet such has not been the case in the British colonies where the governments have had control of construction. .. . "5. That, with the amount of red tape that will be in use, it will be impossible to secure the building of needed lines. While such objection is inconsistent with the fourth, it may have some force, but as the greater part of the country is already provided with all the railways that will be needed for a generation, it is not a very serious objection even if it is as difficult as asserted to procure the building of the new lines. It is not probable, however, that the Government would refuse to build any line that would clearly subserve public, convenience, the conduct of the postal service negativing such a supposition. .. . "6. That lines built by the Government would cost much more than if built by corporations. Possibly this would be true, but they would be much better built and cost far less for maintenance and betterments, and would represent no more than actual cost; and such lines as the Kansas Midland, costing but $10, 200 per mile, would not, as now, be capitalized at $53, 024 per mile, nor would the president of the Union Pacific (as does Sidney Dillon, in the _North American Review_ for April) say that "a citizen, simply as a citizen, commits an impertinence when he questions the right of a corporation to capitalize its properties at any sum whatever, " as then there would be no Sidney Dillons who would be presidents of corporations, pretending to own railways built wholly from Government moneys and lands, and who have never invested a dollar in the construction of a property which they have now capitalized at the modest sum of $106, 000 per mile. .. . "7. That they are incapable of as progressive improvement as are corporate-owned ones, and will not keep pace with the progress of the nation in other respects; and in his _Forum_ article Mr. Acworth lays great stress upon this phase of the question and argues that as a result the service would be far less satisfactory. "There may be force in this objection, but the evidence points to an opposite conclusion. When the nation owns the railways trains will run into union depots, the equipment will become uniform and of the best character, and so sufficient that the traffic in no part of the country would have to wait while the worthless locomotives of some bankrupt corporation were being patched up, nor would there be the present difficulties in obtaining freight cars growing out of the poverty of corporations which have been plundered by the manipulators, and improvements would not be hindered by the diverse ideas of the managers of various lines in relation to the adoption of devices intended to render life more secure or to add to the public convenience. .. . Existing evidence all negatives Mr. Acworth's postulate that "state railway systems are incapable of vigorous life. " "8. An objection to national ownership which the writer has not seen advanced is that States, counties, cities, townships and school districts would lose some $27, 000, 000 of revenue derived from taxes upon railways. While this would be a serious loss to some communities, there would be compensating advantages for the public, as the cost of transportation could be lessened in like measure. "Many believe stringent laws, enforced by commissions having judicial power, will serve the desired end, and the writer was long hopeful of the efficacy of regulation by State and National commissions; but close observation of their endeavors and of the constant efforts--too often successful--of the corporations to place their tools on such commissions, and to evade all laws and regulations, have convinced him that such control is and must continue to be ineffective and that the only hope of just and impartial treatment for railway users is to exercise the 'right of eminent domain, ' condemn the railways, and pay their owners what it would cost to duplicate them; and in this connection it may be well to state what valuations some of the corporations place upon their properties. "Some years since the Santa Fe filed in the counties on its line a statement showing that at the then price of labor and materials--rails were double the present price--their road could be duplicated for $9, 685 per mile, and, the materials being much worn, the actual cash value of the road did not exceed $7, 725 per mile. "In 1885 the superintendent of the St. Louis and Iron Mountain Railway, before the Arkansas State Board of Assessors, swore that he could duplicate such a railway for $11, 000 per mile, and yet Mr. Gould has managed to float its securities, notwithstanding a capitalization of five times that amount. " Among the advantages to be derived from Government ownership he namesthe following: "First would be the stability and practical uniformity of rates, now impossible, as they are subject to change by hundreds of officials, and are often made for the purpose of enriching such officials. .. . "It would place the rate-making power in one body, with no inducement to act otherwise than fairly and impartially, and this would simplify the whole business and relegate an army of traffic managers, general freight agents, soliciting agents, brokers, scalpers and hordes of traffic association officials to more useful callings, while relieving the honest user of the railway of intolerable burdens. "Under corporate control, railways and their officials have taken possession of the majority of mines which furnish the fuel so necessary to domestic and industrial life, and there are few coal fields where they do not fix the price at which so essential an article shall be sold, and the whole nation is thus forced to pay undue tribute. "Controlling rates and the distribution of cars, railway officials have driven nearly all the mine owners, who have not railways or railway officials for partners, to the wall. "With the Government operating the railways, discriminations would cease, as would individual and local oppression; and we may be sure that an instant and absolute divorce would be decreed between railways and their officials on one side, and commercial enterprises of every name and kind on the other. "The failure to furnish equipment to do the business of the tributary country promptly is one of the greater evils of corporate administration, enabling officials to practice most injurious and oppressive forms of discrimination, and is one that neither Federal nor State commission pays much attention to. With national ownership a sufficiency of cars would be provided. On many roads the funds that should have been devoted to furnishing the needed equipment, and which the corporations contracted to provide when they accepted their charters, have been divided as construction profits, or, as in the case of the Santa Fe, Union Pacific, and many others, diverted to the payment of unearned dividends, while the public suffers from this failure to comply with charter obligations. "There would be such an adjustment of rates that traffic would take the natural short route, and not, as under corporate management, be sent around by the way of Robin Hood's barn, when it might reach its destination by a route but two-thirds as long, and thus save the unnecessary tax to which the industries of the country are subjected. That traffic can be sent by these roundabout routes at the same or less rates than is charged by the shorter ones is _prima facie_ evidence that rates are too high. "There would be a great reduction in the number of men employed in towns entered by more than one line. For instance, take a town where there are three or more railways, and we find three or more full-fledged staffs, three or more expensive up-town freight and ticket offices, three or more separate sets of all kinds of officials and employes, and three or more separate depots and yards to be maintained. Under Government control these staffs--except in very large cities--would be reduced to one, and all trains would run into one centrally located depot; freight and passengers be transferred without present cost, annoyance and friction, and public convenience and comfort subserved, and added to in manner and degree almost inconceivable. "The great number of expensive attorneys now employed, with all the attendant corruption with the fountains of justice, could be dispensed with, and there would be no corporations to take from the bench the best legal minds, by offering three or four times the Federal salary. .. . "Every citizen riding would pay fare, adding immensely to the revenues. Few have any conception of the proportion who travel free, and half a century's experience renders it doubtful if the evil--so much greater than ever was the franking privilege--can be eliminated otherwise than by national ownership. From the experience of the writer, as an auditor of railway accounts, and as an executive officer issuing passes, he is able to say that fully ten per cent. Travel free, the result being that the great mass of railway users are yearly mulcted some thirty millions of dollars for the benefit of the favored minority; hence it is evident that if all were required to pay for railway services as they are for mail services, the rates might be reduced ten per cent, or more, and the corporate revenues be no less, and the operating expenses no more. In no other country--unless it be under the same system in Canada--are nine-tenths of the people taxed to pay the traveling expenses of the other tenth. By what right do the corporations tax the public that members of Congress, legislators, judges and other court officials and their families may ride free? Why is it that when a legislature is in session passes are as plentiful as leaves in the forest in autumn?. .. "The corporations have ineffectually wrestled with the commission evil, and any number of agreements have been entered into to do away with it; but it is so thoroughly entrenched, and so many officials have an interest in its perpetuation, that they are utterly powerless in the presence of a system which imposes great and needless burdens upon their patrons, but which will die the day the Government takes possession of the railways, as then there will be no corporations ready to pay for the diversion of traffic. "As a rule, American railways pay the highest salaries in the world for those engaged in directing business operations, but such salaries are not paid because transcendent talents are necessary to conduct the ordinary operations of railway administration, but for the purpose of checkmating the chicanery of corporate competitors. In other words, these exceptionally high salaries are paid for the purpose, and because their recipients are believed to have the ability to hold up their end in unscrupulous corporate warfare where, as one railway president expressed it, 'the greatest liar comes out ahead. .. . ' "Government control will enable railway users to dispense with the services of such high-priced umpires as Mr. Aldace F. Walker, as well as of all the other officials of sixty-eight traffic associations, fruitlessly laboring to prevent each of five hundred corporations from getting the start of its fellows, and trying to prevent each of the five hundred from absorbing an undue share of the traffic. It appears that each of these costly peace-making attachments has an average of seven corporations to watch. .. . "With National ownership the expenditures involved in the maintenance of traffic associations would be saved and railway users relieved of a tax that, judging from the reports of a limited number of corporations of their contribution towards the support of such organizations, must annually amount to between $4, 000, 000 and $5, 000, 000. "Of the six hundred corporations operating railways, probably five hundred maintain costly general offices, where president, secretary and treasurer pass the time surrounded by an expensive staff. The majority of such offices are off the lines of the respective corporations, in the larger cities, where high rents are paid and great expenses entailed, that proper attention may be given to bolstering or depressing the price of the corporation's shares, as the management may be long or short of the market. So far as the utility of the railways is concerned, as instruments of anything but speculation such offices and officers might as well be located in the moon, and their cost saved to the public. .. . "Railways spend enormous sums in advertising, the most of which National ownership would save, as it would be no more necessary to advertise the advantages of any particular line than it is to advertise the advantages of any given mail route. .. . A still greater expense is involved in the maintenance of freight and passenger offices off the respective lines, for the purpose of securing a portion of competitive traffic. In this way vast sums are expended in the payment of rents and the salaries of hordes of agents, solicitors, clerks, etc. , etc. .. . "Under Government control discriminations against localities would cease, whereas now localities are discriminated against because managers are interested in real estate elsewhere, or are interested in diverting traffic in certain directions. .. . "Another, and an incalculable benefit, which would result from National ownership, would be the relief of State and National legislation from the pressure and corrupting practices of railway corporations, which constitute one of the greatest dangers to which republican institutions can be subjected. This alone renders the nationalization of the railways most desirable, and at the same time would have the effect of emancipating a large part of the press from a galling thraldom to the corporations. .. . "Estimated net annual saving to the public which would result from Government control: From consolidation of depots and staffs $20, 000, 000 From exclusive use of shortest routes 25, 000, 000 In attorneys' fees and legal expenses 12, 000, 000 From the abrogation of the pass evil 30, 000, 000 From the abrogation of the commission evil 20, 000, 000 By dispensing with high-priced managers and staffs 4, 000, 000 By disbanding traffic associations 4, 000, 000 By dispensing with presidents, etc 25, 000, 000 By abolishing all but local offices, solicitors, etc. 15, 000, 000 Of five-sevenths of the advertising account 5, 000, 000 ----------- Total savings by reason of better administration $160, 000, 000 "It would appear that, after yearly setting aside $50, 000, 000 as a sinking fund, there are the best reasons for believing that the cost of the railway service would be some $310, 000, 000 less than under corporate management. "That $6, 000, 000, 000 is much more than it would cost to duplicate existing railways will not be questioned by the disinterested familiar with late reductions in the cost of construction, and that such a valuation is excessive is manifest from the fact that it is much more than the market value of all the railway bonds and shares in existence. " The above quotations from Mr. Davis' article hardly do it justice, andit should be read in full to appreciate its full force. Many of thepredictions and estimates are undoubtedly in the main correct, yet uponthe whole it must be admitted that it is a rather rosy and too hopefulview to take of Government ownership of our railroads. _4. State ownership with private management. _ This is a compromise between a public and a private system of railwayownership and management. It is claimed by the advocates of this systemthat if the Government would acquire by purchase or through condemnationproceedings all of the railroads of the country, pay for them by issuingits bonds, and then lease the various lines to the highest responsiblebidders, prescribing a schedule and rules of management, most of thebenefits resulting from state ownership of railroads could be securedwhile nearly all its disadvantages would be avoided. It is proposed topurchase railroads at their actual value and to issue in payment bondsbearing the same rate of interest as other Government securities. Thiswould deprive managers of every opportunity to manipulate the railroadbusiness for purposes of stock speculation. It would also reduce thefixed charges of our railroads at least 50 per cent. , the benefits ofwhich reduction the public would chiefly share. The acquisition of therailroads by the Government would, moreover, afford the conservativecapitalist a safe and permanent investment, which, with the gradualdisappearance of our war debt, might become a national desideratum. It is proposed by the advocates of this system that the Government fixrates of transportation for a certain period, to be reviewed at the endof that period upon an agreed basis. The operating companies would berequired to keep their roads in repair and give sufficient bonds for thefaithful performance of their contracts. If found guilty of persistentviolations of the terms of their leases or of such laws as Congressmight enact for their control, their bonds and leases might be declaredforfeited. A new Government department or bureau would have to beestablished and charged with the duty of exercising the same controlover railroads which the Government now exercises over national banks, and in addition to this complete publicity of the service would have tobe relied upon to prevent the introduction of abuses. There are at least two valid objections that can be urged against theadoption of such a system. Responsible companies could not be induced tolease a line for a valid consideration unless their rates weredefinitely fixed for a series of years. Such a course might, however, in time result in great hardship to the commerce of the country, as thegreat and unavoidable difference in the rates of the various railroadlines of the country would give to the commercial interests of somesections decided advantages over those of others. Besides this it wouldbe very difficult to compel the different companies to keep the linesleased by them in repair. Controversies would constantly arise betweenthe officers charged with the supervision of the roads and the operatingcompanies, which could be ultimately determined only by the courts, causing to the Government loss, or at least delay in the adjustments. _5. National control. _ Mr. A. B. Stickney, in his work, "The Railway Problem, " holds that inthe interest of uniformity it is desirable to transfer the entirecontrol of railroads to the National Government. He assigns two reasonsfor the proposed change; one being that Congress would consider thesubject of railroad control with more intelligence and greaterdeliberation; the other, that "the problem of regulating railway tollsand of managing railways is essentially and practically indivisible bythe State lines or otherwise, " and that the authority of Congress todeal with interstate traffic carries with it the right to regulate thetraffic which is now assumed to be controlled by the several States. It must be admitted that it is a difficult matter to draw the line ofdemarcation between National and State control, and that Congressionalregulation of railways would remedy many evils which now affect ourtransportation system; yet there is reason to believe that the proposedchange would in the end be productive of more evil than good. It is anessentially American maxim that the home government only should betrusted with the administration of home affairs. The people of eachState know best their local needs, and it is safe to say that for ageneration or two no serious effort will be made to amend the FederalConstitution in this respect or to secure from the courts aninterpretation of the interstate commerce clause greatly differing fromthat which now obtains. It is thus seen that nearly all the methods of railroad management whichwe have discussed are, at the present time at least, more or lessimpracticable on account of the radical changes which they wouldnecessitate. It is not likely that for many years to come the Americanpeople could be induced to try any extensive experiments in stateownership of railroads; nor is it any more likely that the presentgeneration will undertake the difficult task of separating the ownershipof railroads from their operation. A nation is, like the individual, inclined to follow beaten tracks. Itfinds it, as a rule, easier to improve these tracks than to abandon themand mark out a new course. Any proposition made for the improvement ofour system of railroad transportation is in the same proportion likelyto receive the approval of the masses in which it makes use of existingconditions. It will, therefore, be my aim, in making suggestions as to amore efficient control of this modern highway, to retain whatever goodfeatures the present system possesses, and to only propose such changesas may seem essential to restore to the railroad the character of ahighway. As has been indicated above, any system of railway regulation, to beapplicable to our circumstances, must recognize the dual sovereignty ofNation and State. The great majority of our railroad corporations wereoriginally created by the State, and are only responsible to the Stateas long as they do not engage in interstate commerce. Even foreigncorporations must submit to all police regulations of the State in whichthey may do business, and as long as the American Constitution remainsintact the individual States will, and should, assert their right toregulate local traffic and to exercise police supervision over allrailroads crossing their boundaries. All power should be kept as closely to the people as is consistent withefficiency in the public service. It may even be questioned whetherentire transfer to the Federal Government of the supervisory powers nowexercised by the States in railroad affairs would tend to correctexisting railroad evils more speedily or more effectually than they canbe corrected through the agency of local rule. The conditions, andtherefore the wants, of the different States differ so greatly thatgeneral legislation must always fail when it attempts to regulatematters of merely local concern. The means employed by the State for the regulation of the roads underits jurisdiction should be such as are least likely to lead to aconflict with Federal authority, and experience has shown that theauthority of the General Government and that of an individual State overa railroad company, which is incorporated under the laws of the latter, but is engaged in interstate commerce, may be so harmonized as to avoidconflicts between the two sovereignties without any great sacrifice ofpower on the part of either. Judge Cooley said recently in reference toregulation by National and State commissions: "There is no good reason in the nature of things why the conformity should not be complete and perfect. It is remarkable that up to this time there has been so little--I will not say of conflict, but even of diversity of action between the National and State commissions. Indeed, I recall no instance at this time when anything done by the one has seemed to me to afford just ground for complaint by the other. This may justly be attributed to the fact that there has been no purpose on the part of either to do any act that could afford ground for just complaint on the part of managers of the business regulated and no desire to do anything else than to apply rules of right and equality for the protection of the general public. The aim of all regulation ought to be justice, and when it is apparent that this is the purpose of the several commissions, the railroad managers of the country may more reasonably be expected to coöperate with them much more generally than they do now. If these managers were to come generally and heartily into more full and complete recognition of the rules of right and justice that the law undertakes to lay down for the performance of their duties in their management of the great interests they represent, there cannot be the least doubt that the general result would be, not only that their service to the public would be more useful than it is now, but that the revenues derived from their business would be materially increased through the cutting off of many of the drains upon them, which now, while affecting injuriously the returns they can make to their stockholders, at the same time have the effect of prejudicing the mind of the general public against railroad management to an extent quite beyond what is generally understood by those who suffer from it. The prejudice is inevitable, and not at all unreasonable when it is seen, as it very often is, that these drains result from an unjust discrimination against the public or some portion thereof, that they are of a character that ought to need no law and no criminal or other penalties to put them under the ban of condemnation in every office of railroad management. "I take the liberty of adding one more thought: that the more perfect is railroad legislation, the less we shall hear of transportation by rail being made a Government function, the General Government making purchase of all the roads and entering upon a course which will lead we know not where or into what disasters. " There has been during the past twenty years a tendency in a majority ofthe States to place the local control of railroads in the hands ofexecutive boards, usually styled "railroad commissioners. " Previous tothis period the various States relied solely upon legislation for theregulation of the transportation business, but in time they becameconvinced that such laws were inoperative for the want of an enforcingpower. It was found that the individual shipper was unable to cope witha powerful company and usually would rather suffer wrong than to enterinto a contest which nearly always resulted in great pecuniary loss tohim. On the other hand, it was apparent that if the claim of theindividual were pressed by a railroad commission, even though such abody had but limited powers, it would, under ordinary circumstances, behonored, provided it was meritorious; and if the commission wascompelled to enforce a demand through the courts, it would have thesupport of the State to poise the wealth and power of the corporation. The term "railroad commissioner" in the United States is nearly as oldas the railroad itself; but the first officials bearing that title weremerely successors to the turnpike commissioners of yore; their dutiesconsisted chiefly in supervising, passing or reporting upon theconstruction and condition of the highway. The first railroad commission, in the present acceptation of the term, was created in the State of Massachusetts, in 1869. The commissionconsisted of three persons, whose principal duty was to "make an annualreport to the General Court, including such statements, facts andexplanations as will disclose the actual working of the system ofrailroad transportation in its bearing upon the business and prosperityof the commonwealth, and such suggestions as to its general railroadpolicy, or any part thereof, or the condition, affairs or conduct of anyrailroad corporation, as may seem to it appropriate. " This board alsohad the general supervision of all railroads and power to examine thesame. It was required to give notice in writing to any railroadcorporation which, in its judgment, was guilty of any violation of therailroad laws of the State; and if such company continued the violation, after such notice, it became the duty of the commission to present thefacts to the Attorney-General. It was further made the duty of the boardto examine, from time to time, the books and accounts of all railroads, to see that they were kept in a uniform manner, and upon the systemprescribed by the board. It was also required to investigate the causeof any accident on a railroad resulting in loss of life. These being theprincipal duties of the board, its powers were very limited; but itspersonnel supplied the power which the law had withheld. The success ofthis commission exceeded even the expectations of the advocates of thesystem, who, in view of the limited powers of the commission, hadanticipated but meager results. To quiet the Granger movement the railroads favored and finally securedthe adoption of the commissioner system in the West, and South, in whichsections it attained its highest development. It was soon found that acommission after the Massachusetts model, when composed of men lesscompetent or less disposed to do their duty, was liable to dwindle intoa statistical board or even become a pliant tool in the hands of therailroads. Furthermore, the conditions in Massachusetts, where railroadowners and railroad patrons lived side by side and were in manyinstances even identical, differed materially from those found in theWest and South, where railroad patrons were made to pay excessive rates, to produce liberal dividends on fictitious stocks for non-residentstockholders. Here a conflict between the railroads and such commissionsas were determined to do their duty became often unavoidable. Railroadcompanies were as a rule disposed to disregard the recommendation of acommission to reduce exorbitant rates. This led in those States whichsuffered most from unjust tariffs to a popular demand to endow thecommission with the power to fix _prima facie_ rates. While the numberof States which have taken this step is at present still limited, publicopinion in its favor is growing throughout the nation, and a generaladoption of this policy is probably only a question of time. There isevery reason for believing that a commission vested with the right tofix local rates, to require full and complete reports from railroadcompanies, and to make proper regulations for their control, aided bypenal legislation to compel compliance with their orders, will be asufficient aid to the State in exercising such control over thecompanies operating lines within its borders as its dignity and thewelfare of its people demand. Viewing the question from a national point of view, we find that, owingto the great and constantly increasing importance of interstate traffic, improved Federal agencies for railroad control are a pressing need. While much has been accomplished by the Interstate Commerce Act, muchyet remains to be done. Violations of the act are still far toofrequent, and they have been encouraged by unfriendly decisions by someof the inferior Federal courts. It must be admitted that nearly all the evils connected with interstatetransportation could soon be remedied were it not for the difficultieswhich the Interstate Commerce Commission encounters in the enforcementof the law. On the one hand it is not possible with the machinery atpresent provided to detect and prove a considerable part of theviolations of which railroad managers are daily guilty; and on the otherhand, if these violations are brought to light, there would not, according to the testimony of a prominent railroad man, be courts enoughin the country to try the violators. Besides this, such is theartfulness of railroad managers that in a majority of cases it would beimpossible to reach the guilty party, and subordinates would have toanswer for the transgressions of their superiors. To provide adequate machinery for the supervision of the transportationbusiness, a national bureau of commerce and transportation should beestablished. As its chief a director-general of railroads should beappointed by the President, on the recommendation of the Secretary ofthe Interior, by and with the advice and consent of the Senate. Thisofficer should hold his office for a term of at least six years, unlesssooner removed by the President, upon reasons to be communicated by himto the Senate. He should not be interested either directly or indirectlyin railroad securities. The Interstate Commerce Commission should becontinued as an advisory board. It should upon the whole retain itspresent functions and should be consulted by the director-general in allmatters requiring expert investigation. A number of divisions orsub-bureaus should be established, and each should be entrusted, underthe supervision of the director-general, with such duties as may bedeemed necessary to secure the greatest efficiency. There should be a division charged with the duty of carefully examiningand compiling the detailed reports which the various companies should bylaw be required to make to the bureau. An inspection service should alsobe established, similar to that now maintained by the Treasury andPost-office Departments. Its officers should be empowered to enter allrailroad offices and examine the companies' books, board trains andemploy other legal means to detect violations of the railroad law andreport them to the chief of the bureau. Railroad companies might be permitted to make interstate rates, but allschedules should be submitted to the bureau for approval or revision. Legal provision should be made against every sort of speculation inrailroad stocks on the part of railroad officers, who should, inaddition, be prohibited from sharing in the profits of favorite rates, as at present. All executive officers and directors of railroadcompanies should, like officers of national banks, be required toqualify by taking an oath of office, and should be held to strictaccountability for their official acts. Officers of railroad companiesshould not be allowed to receive and use proxies at stockholders'meetings. The director-general should have the power, when he has proof that arailroad manager is persistently violating the law, to remove him and toappoint a receiver to take charge of the road until its owners can makeprovision and furnish sufficient guarantee for a more responsiblemanagement. Such a procedure would not be without analogy in the sphereof Federal authority. The Comptroller of the Currency is authorized bylaw to remove the derelict officials of a national bank and place itsbusiness in charge of a receiver. The beneficial effect of thisprovision is evinced in the extreme rareness of such a step. Whenrailroad managers are held responsible for their own official acts, aswell as for those of their subordinates, and when all railroadtransgressions are visited upon their source in such a manner as to beremembered by the stings of disgrace and of a blighted career, unfaithful railroad managers will be extremely rare. The plan here outlined is of course capable of being greatly improved. Experience only is a reliable guide as to the merits of the variousdetails of such a system of control. What is needed above all things isa beginning, the establishment of the principle of complete control ofrailroad transportation by the State and the Nation. When this step isonce taken, the friends of railroad reform may safely trust to time forthe solution of the subordinate questions of this important problem. By thorough State and Federal supervision of the railroad business manyof the present abuses can be prevented. But the temptations of railroadmanagers to violate the law will continue to exist as long as thespeculative element is permitted to remain in railroad securities. Toremove the fountain-head of the evil eventually, the way shouldgradually be paved for a change in railroad organization and ownershipwhich would also greatly increase the responsibility and efficiency ofrailroad management. In the beginning of the railroad era, nearly all, and not unfrequently all the capital needed for the construction of anew line was supposed to be furnished by the company's stockholders. Butas it often happened that the cost of construction considerably exceededthe original estimate, the State authorized railroad companies tomortgage their property for the purpose of raising the money necessaryto complete the road. In time this provision of the law was takenadvantage of by speculative stockholders to such an extent that roadswere often bonded for the full amount necessary to construct them, andeven for more, while the stock was issued simply as a bonus to thepromoters and the bondholders of the road. But as the bonds and sharesscarcely ever remain in the same hands, such a condition was eventuallybrought about that roads were controlled by those who had little ornothing invested in the enterprise, and their real owners were deprivedof all influence in their management, retaining only the right toforeclose their mortgages when things came to the worst. It is evidentthat men who have only a speculative interest in property cannot havethe same concern for its permanent value and prosperity as those whohold it as a permanent investment. Many of the railroad abuses of thepast had their origin in the law permitting the bonding of railroadproperty. Were it desirable to make a property for the sole use andconvenience of speculators and gamblers, a better scheme could hardly bedevised than the present system of our railroad organizations. Wererailroad companies organized like national banks, were each shareholderrequired to pay the full amount of the face value of his shares, andwere mortgaging railroad property entirely prohibited, it is not likelythat the proportion of bankrupted railroads would be any larger thanthat of bankrupted banks. Few, if any, railroads would be built forpurely speculative or blackmailing purposes. Capital is naturally conservative, and speculation is only invited wherethe chances of gain are greatly out of proportion to the capitalinvested. Were the principle of ownership which applies to nationalbanks and other well regulated corporations also applied to therailroads, and were bonds entirely abolished, only such persons wouldby the shareholders be placed in charge of their property as could giveto them the best assurance of honest and conservative management. Such achange would greatly increase public confidence in, and the value of, railroad securities, and would eventually place them above bank stock asdesirable investments. With the great fluctuations which under presentcircumstances obtain in railroad stocks, these securities are regardedas unsafe and unsatisfactory investments by conservative people. Duringa period of less than twelve months in 1891 and 1892 the stock of theAtchison, Topeka and Santa Fe fluctuated from 28-1/2 to 43-1/2, or 53per cent. ; that of the Chesapeake and Ohio from 15-1/4 to 25-7/8, or 70per cent. ; of the Chicago and Northwestern from 101 to 118, or 17 percent. ; of the Chicago, Saint Paul, Minneapolis and Omaha from 20-1/2 to38-1/2, or 88 per cent. ; of the Chicago, Milwaukee and St. Paul from48-3/4 to 78-1/2, or 61 per cent. ; of the Iowa Central from 6-1/2 to 13, or 100 per cent. If we look over the stock quotations of the past ten or twelve years wefind still greater fluctuations. The following table, taken from the_United States Investor_, shows the range of prices of a few of theprincipal stocks during this period: Name. Lowest. Highest. Central Pacific 26-1/2 (1888) 102-7/8 (1881) Chesapeake and Ohio 1 (1888) 33-7/8 (1881) Erie 9-1/4 (1885) 52-7/8 (1881) Illinois Central 79-1/4 (1879) 150-1/2 (1882) Lake Erie and Western 1-3/8 (1885) 65-3/4 (1881) Michigan Central 46-1/2 (1885) 130-1/8 (1880) New Jersey Central 31 (1885) 131 (1889) New York Central 81-3/4 (1885) 155-3/8 (1880) Northern Pacific 14 (1884) 54-3/8 (1882) Rock Island 63-3/8 (1891) 204 (1880) C. , M. & St. P. 34-3/8 (1879) 129-1/4 (1881) Texas and Pacific 5-1/2 (1884) 73-5/8 (1881) Wabash 2 (1885) 60 (1881) Atchison and Topeka 23-3/4 (1890) 152-1/2 (1880) Chicago, Burlington and Quincy 75-7/8 (1891) 182-1/2 (1881) N. Y. & N. E. 9 (1884) 86 (1881) Wisconsin Central 2 (1880) 39 (1881) Union Pacific 28 (1884) 131 (1881) And such fluctuations have always been rather the rule than theexception. It is a gross outrage upon the investing public to let thisstate of affairs continue. It should be corrected without delay. How many high officials in charge of railroad property will under thesecircumstances resist the temptation to speculate in the stock of theircompanies, and, so long as it is permitted, how many will resist thetemptation to adopt such policies in the government of their roads aswill cause such fluctuations? It is a common report that it is not anunfrequent occurrence for Senators and members of Congress to receiveinformation from railway officials that enables them to raise theircampaign funds by speculation in Wall Street. Mr. Henry C. Adams, statistician of the Interstate Commerce Commission, says in his third annual report: "It certainly appears . .. That the motive for ownership in railroad stock is quite different from the ordinary motives which lead men to invest in corporate enterprises, thus presenting an additional proof that railways are a business not subject to ordinary business rules. " There is no safer business in the world than railroad transportation;there is none that has less elements of uncertainty; none whose returnsin the aggregate are less varying. Every other business in the country, whether prospering or struggling, pays tribute to it. It rests on a cashbasis, and suffers probably less from hard times than any business ofits magnitude. Both the merchant and the manufacturer run large risks indoing business largely on a credit basis. The farmer sows in the spring, harvests in the fall, and often cannot realize on his products untilwinter; but the railroad company always receives its pay as soon as itswork is done, and not unfrequently even before it is done. Statisticsshow that railroad revenues are, in the aggregate, remarkably uniform, and there is no reason why railroad securities should be less stablethan bank or insurance stocks. Mr. Jeans says: "It is observable, in respect to the net profits from railway working, that they have not fluctuated from year to year in the same way as nearly all other profits have done. .. . It comes, then, to this, that, next after land and house property, the railway interest is the largest and most important in the country. But it is superior to both of these rival interests in its profit-earning capabilities, yielding, as it does, more than 4 per cent. On the capital expended, against a possible average of 2-1/2 to 3 per cent. In respect to the others. " There may be some arguments in favor of bonding railroads, but thispractice is, upon the whole, productive of infinitely more evil thangood. The State should, therefore, compel railroad companies toliquidate all of their bonded indebtedness without unnecessary delay. Inthe proportion in which this is accomplished railroad shares will gainin stability and value. Railroad men complain that the small savings of the poor invested inrailroad securities do not yield adequate returns and are often lost inconsequence of the foreclosing of the roads in which these investmentshave been made. Others complain that railroads are bankrupted in theinterest of designing bondholders. Still others charge that rich andpowerful roads contrive to obtain a controlling interest in thedepreciated stock of weaker roads and then manage these roads in theirown interest and greatly to the detriment of other stockholders. Allthese evils would disappear if the law required the identity of actualand virtual ownership. "Freezing-out" processes could no longer beresorted to by expert directors to obtain without compensation theproperty of their less sophisticated fellow stockholders. One railroadcould no longer obtain control of another by acquiring an insignificantpart of the sum total of its securities. There would be no longer anyclashing between the interests of bondholders and stockholders, andrailroads would no longer be managed in the interest of a small minorityof their owners. In addition to the cancellation of all railroad mortgages the Stateshould require that all railroad stocks should, in the future, be paidin full. Furthermore, roads should be built only from the proceeds ofthe capital stock, and the expense of repairs should be defrayed fromthe revenues of the road. Dividends should only be paid from surplusearnings and should in no case exceed a fair rate of interest on theactual present value of the road. The statistician to the InterstateCommerce Commission suggests the creation of a special commissioncharged with the duty of converting the actual capitalization ofrailroad lines into a just value of their property. To do justice toboth the railroads and their patrons in the fixing of rates, it isimportant that the just value of railroad property be ascertained, butthe work could probably be done with less friction by a coöperation ofNational and State commissions. A number of reforms are needed withinthe province of railroad management. Passenger rates are, as a rule, toohigh, and out of all proportion to freight rates. Many passengertariffs still recognize the old stage-coach principle of fixing the farein an exact proportion to the distance traveled. Thus a passenger whotakes the train for a five-mile trip pays only fifteen cents for his owntransportation and that of one hundred pounds of baggage, while thepassenger who buys a ticket for a journey of one hundred miles pays, onmost American lines, exactly twenty times the amount paid by thefive-mile passenger. Here the principle of collecting terminal chargesis entirely ignored. Sufficient inducements are not held out to thepassenger to prolong his journey, and as a consequence of thisshort-sighted policy of the railroad companies the average distancetraveled in the United States by each passenger, instead of havinggradually increased, has gradually decreased of late years until it isnow only 24. 18 miles. The average freight haul in the United States is120 miles, or about five times as long as the average journey perpassenger. How can such a difference be accounted for except by thedissimilarity in the principles which govern the computation ofpassenger and freight charges? The same rule should be adopted in fixingpassenger rates that is recognized by railroad men in fixing freightrates: the rate per mile should decrease with the increase of the numberof miles traveled. The principle of arranging passenger tariffs on a sliding scale hasfound recognition in Europe. In Denmark first-class passenger fare is3. 13 cents for each of the first 47 miles, 2. 67 cents for each of thenext 47 miles, and only 2. 22 cents for every additional mile. Thepractical application of this principle is, in fact, only limited by theextent of the kingdom. In nearly all European countries a uniformreduction, ranging from 20 to 30 per cent. , is made from regular ratesfor return trip tickets, and coupon tickets are issued to touristsalmost everywhere at largely reduced rates. Hungary recently adopted a new method of making passenger and freighttariffs for its state lines. This is now generally called the zonesystem. There are two classes of tickets sold, one for short trips onsuburban or branch lines, the other for longer journeys on the mainlines. The distances that can be traveled on short or suburban lines aredivided into two zones of stations, and those on main lines intofourteen zones. The division of the kingdom into zones is made withBuda-Pesth as the center. A ticket purchased for a particular zonecarries the passenger to the end of that zone or any nearer station. The following table will show the extent of each zone and the farespaid: --------------+---------------+--------------------+-------------------- | | LOCAL TRAINS. | FAST TRAINS. ZONE | DISTANCE |------+------+------+------+------+------ | |First |Second|Third |First |Second|Third | |Class. |Class. |Class. |Class. |Class. |Class. --------------+---------------+------+------+------+------+------+------ Short Lines. | | Fl. | Fl. | Fl. | Fl. | Fl. | Fl. |First Station. | 0. 30 | 0. 15 | . 10 | - | - | - |Second Station. | . 40 | . 22 | . 15 | - | - | - Main Lines. | | | | | | | 1 | 1-25 km. | . 50 | . 40 | . 25 | 0. 60 | 0. 50 | 0. 30 2 | 26-40 " | 1. 00 | . 80 | . 50 | 1. 20 | 1. 00 | . 60 3 | 41-55 " | 1. 50 | 1. 20 | . 75 | 1. 80 | 1. 50 | . 90 4 | 56-70 " | 2. 00 | 1. 60 | 1. 00 | 2. 40 | 2. 00 | 1. 20 5 | 71-85 " | 2. 50 | 2. 00 | 1. 25 | 3. 00 | 2. 50 | 1. 50 6 | 86-100 " | 3. 00 | 2. 40 | 1. 50 | 3. 60 | 3. 00 | 1. 80 7 | 101-115 " | 3. 50 | 2. 80 | 1. 75 | 4. 20 | 3. 50 | 2. 10 8 | 116-130 " | 4. 00 | 3. 20 | 2. 00 | 4. 80 | 4. 00 | 2. 40 9 | 131-145 " | 4. 50 | 3. 60 | 2. 25 | 5. 40 | 4. 50 | 2. 70 10 | 146-160 " | 5. 00 | 4. 00 | 2. 50 | 6. 00 | 5. 00 | 3. 00 11 | 161-175 " | 5. 50 | 4. 40 | 2. 75 | 6. 60 | 5. 50 | 3. 30 12 | 176-200 " | 6. 00 | 4. 80 | 3. 00 | 7. 20 | 6. 00 | 3. 60 13 | 201-225 " | 7. 00 | 5. 30 | 3. 50 | 8. 40 | 6. 50 | 4. 20 14 | 225 km. | | | | | | | and over | 8. 00 | 5. 80 | 4. 00 | 9. 60 | 7. 00 | 4. 80 (The florin is a little more than one-third of a dollar. ) A ride from a city to the first suburban station costs from 3 to 10cents, according to class of car, and to the second station 5 to 13. 6cents. On through trains a person may travel 15 miles at a cost of from8-1/2 to 20 cents, according to kind of train and class of car, ahundred miles for from 85 cents to $2. 00; 140 miles for from $1. 15 to$2. 80 and any distance above 140 miles for from $1. 35 to $3. 25. A personmay thus travel from Buda-Pesth to Predeal, a distance of 472 miles, with a third-class ticket for zone 14, purchased at a cost of $1. 35, or28-100 of a cent per mile. Our railroad men with much complacency point to the fact that theserates do not cover the forwarding of passengers' baggage and that thisservice must be paid for separately. These charges, however, are verymoderate, being on 120 pounds of baggage 8-1/3 cents a distance of 34miles or less, about 17 cents for a distance of more than 34 and lessthan 62 miles, and about 34 cents for any distance over 62 miles. Theadditional charge for carrying 120 pounds of baggage from Buda-Pesth toPredeal is therefore about one-fourteenth of one cent per mile. It mustbe admitted that this system of charging separately for passenger andbaggage is eminently just, for there is no good reason why the passengerwithout baggage should be taxed to pay for the carriage of that of hisfellow-traveler. The zone tariff was introduced on the state railways of Hungary by M. Barosz, the Hungarian Minister of Commerce, on the 1st of August, 1889. The adoption of the new tariff was ridiculed and condemned as visionaryby road experts, who even went so far as to prove to the satisfaction ofpractical railroad men that the innovation was destined to be a failure. For a month or two it almost seemed as if their prediction might befulfilled, the number of passengers carried remaining behind the numbercarried during the corresponding period of previous years. But soon thereaction set in. The month of November, 1889, already witnessed anincrease in the number of passengers as well as in receipts over thesame month of the year previous. The result of the first year's trialdemonstrated the wisdom of the "innovation. " The number of passengerscarried, which had been only 5, 186, 227 in 1888-89, rose to 13, 060, 751 in1889-90, and the total receipts for passengers and baggage rose from9, 138, 715 florins to 11, 186, 321 florins, a gain of 2, 047, 606 florins, or22 per cent. , during the first year. There is a continued increase bothin the number of passengers and in receipts, and the success of thesystem must be pronounced phenomenal. The railroad experts of Europe, who had predicted the signal failure of the zone system, now that theunexpected has happened, are trying to discover the particular favorableconditions which made the success of the system possible in Hungary. Itwill probably be a decade, or even two, before the railroad experts ofboth hemispheres will be entirely reconciled to this new application ofthe old principle that a reduction in the price of a commodity increasesthe demand for it. It is strange, indeed, that intelligent men should be so slow inrecognizing an economic principle for which both history and dailyexperience furnish an unlimited number of illustrations. The post-officereceipts everywhere have increased with a reduction in postage. TheGovernment telegraph in England did not become self-supporting untilParliament made a sweeping reduction in its rates. The revenue from theBrooklyn bridge never paid a fair interest on the capital expended inits construction until its tolls were cut down. Were it necessary, hundreds of other examples could be added to these. Hungary has also applied the zone system to its freight traffic. Threezones are fixed for the carrying of goods, viz. : Zone I, for distancesless than 200 kilometers (124 miles); Zone II, for distances over 200and less than 400 kilometers, and Zone III, for distances over 400kilometers. A uniform tariff is established for each zone, which isone-third less than the average freight rates for equal distancesformerly in force. American railroads should profit by the wisdom andexperience of the Hungarian Government, and adopt at an early day suchfeatures of its system as upon our soil and under our institutions maybe made practicable. The Hungarian system, with some modifications, isnow being tried by Austria and a few of the German states, and isincreasing railroad revenues wherever adopted. There is a growing demand for lower fares. This demand increases in thesame proportion in which the desire and the necessity for travelincrease. European states have not been slow to meet it. Reductions aremade everywhere, and chiefly favor the lower classes. Thus, when France, within the last year, changed her passenger tariff, she reducedfirst-class fare 9 per cent. , second-class fare 18 per cent. , andthird-class 27 per cent. The European passenger reports show the numbers of first andsecond-class passengers are continually falling off, while those of thethird-class passengers are fast increasing. In England and Wales thenumber of first-class passengers fell between 1875 and 1889 from37, 000, 000 to 24, 000, 000 while the number of third-class passengersincreased during that same period from 350, 000, 000 to 601, 000, 000, andthis increase still continues. In the United Kingdom the number ofthird-class passengers for 1891 was over 750, 000, 000. Furthermore, passenger revenue comes chiefly from the third class. In the UnitedKingdom the receipts from first-class passengers were in 1889£3, 188, 000; from second-class passengers, £2, 705, 000; and fromthird-class passengers, £19, 785, 000. It is thus seen that receipts fromthird-class passengers are nearly 3-1/2 times as large as those from thefirst and second-class passengers combined. A similar proportion isfound in nearly every country on the continent. European roadsdiscovered some years ago that first and second-class passengers werecarried at a loss, and all the passenger earnings were derived fromthird-class passengers. The profits from this source show a considerableincrease every year. The average fare per mile is 2. 15 cents in the United States, and only1. 17 cents in Germany, 1. 67 cents in Austria, 1. 18 cents in Belgium, 1. 29 cents in Denmark, 1. 45 cents in France, 1. 64 cents in Italy, and1. 45 cents in Russia. It is often claimed by railroad men that we travelmore luxuriously than the people of any other country in the world, butit should not be forgotten that traveling in the United States is alsomore expensive than anywhere else. It is contended that classdistinctions are odious in America, and that second and third-class carswould not be patronized. The same argument might be applied to theaters, hotels, clothiers, grocers, etc. It is difficult to see why distinctionhere should be less odious than on the railroad train. The truth is, Americans are just like other people and will avail themselves ofaccommodations in keeping with their means if they have the opportunity. Many passengers who will not travel in an uncouth smoking-car would, ifclean second-class cars were provided, gladly dispense with the luxuryof an upholstered seat if by doing so they could save from $5 to $10 aday. A common laborer in this country earns from a dollar to a dollar and ahalf a day, and in the performance of his labor as a rule suffersgreater inconvenience than does the traveler who travels the country ina second-class car. Is it under these circumstances at all likely thatthe American would hesitate to travel for a day in a plain but cleancar, if by doing so he could save a week's earnings? We may even gofurther and say that it is a very reasonable assumption that the man whoearns his bread by the sweat of his brow would choose the cheaper car ifthe difference in one day's fare were equal to one day's wages. It is acommon saying in Europe that the first-class passengers consist of lordsand fools, and few of the hundreds of thousands of American touriststraveling abroad give the natives occasion to class them with either. The first-class car has almost fallen into disuse in Europe, and eventhe patronage of the second-class is less than ten per cent, of that ofthe third. Reduced rates for return tickets should be provided under rules andregulations of commissioners. The Massachusetts legislature recently passed a law requiring therailways of that State to sell interchangeable thousand-mile tickets for$20. The State commission is given power to except any company from itsrequirements if the public welfare or the financial condition require ordemand it. This is a step in the right direction and should be followedby other States. Michigan also requires certain roads to carryfirst-class passengers at two cents per mile. Railroad companies should be compelled to discard the pass as acourtesy as well as a consideration. The giving of passes under theguise of mileage books, or tickets for pretended or unnecessaryservices, is very pernicious and should be prohibited. Such a reformwould soon enable them to offer low fares to all. An employe may befurnished free transportation while actually engaged in the business ofhis company, and it should be made the duty of the State and Nationalcommissions to make proper regulations governing such freetransportation of employes. Half-fare tickets for adults should also beabolished. The pauper ticket is given to the minister of the gospel tosecure for the railroads the influence of the pulpit, though offeredunder the pretense of charity or support of the church. The State shouldnot permit the railroad companies to practice this or any other kind ofcharity at the expense of the general public. The railroad is a highway, and the company operating it is entitled to rates sufficient to payoperating expenses and a fair interest on the value of the property. Itcan therefore easily be seen that the so-called gifts show no liberalityon the part of the railroad company, but are made at the expense ofother people. Donations made by railroad companies should be made fromthe pockets of their stockholders and not from the pockets of theirpatrons. All perquisites of railroad officers should be abolished. When a railwayofficial has become so pompous and consequential that he requires aspecial car, it is about time to look about for his successor. If we areto have a special-car aristocracy in this country let it be supported atthe expense of some other interest. Another railroad reform is needed on this side of the Atlantic. Whilethe great majority of railroad officials are courteous and considerate, and perform their duties in the most agreeable and acceptable manner, there are a few who do not properly appreciate the relation which theysustain to the patrons of their companies. They are inclined to forgetthat they are quasi-public servants, and that the public has a right todemand courteous treatment at their hands. All railroad employes shouldrealize that their first duty is to administer to the welfare and theconvenience of the public, and each one should have the full protectionof the law in his efforts to do so. The American public objects muchless to an inferior car than to rude treatment by the companies' agents. Railroad superintendents may justly be blamed for the incivilities oftheir subordinates. It is their duty to know the character of those whomthey employ, and not to retain in their employ those who are derelict intheir duty to the public. Nothing offends the feelings of a trueAmerican more than the display of a bureaucratic spirit on the part ofpublic servants. Nothing more commends a line of railroad to the publicthan uniform painstaking kindness and courteous treatment on the part ofits employes. It is made the duty of railroad employes of France "to sotreat the public as if they were eager to oblige it, " and the very firstparagraph of the official instructions to the railroad employes ofGermany enjoins them "to assume a modest and polite demeanor in theirintercourse with the public. " In this connection it might be stated thatthe second paragraph of those instructions positively forbids theacceptance of any gratuity by a railroad employe. If our Americansleeping and dining-car companies would give their employes adequatecompensation and then adopt and enforce the German rule concerning"tipping, " their service would gain popularity and their employesself-respect. Entrance into the railway service should be by agreement for a definitetime, and dismissals and resignations should be governed by rules agreedupon by boards of commissioners and the companies. The use of the corporation has done so much to secure for capital solarge a share of the profits of industrial enterprises, and largesalaries also for the officers who manage them, that laborers have beenled to organize themselves into associations for like purposes, andambitious men have not been slow in availing themselves of theadvantages afforded them in this new field. It is right and proper for laborers to organize such associations whenthey can do so under wise and economical management, for the purpose ofsecuring greater intelligence, better education, higher culture, higherwages, a shorter work-day, and a general ameliorating of theircondition, all of which will tend to make them more efficient workmenand also better enable them to resist the aggression of centralizedwealth; for, in the absence of organization, the single-handed employeof the great modern employer is comparatively helpless. But if theseorganizations are allowed to be controlled by ignorant, unreasonable ordesigning men, who will, at trifling provocations, resort to violent andunlawful measures, they are sure to prove harmful, and a greatdetriment, instead of a help, to their members, and the sooner they areabandoned the better for all. Great conflicts are sure to arise between organized capital andorganized labor, and they must be settled in a reasonable way, oranarchy will prevail. They cannot be left for headstrong orinconsiderate men representing either side to determine, but the linemust be drawn by the public authorities. Each year affords accumulated evidence of the necessity of extendinglegal restrictions over the management of the railway business, and thelaw, as laid down by Judge Ricks to the Ann Arbor strikers last March, in the United States Circuit Court, at Toledo, is undoubtedly correctand will meet with general approval from the public. He says: "You are engaged in a service of a public character, and the public are interested not only in the way in which you perform your duties while you continue in that service, but are quite as much interested in the time and circumstances under which you quit that employment. You cannot always choose your own time and place for terminating these relations. If you are permitted to do so you might quit your work at a time and place and under circumstances which would involve irreparable damage to your employers and jeopardize the lives of the traveling public. " Mr. Powderly, in commenting upon the above decision, does not complainof it, but says: "The decision shows, as I have said before, that the principle of Government ownership of the railroads is being recognized by the courts. While the decision is apparently against the men, it emphasizes our position that the Government has the right to supervise the railroads. Now it is a poor rule that won't work both ways. "The Interstate Commerce Law was passed for the purpose of controlling the railroads, but up to date no railroad has paid any attention to the law. Anarchy of the worst kind has prevailed. By that I mean a total disregard of the law, and that is what the corporations charge against the anarchists. The courts hold themselves in readiness to obey the will of the corporations when a charge is made against the workmen, but no effort is made to carry out the mandates of the law when the provokers of strikes, the corporations, violate the law. " There is but little doubt, if the judges of the Federal courts wouldshow the same zeal in holding railroad managers amenable to the law asJudge Ricks has displayed in this case with the employes, they wouldsecure increased confidence from the people in the tribunals over whichthey preside. All fair-minded persons will agree that labor as well as capital must besubjected to proper restraints, and that the public will demand nothingunreasonable from either. Accidents are too frequent upon American railroads. The reports of theInterstate Commerce Commission give the following as the numbers killedand injured during the years named: ---------+---------------+---------------+---------------+--------------- | 1888 | 1889 | 1890 | 1891 |Killed. Injured|Killed. Injured|Killed. Injured|Killed. Injured ---------+-------+-------+-------+-------+-------+-------+-------+------- Employees| 2, 070 | 20, 148| 1, 972 | 20, 028| 2, 451 | 22, 396| 2, 660 | 26, 140 Passeng's| 315 | 2, 138| 310 | 2, 146| 286 | 2, 425| 293 | 2, 972 Others | 2, 897 | 3, 602| 3, 541 | 4, 135| 3, 598 | 4, 206| . .. . | . .. . ---------+-------+-------+-------+-------+-------+-------+-------+------- Total | 5, 282 | 25, 888| 5, 823 | 26, 309| 6, 335 | 29, 027| . .. . | . .. . ---------+---------------+-------+-------+-------+-------+-------+------- For the year ending June 30, 1890, the total number of employes was749, 801. There was, therefore, one death for every 306 men employed andone injury for every 33 men employed. For the previous year one waskilled for every 357 men employed, and one was injured for every 35 menemployed. While trainmen represent but 20 per cent, of the total numberof employes, the casualties among them represent 58 per cent. Of thetotal number of casualties. For the year 1888, one passenger was killed in every 1, 523, 133passengers carried, and one injured in every 220, 024 carried. The corresponding rate in England for the year 1888 is one passengerkilled for every 6, 942, 336 carried, and one injured for every 527, 577carried. Railroads doing a large business should be compelled to adopt the mostimproved appliances for avoidance of accidents. The occupation of trainmen is especially hazardous, and too longcontinued service should not be required, but proper intervals of restshould be allowed. It is to the want of this, undoubtedly, that a greatmany of the serious accidents are owing. No more Sunday trains should be run than are absolutely necessary. Provision should be made by law to enable trainmen to procure insuranceat the lowest rate possible, for indemnity against loss of health, lifeor limb. It was only a few days before the great disaster occurred on the HudsonRiver Railroad at Hastings, over a year ago, that an announcement hadbeen made to the public of the extreme prosperity of the road during theyear. The great slaughter that occurred there is another illustration ofthe disregard of public duty, and another instance of the sacrifice oflife and limbs of passengers and employes by a railway corporation inorder to secure large dividends on watered stock. It is not only gross, but criminal neglect for a company with such an immense income not toprovide greater safety appliances, and the coroner's jury in this casewas too modest when it decided that the management of the road wasmorally responsible for the disaster. Parliament has compelled the British railways to adopt, in the interestof the public safety, the block system and continuous brake, and greatlines like the New York Central and Hudson River companies should becompelled to adopt such improvements. The traveling public has another grievous cause for complaint. There arebut few companies that make any efforts to have their trains connectwith those of rival roads. On the contrary, a good deal of scheming isoften done by railroad companies to so arrange their time-tables withreference to those of their rivals as to inconvenience passengers asmuch as possible by delays at competing points. To remedy this evil theState should require that every time-table should have the approval ofproper authorities, and no change should be permitted without theirapproval. Railroad companies are chartered for the purpose of promoting the publicwelfare, and every violation of their charter should be punished. It should be the main object of railroad legislation to compel companiesto fulfill their public obligations without depriving them of theirefficiency. Above all things these companies should be stripped of thepower to use their great wealth for the purposes of corruption or theattainment of political influence. Our railroads to-day probablyrepresent no less than one-fourth of the personal property of thecountry, and this vast wealth is controlled by a comparatively smallnumber of men, many of whom have in the course of time become soarrogant and despotic that they have little regard for popular rights orthe expressed will of a free people. It is reported that when, a few years ago, a representative of the pressdirected Mr. Vanderbilt's attention to the fact that the publicdisapproved of his railroad policy, the latter gave vent to his contemptfor public opinion by the no less profane than laconic reply: "Thepublic be damned. " Ex-Railroad Commissioner Coffin called on one of theGoulds to urge the adoption of the automatic car-coupler and othersafety appliances for the roads controlled by them. He was very curtlytold that not a cent would be expended by the Gould roads for such apurpose until the West had repealed its obnoxious railroad laws. TheGould dynasty thus intends to accomplish the repeal of these laws bycoercion. Railroad magnates and their lieutenants often show stillgreater arrogance in dealing directly with their employes. It may be difficult for railroad managers of the present school to adaptthemselves to new conditions; it may be impossible for them tounderstand how any other practices than those which have long beenestablished can succeed; yet in spite of them both the law and publicsentiment have already undergone great changes, and still greaterchanges will follow. It may take years to accomplish this work; to bringabout any great reform requires time and a deter, mined purpose on thepart of its advocates. Yet I believe the era is not far off whenrailroads will be limited to their legitimate sphere as common carriers, when they will treat all persons and all places as impartially as doesthe Government in the mail service, when their chief factor inrate-making will be the cost of service, when they will respect therights of the public and those of their stockholders, insuring perfectservice to the former and fair profits upon the actual value of thelines operated to the latter. The fact should, finally, not be overlooked that it is in the power ofthe General Government to prevent many railroad abuses, and especiallyexcessive freight charges, by the improvement of our rivers and harbors. That our water-courses act as levelers of interstate rates is apparentfrom the fact that railroad rates invariably rise with the freezing ofthe water-ways and fall with the opening of river and lake navigation. By connecting, wherever feasible, our large Western rivers with thegreat lakes, the Government could greatly extend the reign ofcompetition in transportation, and thereby keep freight rates withinreasonable bounds. Lake transportation even now plays an important role. In 1892 it was not less than 20, 000, 000, 000 ton miles during the seasonof eight months' duration, and it is almost equal to one-fourth of thetotal ton mileage of all the railroads in the country for the entireyear. The average rate of lake transportation has been reduced to 1. 3mills per ton per mile, which is only about one-seventh of the averagerailroad freight rate in the United States. Where the masses hold the sovereign power, there, if anywhere, thewelfare of the people should be the supreme law. Violent politicalcommotions never disturb the government whose policy is to secure thegreatest good to the greatest number. Thorold Rogers justly remarks thatthe strength of communism lies in the misconduct of administrations, thesustentation of odious and unjust privileges and the support of what arecalled vested interests. Lord Coleridge, in a remarkable articlepublished not long ago, recommended a revision of the laws relating toproperty and contract, in order to facilitate the inevitable transitionfrom feudalism to democracy, and laid down the rule that the laws ofproperty should be made for the benefit of all, and not for the benefitof a class. During the middle ages, and even up to the beginning of the presentcentury, nearly all the laws on the statute books looked towards theprotection of the rights of the feudal lord. Provision was made for theexpeditious collection of his dues and a severe punishment of hisdelinquent debtor. The peasant was forced to labor fifteen hours per dayand three hundred and sixty-five days in the year to pay the baron'srentals and sustain life. The law permitted him to be flogged forfailing to courtesy the feudal lord, and to be executed for injury tothe lord's person, while to kill a peasant was no worse a misdemeanorthan to kill his lordship's favorite dog or falcon. In short, all lawswere made to protect and perpetuate the wealth and power of the few byimpoverishing, humbling and enslaving the masses. The age of feudalism has given way to an age of democratic liberty, butthere is many a feudal feature left in our statutes and many a feudaldoctrine is enunciated by our judges and learned expounders of modernjurisprudence. In his decision in the Iowa tariff case Judge Brewersaid: "I read also in the first section of the Bill of Rights of this State [Iowa] that 'all men are by nature free and equal and have certain inalienable rights, among which are those of enjoying and defending life and liberty, acquiring, possessing and protecting property and pursuing and obtaining safety and happiness, ' and I know that while that remains as the supreme law of the State, no legislature can, directly or indirectly, lay its withering or destroying hand on a single dollar invested in the legitimate business of transportation. " Had Judge Brewer taken the pains to read on, he would have found insection 2 of the Bill of Rights the following: "All political power is inherent in the people; government is instituted for the protection, security and benefit of the people. " It is strange that the learned Judge failed to see the differencebetween "men, " the creatures of God, "by nature free and equal, " and"possessing certain inalienable rights, " and corporations, the creaturesof man, having no rights except those which the State sees fit to givethem. Had the learned Judge perused the whole of the document to whichhe refers, he would have found in article VIII, section 12, thefollowing provision: "The General Assembly shall have power to amend or repeal all laws for the organization or creation of corporations, or granting of special or exclusive privileges or immunities, by a vote of two-thirds of each branch of the General Assembly. " It should thus have been plain to the learned Judge that in Iowacorporations have not human or inalienable rights, and government wasnot instituted for their special protection, but for the protection, security and benefit of her people. Nor should it be otherwise. The corporation for pecuniary gain has neither body nor soul. Itscorporeal existence is mythical and ethereal. It suffers neither fromcold nor from hunger, has neither fear of future punishment nor hope offuture reward. It takes no interest in schools or in churches. It knowsneither charity nor love, neither pity nor sympathy, neither justice norpatriotism. It is deaf and blind to human woe and human happiness. Itsonly aim is pecuniary gain, to which it subordinates all else. Should the State sacrifice the welfare of all her people rather than layits "withering or destroying" hand on a single dollar of corporatewealth? Are there no human rights, for the protection of whichgovernment was established, more sacred than the rights of a wealthycorporation's dollar? Have the people made the judiciary a coördinatebranch of the Government in order that it may protect the vested orrather usurped rights of corporations against legislative attempts tocurtail them? If the courts so interpret the power which has beendelegated to them, they will awake one day to the painful reality thatpopular convictions of right are more potent than judicial decrees. It is the duty of the State not so much to defend the so-called vestedrights of corporations as to make such just and beneficial laws as willtemper inequality, mitigate poverty, protect the weak against thestrong, preserve life and health, and, in short, promote the welfare andthe happiness of the masses. Constitutions have been made to accomplishthese ends, to protect the lives, the liberty and the conscience ofhuman beings, while laws have been sufficient to protect the dollars ofcorporations. It is a short-sighted policy on the part of the latter totake unfair advantage of their wealth and influence, for "As ye sow, soshall ye reap, " is the inexorable law of Providence. There is no dynastyso mighty, no class so privileged, no interest so influential or wealthyas to obtain immunity from its operation. APPENDIX. TABLE No. 1. COMPILED FROM THE SIXTH ANNUAL REPORT OF THE INTERSTATE COMMERCECOMMISSION. Mileage in the United States June 30, 1891 168, 402. 74 Number of men employed 784, 285 Number of employes per 100 miles 486 Number of locomotives per 100 miles 19 Number of passenger cars per 100 miles 17 Number of cars per 100 miles 721 Capital $9, 829, 475, 015 Capital per mile 60, 942 Gross earnings 1, 096, 761, 395 Gross earnings per mile 6, 801 Operating expenses 731, 887, 893 Operating expenses per mile 4, 538 Net income from operation 364, 873, 502 Net income per mile 2, 263 Of gross income 67. 17 per cent. Was earned on freight. Of gross income 25. 64 per cent. Was earned on passengers. Received for carrying mails $ 24, 870, 015 Received rentals from express companies 21, 594, 349 Received from investments 133, 911, 126 No. Of passengers carried 531, 183, 988 No. Of tons freight carried 675, 608, 323 Average journey per passenger 24. 18 miles Average haul per ton of freight 120 miles Average number passengers per train 42 Average number tons freight per train 181. 67 Average revenue per passenger per mile 2. 142 cents Average revenue per ton per mile of freight . 895 cents Average revenue per train mile, passenger $1. 06 Average revenue per train mile, freight 1. 64 TABLE No. 2. STATISTICS OF THE RAILWAYS OF THE UNITED KINGDOM FOR THE YEAR ENDINGDEC. 31, 1891. From the English Reform Almanac for 1893 and from the Report ofCommissioners R. Giffen and Courtenay Boyle to the Board of Trade. Mileage 20, 191 miles Double, triple or quadruple 10, 853 miles Capital per mile £45, 536 Gross income per mile 3, 873 Net income per mile 1, 818 Income from passenger traffic 35, 130, 916 Income from goods traffic 43, 230, 717 Income from miscellaneous 3, 498, 974 ------------ Income, total £81, 860, 607 Operating expenses, 55 per cent £45, 144, 778 Rates and taxes 2, 246, 430 Government duty 321, 260 Paid for persons injured 165, 219 Paid for damage and loss of goods 257, 804 Number of first-class passengers 30, 423, 776 Number of second-class passengers 63, 378, 397 Number of third-class passengers 751, 661, 495 Number of third-class passengers over 88 per cent. Of all. Number of employes 346, 426 Number of employes per 100 miles 1, 750 Number of locomotives per 100 miles 80 Number of passenger cars per 100 miles 249 Number of freight and other cars 2, 595 Revenue per train mile 58. 37d Expense per train mile 30. 54d Per cent. Of earnings on capital 4. 21 TABLE No. 3. SHOWING SALARIES AND WAGES PAID TO OFFICIALS AND EMPLOYES OF STATERAILWAYS IN EUROPE. Compiled from Röll's Encyclopädie des Eisenbahnwesens. ======================================================================= POSITION. | AUSTRIA. | HUNGARY. | PRUSSIA. | BELGIUM. -----------------+-------------+-------------+-------------+----------- | Fl. , equal | Fl. , equal | Mark, equal | Fr. , equal | to about | to about | to about | to about |33-1/3 cents. |33-1/3 cents. | 24 cents. | 20 cents. | | | | President | 7, 000 | --- |10, 500 | 9, 000 Directors and | | | | Superintendents | 4, 000-5, 500 | 4, 000-4, 800 | 4, 200-6, 000 | 7, 000-8, 000 Chief Engineer | 1, 600-2, 000 | 1, 900-2, 500 | 3, 600-4, 800 | 2, 700-5, 500 Clerks | 500-1, 200 | 640-1, 000 | 1, 000-2, 700 | 900-3, 100 Station Agents in| | | | Cities, Division| | | | Superintendents | 2, 200-2, 600 | 2, 600-3, 400 | --- | --- Station Agents | | | | in Towns | 500-850 | 520-880 | 1, 500-3, 200 | 1, 600-4, 000 Locomotive | | | | Engineers | 500-850 | 520-780 | 1, 200-2, 000 | --- Firemen | 300-350 | 380-480 | 1, 000-1, 500 | --- Conductors | 450-550 | 520-850 | 1, 100-1, 500 | 2, 000-2, 400 Brakemen | 300-350 | 380-480 | 800-1, 200 | 1, 200-2, 000 Section Men | 288-336 | 270-370 | 700-900 | --- ------------------------------------------------------------------------ TABLE No. 4. Compiled from Röll's Encyclopädie des Eisenbahnwesens. _FREIGHT TARIFFS. _--BELGIUM. All freight is divided into three general classes: 1. _Express Freight_, which is delivered by special messengers. Parcelsweighing 5 kg. (11 lbs. ) and less, if prepaid, are carried for . 80 fr. (16c. ) for all distances. Parcels not prepaid and such as weigh from 6to 10 kg. Pay . 90 fr. For a distance of from 1 to 25 km. ; 1 fr. For 26to 75 km. ; 1. 10 fr. For greater distances. 2. _Fast Freight_, which may be made use of for consignments weighing upto 200 kg. (440 lbs. ) Parcels weighing up to 5 kg. Pay . 50 fr. For alldistances. Parcels not prepaid and such as weigh from 5 to 10 kg. Pay. 50 fr. For from 1 to 25 km. ;. 60 fr. For distances ranging from 26 to 75km. , and . 70 fr. Over 75 km. 3. _Common Freight_, which is again sub-divided into four classes: InClass I 400 kg. , in Classes II and III 5, 000 kg. , and in Class IV 10, 000kg. Is recognized as the minimum weight. * * * * * TARIFF FOR THE FOUR DIFFERENT CLASSES OF COMMON FREIGHT. _Terminal Charges--Franc 1. 00. _ I Class--For 1, 000 kg. (2, 250 lbs. ) From 1 to 5 km Fr. 1. 00 From 6 to 75 km, per km . 10 From 76 to 150 km . 08 (per km. Above 75) From 151 to 200 km . 06 (per km. Above 150) Above 300 km . 06 (per km. Above 200) II Class--For 1, 000 kg. From 1 to 5 km. Fr. 0. 40 From 6 to 75 km. , per km. . 08 From 76 to 125 km. . 04 (per km. Above 75) Above 125 km. . 02 (per km. Above 125) III Class--For 1, 000 kg. From 1 to 5 km. Fr. 0. 30 From 6 to 75 km. , per km. . 06 From 76 to 100 km. . 03 From 101 to 125 km. . 02 Above 125 km. . 01 IV Class--For 1, 000 kg. From 1 to 24 km. , per km. Fr. 0. 06 From 25 to 75 km. , per km. . 04 From 76 to 100 km. . 02 From 101 to 350 km. . 01 Above 350 km. . 02 For distances from 1 to 24 km. The terminal charges are only . 5 fr. For Class IV. TABLE No. 5. GERMANY. The tariff recognizes the following distinctions: 1. Fast parcel freight. 2. Fast carload freight. 3. Parcel freight. 4. General carload Class A1, for shipments of at least 5, 000 kg. 5. General carload Class B, for shipments of at least 10, 000 kg. 6. Special tariffs. _Distance charges per ton per kilometer: (Pfennig, 1/4 c. )_ 1. For parcel 11. 0 pfennige 2. For carload Class A1 6. 7 " 3. For carload Class B 6. 0 " 4. For Special Tariff A2 5. 0 " 5. For Special Tariff I 4. 5 " 6. For Special Tariff II 3. 5 " 7. For Special Tariff III: For distances up to 100 km 2. 6 " For distances above 100 km 2. 2 " 8. For fast parcel freight 22. 0 " 9. For fast carload freight, twice the rate of Classes A1 and B. _Terminal Changes. _ 1. For parcels and carload Class A1: Up to 10 km 10 pfennige From 11 to 20 km 11 " From 21 to 30 km 12 " From 31 to 40 km 13 " From 41 to 50 km 14 " From 51 to 60 km 15 " From 61 to 70 km 16 " From 71 to 80 km 17 " From 81 to 90 km 18 " From 91 to 100 km 19 " Above 100 km 20 " 2. For carload Class B: Up to 10 km 8 pfennige From 11 to 20 km 9 " From 21 to 30 km 10 " From 31 to 40 km 11 " Above 40 km 12 " 3. For Special Tariffs A2, I, II and III: Up to 10 km 8 pfennige From 11 to 100 km 9 " Above 100 km 12 " _Charges for Live Stock. _ (a) Horses. Terminal charge per head, 1 m. (24c. ) Distance charge per kl. For one head 0. 30 mark Charge per kl. For 2 head . 40 " Charge for each additional head . 10 " (b) Cattle. Terminal charge, per head 0. 60 mark Distance charge per kl. , for one head . 10 " Distance charge for each additional head . 03 " (c) Sheep, Hogs, Calves, etc. : Terminal charge, per head 0. 20 mark Distance charge, per kl. , for each of the first 10 heads . 02 " Distance charge, per kl. , for each additional head . 01 " If shipped in carloads the charges for live stock are . 03 m. Per square meter per kilometer. TABLE No. 6. FRANCE. The French railroads divide all freight into six different classes. Thefollowing is the tariff adopted by a majority of the principal roads: _Common Freight. _ ================================================== | Centimes per Ton--Kilometer. --------------------+----+----+----+----+----+---- Classes | 1 | 2 | 3 | 4 | 5 | 6 --------------------+----+----+----+----+----+---- Up to 25 km | 16 | 14 | 12 | 10 | 8 | 8 From 26 to 100 km | 16 | 14 | 12 | 10 | 8 | 4 From 101 to 150 km | 15 | 13 | 11 | 9 | 8 | 3. 5 From 151 to 200 km | 15 | 13 | 11 | 9 | 7 | 3. 5 From 201 to 300 km | 15 | 13 | 11 | 9 | 4 | 3. 5 From 301 to 500 km | 14 | 12 | 10 | 8 | 4 | 3 From 501 to 600 km | 13 | 11 | 9 | 7 | 4 | 3 From 601 to 700 km | 12 | 10 | 8 | 6 | 4 | 2. 5 From 701 to 800 km | 11 | 9 | 7 | 5 | 4 | 2. 5 From 801 to 900 km | 10 | 8 | 6 | 4 | 4 | 2. 5 From 901 to 1000 km | 9 | 7 | 5 | 4 | 4 | 2 Above 1, 000 km | 8 | 6 | 5 | 4 | 4 | 2 -------------------------------------------------- The rates for fast parcel freight are, on all roads, for less than 40 kg. , per ton, km. : Up to 200 km 35 centimes From 201 to 300 km 32 " From 301 to 400 km 31 " From 401 to 800 km 30 " From 801 to 1, 000 km 28 " Above 1, 000 km 25 " For more than 40 kg. : Up to 100 km 32 centimes From 101 to 300 km 30 " From 301 to 500 km 28 " From 501 to 600 km 26 " From 601 to 700 km 24 " From 701 to 800 km 22 " From 801 to 900 km 20 " From 901 to 1, 000 km 18 " Above 1, 000 km 16 " Express parcels weighing up to 3 kg. (6-3/5 lbs. ), pay 1 fr. For all distances, and parcels weighing from 3 to 5 kg. Pay fr. 1. 20. Delivery to the house, 25 centimes (5c. ) additional. Live Stock, per piece, per km. : Horses and cattle 16 centimes Calves and hogs 6 " Sheep, etc. 3 " TABLE No. 7. ITALY. --_Freight Tariff. _ ======================================================================== | GENERAL CLASSES. RATES. |------+------+-----+------+-------+------+-----+------ | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 -----------------+------+------+------+------+------+------+-----+------ For the ton--km |0. 1632|0. 1428|0. 1224|0. 1020|0. 0816|0. 0714|0. 612|0. 0510 Terminal charges, | | | | | | | | per ton. |2. 04 |2. 04 |2. 04 |2. 04 |2. 04 |1. 224 |1. 224|1. 224 ------------------------------------------------------------------------ The rate on merchandise sent as fast freight is . 452 lire (9c. ) per ton kilometer. _Live Stock--(5 Classes. )_ ======================================================================= | | Cattle, | | | Cattle, FIRST-CLASS. |Horses. |Swine and| SECOND-CLASS. |Horses. |Swine and | | Sheep. | | | Sheep. ----------------+--------+---------+----------------+--------+--------- 1 head, per km | 0. 1530 | 0. 136 |1 head, per km | 0. 1530 | 0. 1326 2 heads, per km | . 0918 | . 0765 |2 heads, per km | . 0816 | . 0714 3 heads, per km | . 0816 | . 0714 |3 heads, per km | . 0663 | . 0612 4 heads, per km | . 0765 | . 0663 |4 heads, per km | . 0612 | . 0561 5 heads, per km | . 0714 | . 0612 |5 heads, per km | . 0561 | . 0510 6 heads or more, | | |6 heads or more, | per km | . 0663 | . 0561 | per km | . 0510 | . 0459 | | |III Class | | . 02244 | | |IV Class | | . 01224 | | |V Class | | . 00612 ------------------------------------------------------------------------ TABLE No. 8. _Austrian Tariff (in kreutzers). --July 1, 1891. _ ============================================================================= | | Parcel | | Special | | Fast Freight. | Rate. | Carload Rate. | Tariff Rate. | |--------+-------+----+----+----+----+----+----+----+----| | | | | | | | | | | |Excep- |Ordinary|Reduced| | | | | | | | |tional | Rate | Rate | I | II | A | B | C | 1 | 2 | 3 |Rate -------------+--------+-------+----+----+----+----+----+----+----+----+------ 1 to 50 km | 1. 20 |0. 60 |0. 60|0. 50|0. 34|0. 24|0. 18|0. 26|0. 18|0. 15|0. 12 50 to 150 km | 1. 16 | . 58 | . 58| . 46| . 29| . 22| . 15| . 23| . 15| . 13| . 10 150 to 300 km| 1. 12 | . 56 | . 56| . 42| . 25| . 18| . 12| . 19| . 12| . 10| . 09 For every | | | | | | | | | | | addit'n'l km| 1. 00 | . 50 | . 50| . 30| . 20| . 12| . 10| . 15| . 10| . 08| . 08 | | | | | | | | | | | | _Terminal Charges. _ 1 to 30 km | 6. 0 |3. 0 |3. 0 |3. 0 |3. 0 |2. 0 |2. 0 |2. 0 |2. 0 |2. 0 |2. 0 31 to 80 km | 6 |3 |3 |3 |3 |3 |3 |3 |3 |3 |2 Above 80 km | 8 |4 |4 |4 |4 |4 |4 |4 |4 |4 |2 -------------+--------+-------+----+----+----+----+----+----+----+----+------ _Horses_ and _mules_ are placed in Class II, with a minimum weight of1, 400 kg. For one head and 700 kg. For every additional head. _Cattle_ are placed in Class II, and are billed at actual weight. _Potatoes_, hay, straw, wood, coal and coke enjoy the "exceptional rate"when shipped in carload lots. TABLE No. 9. _Hungarian Tariff (in kreutzers). --January 1, 1891. _ ============================================================= | | Parcel | | | Fast Freight. | Rate. | | |--------+-------+----+----| | | | | | | | |Ordinary|Reduced| I | II | | | Rate | Rate | | |"Sperrgüter. "| -------------------+--------+-------+----+----+-------------+ From 1 to 200 km. | 1. 3 | 0. 6 |0. 72|0. 52| 0. 9 | | | | | | | From 201 to 400 km. | 1. | . 5 | . 52| . 42| . 8 | | | | | | | Above 400 km. | 1. | . 5 | . 52| . 42| . 8 | | | _Terminal Charges for 100 kg. _ | . 10 | . 10 | . 10| . 10| . 10 | -------------------+--------+-------+----+----+-------------+ =============================================================== | | Special |Exceptional | Carload Rate. | Tariff. | Tariff. |----+----+------+----+----+----|-----+----- | | | | | | | | | A | B | C | I | II | III| I | II | | |Lumber| | | | | -------------------+----+----+------+----+----+----+-----+----- From 1 to 200 km. |0. 32|0. 21| 0. 16 |0. 27|0. 16|0. 13|0. 13 |0. 11 | | | | | | | | From 201 to 400 km. | . 24| . 17| . 13 | . 15| . 13| . 10| . 10 | . 09 | | | | | | | | Above 400 km. | . 16| . 10| . 09 | . 10| . 09| . 07| . 07 | . 06 | . 06| . 06| . 04 | . 05| . 04| . 03| . 03 | . 03 -------------------+----+----+------+----+----+----+-----+------ Exceptional Tariff I comprises coal, wood, potatoes, stone, hay andstraw. Exceptional Tariff II comprises manure, earth and Hungarian ores. TABLE No. 10. STATE OF IOWA. SCHEDULE OF REASONABLE MAXIMUM RATES OF CHARGES IN EFFECT MARCH 1, 1893, FOR THE TRANSPORTATION OF _Freight and Cars on each of the Railroads in the State of Iowa, together with a Classification of Freights, prepared by the Railroad Commissioners, in accordance with the Laws of the State of Iowa. _ * * * * * Superseding all former schedules on the said railroads, including allbridges and ferries used or operated in connection with any railroad;and, also, all the roads in use by any corporation, receiver, trustee orother person operating a railroad, whether owned or operated undercontract, agreement, lease or otherwise, or which may hereafter bepurchased, leased, acquired or operated within the State of Iowa. The classification of freights applies to all the lines, regardless ofclass. The schedule of maximum rates applies to all Class "A" roads. Therates on Class "B" roads will be FIFTEEN per cent. Higher, andthe rates on Class "C" roads THIRTY per cent. Higher than therates named for Class "A" roads. The respective roads have beenclassified by the Executive Council of the State as follows, whichclassification is adopted by the Railroad Commissioners, and made partof this schedule: CLASSIFICATION OF ROADS. CLASS "A. " Where gross annual earnings, per mile, shall be $4, 000 ormore. --Burlington, Cedar Rapids and Northern Railway; Chicago andNorthwestern Railway; Chicago, Burlington and Quincy Railroad; Chicago, Milwaukee and St. Paul Railway; Chicago, Rock Island and PacificRailway; Chicago and Great Western Railway (operating the Chicago, St. Paul and Kansas City Railway); Dubuque and Sioux City Railroad; Chicago, St. Paul, Minneapolis and Omaha Railway; Sioux City and NorthernRailway; Chicago, Santa Fe and California Railway; Sioux City andPacific Railroad; Toledo, Peoria and Western Railway; Union PacificRailway. CLASS "B. " Where gross earnings are $3, 000 or over and less than $4, 000 permile. --Iowa Central Railway; Kansas City, St. Joseph and Council BluffsRailroad; Omaha and St. Louis Railway. CLASS "C. " Where annual earnings are less than $3, 000 per mile. --Chicago, Burlington and Kansas City Railway; Chicago, Ft. Madison and Des MoinesRailway; Chicago, Iowa and Dakota Railway; Crooked Creek Railroad andCoal Company; Des Moines and Kansas City Railway; Des Moines, Northernand Western Railway; Humeston and Shenandoah Railroad; Iowa NorthernRailway; Mason City and Fort Dodge Railroad; Minneapolis and St. LouisRailway; St. Louis, Keokuk and Northwestern Railroad; Tabor and NorthernRailway; Wabash Railroad; Winona and Southwestern Railway; Keokuk andWestern Railway. Burlington and Western; Burlington and Northwestern; Ames and College;Albia and Centerville. ====================================================================== | MERCHANDISE IN CENTS | SPECIAL CARLOAD CLASSES IN | PER 100 LBS. | CENTS PER 100 LBS. Miles|---------------------------------------------------------------- | First|Second|Third |Fourth|Fifth |Class|Class|Class|Class|Class |Class. |Class. |Class. |Class. |Class. | A. | B. | C. | D. | E. -----+------+------+------+------+------+-----+-----+-----+-----+----- 5 | 14 | 11. 9 | 9. 34| 7 | 4. 9 | 5 | 4. 9 | 4. 2 | 3. 5 | 2. 8 10 | 14. 8 | 12. 58| 10. 1 | 7. 4 | 5. 18| 5. 3 | 5. 18| 4. 44| 3. 7 | 2. 96 15 | 15. 6 | 13. 26| 10. 4 | 7. 8 | 5. 46| 5. 6 | 5. 46| 4. 68| 3. 9 | 3. 12 20 | 16. 4 | 13. 94| 10. 94| 8. 2 | 5. 74| 5. 8 | 5. 74| 4. 92| 4. 1 | 3. 25 25 | 17 | 14. 45| 11. 34| 8. 5 | 5. 95| 6 | 5. 95| 5. 1 | 4. 25| 3. 4 | | | | | | | | | | 30 | 17. 6 | 14. 96| 11. 73| 8. 8 | 6. 16| 6. 2 | 6. 16| 5. 28| 4. 4 | 3. 52 35 | 18. 2 | 15. 47| 12. 1 | 9. 1 | 6. 37| 6. 4 | 6. 37| 5. 46| 4. 55| 3. 64 40 | 18. 8 | 15. 98| 12. 5 | 9. 4 | 6. 58| 6. 6 | 6. 58| 5. 64| 4. 7 | 3. 76 45 | 19. 4 | 16. 49| 13 | 9. 7 | 6. 79| 6. 8 | 6. 79| 5. 82| 4. 85| 3. 88 50 | 20 | 17 | 13. 34| 10 | 7 | 7. 05| 7 | 6 | 5 | 4 | | | | | | | | | | 55 | 20. 4 | 17. 34| 13. 6 | 10. 2 | 7. 14| 7. 2 | 7. 14| 6. 12| 5. 1 | 4. 08 60 | 20. 8 | 17. 68| 13. 87| 10. 4 | 7. 28| 7. 4 | 7. 28| 6. 24| 5. 2 | 4. 16 65 | 21. 2 | 18. 02| 14. 14| 10. 6 | 7. 42| 7. 6 | 7. 42| 6. 36| 5. 3 | 4. 25 70 | 21. 6 | 18. 36| 14. 4 | 10. 8 | 7. 56| 7. 8 | 7. 56| 6. 48| 5. 4 | 4. 32 75 | 22 | 18. 7 | 14. 67| 11 | 7. 7 | 8 | 7. 7 | 6. 6 | 5. 5 | 4. 4 | | | | | | | | | | 80 | 22. 4 | 19. 04| 14. 94| 11. 2 | 7. 84| 8. 2 | 7. 84| 6. 72| 5. 6 | 4. 48 85 | 22. 8 | 19. 38| 15. 2 | 11. 4 | 7. 98| 8. 4 | 7. 98| 6. 84| 5. 7 | 4. 56 90 | 23. 2 | 19. 72| 15. 47| 11. 6 | 8. 12| 8. 6 | 8. 12| 6. 96| 5. 8 | 4. 64 95 | 23. 6 | 20. 06| 15. 73| 11. 8 | 8. 26| 8. 8 | 8. 26| 7. 08| 5. 9 | 4. 72 100 | 24 | 20. 4 | 16 | 12 | 8. 4 | 9 | 8. 4 | 7. 2 | 6 | 4. 8 | | | | | | | | | | 105 | 24. 8 | 20. 89| 16. 35| 12. 33| 8. 69| 9. 35| 8. 63| 7. 4 | 6. 17| 4. 96 110 | 25. 6 | 21. 38| 16. 7 | 12. 66| 8. 98| 9. 7 | 8. 86| 7. 6 | 6. 34| 5. 12 115 | 26. 4 | 21. 87| 17. 05| 12. 99| 9. 27|10. 05| 9. 09| 7. 8 | 6. 51| 5. 28 120 | 27. 2 | 22. 36| 17. 4 | 13. 32| 9. 56|10. 4 | 9. 32| 8 | 6. 68| 5. 44 125 | 28 | 22. 85| 17. 75| 13. 65| 9. 85|10. 75| 9. 55| 8. 2 | 6. 85| 5. 6 | | | | | | | | | | 130 | 28. 8 | 23. 34| 18. 1 | 13. 98| 10. 14|11. 1 | 9. 78| 8. 4 | 7. 02| 5. 76 135 | 29. 6 | 23. 83| 18. 45| 14. 31| 10. 43|11. 45|10. 01| 8. 6 | 7. 19| 5. 92 140 | 30. 4 | 24. 32| 18. 8 | 14. 64| 10. 72|11. 8 |10. 24| 8. 8 | 7. 36| 6. 08 145 | 31. 2 | 24. 81| 19. 15| 14. 97| 11. 01|12. 15|10. 47| 9 | 7. 53| 6. 24 150 | 32 | 25. 3 | 19. 5 | 15. 3 | 11. 3 |12. 5 |10. 7 | 9. 2 | 7. 7 | 6. 4 | | | | | | | | | | 155 |32. 8 |25. 79 | 19. 85| 15. 63| 11. 59|12. 84|10. 93| 9. 39| 7. 87| 6. 56 160 |33. 6 |26. 28 | 20. 2 | 15. 96| 11. 88|13. 18|11. 16| 9. 58| 8. 04| 6. 72 165 |34. 4 |26. 77 | 20. 55| 16. 29| 12. 17|13. 52|11. 39| 9. 77| 8. 21| 6. 88 170 |35. 2 |27. 26 | 20. 9 | 16. 62| 12. 46|13. 86|11. 62| 9. 96| 8. 38| 7. 04 175 |36 |27. 75 | 21. 25| 16. 95| 12. 75|14. 2 |11. 85|10. 15| 8. 55| 7. 2 | | | | | | | | | | 180 |36. 8 |28. 24 | 21. 6 | 17. 28| 13. 04|14. 54|12. 08|10. 34| 8. 72| 7. 36 185 |37. 6 |28. 73 | 21. 95| 17. 61| 13. 33|14. 88|12. 31|10. 53| 8. 89| 7. 52 190 |38. 4 |29. 22 | 22. 3 | 17. 94| 13. 62|15. 22|12. 45|10. 72| 9. 06| 7. 68 195 |39. 2 |29. 71 | 22. 65| 18. 27| 13. 91|15. 56|12. 77|10. 91| 9. 23| 7. 84 200 |40 |30. 2 | 23 | 18. 6 | 14. 2 |15. 9 |13 |11. 1 | 9. 39| 8 | | | | | | | | | | 210 |41. 6 |31. 18 | 23. 7 | 19. 24| 14. 78|16. 56|13. 45|11. 49| 9. 71| 8. 3 220 |43. 2 |32. 16 | 24. 4 | 19. 88| 15. 36|17. 22|13. 9 |11. 88|10. 03| 8. 6 230 |44. 8 |33. 14 | 25. 1 | 20. 52| 15. 94|17. 88|14. 35|12. 27|10. 35| 8. 9 240 |46. 4 |34. 12 | 25. 8 | 21. 6 | 16. 52|18. 54|14. 8 |12. 66|10. 67| 9. 2 250 |48 |35. 1 | 26. 5 | 21. 8 | 17. 1 |19. 2 |15. 25|13. 05|10. 99| 9. 5 260 | 49. 6 | 36. 08| 27. 2 | 22. 44| 17. 68|19. 86|15. 7 |13. 44|11. 31| 9. 8 270 | 51. 2 | 37. 06| 27. 9 | 23. 08| 18. 26|20. 52|16. 15|13. 83|11. 63|10. . 280 | 52. 8 | 38. 4 | 28. 6 | 23. 72| 18. 84|21. 18|16. 6 |14. 22|11. 95|10. 4 290 | 54. 4 | 39. 02| 29. 3 | 24. 36| 19. 42|21. 84|17. 05|14. 61|12. 27|10. 7 300 | 56 | 40 | 30 | 25 | 20 |22. 5 |17. 5 |15 |12. 5 |11 | | | | | | | | | | 310 | 56. 5 | 40. 5 | 30. 5 | 25. 5 | 20. 5 |23 |18 |15. 5 |13 |11. 5 320 | 57 | 41 | 31 | 26 | 21 |23. 5 |18. 5 |16 |13. 5 |12 330 | 57. 5 | 41. 5 | 31. 5 | 26. 5 | 21. 5 |24 |19 |16. 5 |14 |12. 5 340 | 58 | 42 | 32 | 27 | 22 |24. 5 |19. 5 |17 |14. 5 |13 350 | 58. 5 | 42. 5 | 32. 5 | 27. 5 | 22. 5 |25 |20 |17. 5 |15 |13. 5 | | | | | | | | | | 360 | 59 | 43 | 33 | 28 | 23 |25. 5 |20. 5 |18 |15. 5 |14 370 | 59. 5 | 43. 5 | 33. 5 | 28. 5 | 23. 5 |26 |21 |18. 5 |16 |14. 5 380 | 60 | 44 | 34 | 29 | 24 |26. 5 |21. 5 |19 |16. 5 |15 390 | 60. 5 | 44. 5 | 34. 5 | 29. 5 | 24. 5 |27 |22 |19. 5 |17 |15. 5 400 | 61 | 45 | 35 | 30 | 25 |27. 5 |22. 5 |20 |17. 5 |16 | | | | | | | | | | 410 | 61. 5 | 45. 5 | 35. 5 | 30. 5 | 25. 5 |28 |23 |20. 5 |18 |16. 5 420 | 62 | 46 | 36 | 31 | 26 |28. 5 |23. 5 |21 |18. 5 |17 430 | 62. 5 | 46. 5 | 36. 5 | 31. 5 | 26. 5 |29 |24 |21. 5 |19 |17. 5 440 | 63 | 47 | 37 | 32 | 27 |29. 5 |24. 5 |22 |19. 5 |18 450 | 63. 5 | 47. 5 | 37. 5 | 32. 5 | 27. 5 |30 |25 |22. 5 |20 |18. 5 | | | | | | | | | | 460 | 64 | 48 | 38 | 33 | 28 |30. 5 |25. 5 |23 |20. 5 |19 470 | 64. 5 | 48. 5 | 38. 5 | 33. 5 | 28. 5 |31 |26 |23. 5 |21 |19. 5 480 | 65 | 49 | 39 | 34 | 29 |31. 5 |26. 5 |24 |21. 5 |20 490 | 65. 5 | 49. 5 | 39. 5 | 34. 5 | 29. 5 |32 |27 |24. 5 |22 |20. 5 500 | 66 | 50 | 40 | 35 | 30 |32. 5 |27. 5 |25 |22. 5 |21 ---------------------------------------------------------------------- NOTE. --When rates are not shown in this table for the exactdistance, the rates given for the next greater distance will prevail. When these rates and the classification conflict, these rates willgovern. A = Wheat, flour, millet, flaxseed. B = Corn, oats, barley, other grain and mill stuffs. C = Hard and soft lumber, lath, shingles, sash, doors and blinds. D = Salt, lime, cement, plaster, stucco. E = Horses and mules in carloads--minimum weight 20, 000 lbs. , 31-foot cars, inside measurement. F = Fat cattle in carloads--minimum weight 19, 000 lbs. , 31-foot cars, inside measurement G = Hogs (single deck) in carloads--minimum weight 15, 000 lbs. , 31-foot cars, inside measurement. H = Sheep (single deck) in carloads--minimum weight 15, 000 lbs. , 31-foot cars, inside measurement. I = Hard coal. J = Soft coal, lump and nut. K = Soft coal, pea and slack. ======================================================================= | CARLOAD CLASSES IN | LIVE STOCK IN CENTS |COAL IN CENTS PER | CENTS PER 100 LBS. | PER 100 LBS. |TON OF 2, 000 LBS. -----+-----------------------+-----------------------+----------------- Miles| A | B | C | D | E | F | G | H | I | J | K -----+-----+-----+-----+-----+-----+-----+-----+-----+-----+------+---- 5 | 4. 5 | 3. 75| 3. 5 | 3. 25| 5. 37| 5. 13| 5. 67| 8. 4 | . 60| . 30 | . 25 10 | 4. 7 | 3. 92| 3. 66| 3. 39| 5. 75| 5. 53| 6 | 8. 8 | . 64| . 34 | . 28 15 | 4. 9 | 4. 09| 3. 82| 3. 53| 6. 12| 5. 92| 6. 33| 9. 2 | . 68| . 38 | . 31 20 | 5. 1 | 4. 26| 3. 98| 3. 67| 6. 5 | 6. 32| 6. 67| 9. 6 | . 72| . 42 | . 34 25 | 5. 3 | 4. 43| 4. 14| 3. 81| 6. 87| 6. 71| 7 |10 | . 76| . 46 | . 37 | | | | | | | | | | | 30 | 5. 5 | 4. 6 | 4. 3 | 3. 95| 7. 25| 7. 11| 7. 33|10. 4 | . 80| . 50 | . 40 35 | 5. 7 | 4. 77| 4. 45| 4. 09| 7. 62| 7. 5 | 7. 67|10. 8 | . 84| . 54 | . 43 40 | 5. 9 | 4. 93| 4. 6 | 4. 23| 8 | 7. 89| 8 |11. 2 | . 88| . 58 | . 46 45 | 6. 1 | 5. 09| 4. 75| 4. 37| 8. 37| 8. 29| 8. 33|11. 6 | . 92| . 62 | . 49 50 | 6. 3 | 5. 25| 4. 9 | 4. 51| 8. 75| 8. 68| 8. 67|12 | . 96| . 66 | . 52 | | | | | | | | | | | 55 | 6. 5 | 5. 4 | 5. 04| 4. 65| 9. 12| 8. 95| 9 |12. 4 | 1. 00| . 70 | . 55 60 | 6. 7 | 5. 55| 5. 18| 4. 79| 9. 5 | 9. 21| 9. 33|12. 8 | 1. 04| . 74 | . 58 65 | 6. 9 | 5. 7 | 5. 32| 4. 93| 9. 87| 9. 47| 9. 67|13. 2 | 1. 08| . 78 | . 60 70 | 7. 1 | 5. 85| 5. 46| 5. 07|10. 25| 9. 74|10 |13. 6 | 1. 12| . 82 | . 62 75 | 7. 3 | 6 | 5. 6 | 5. 2 |10. 62|10 |10. 16|14 | 1. 16| . 85 | . 64 | | | | | | | | | | | 80 | 7. 5 | 6. 15| 5. 74| 5. 33|11 |10. 26|10. 32|14. 4 | 1. 20| . 88 | . 66 85 | 7. 7 | 6. 3 | 5. 88| 5. 46|11. 37|10. 53|10. 48|14. 8 | 1. 24| . 91 | . 68 90 | 7. 9 | 6. 45| 6. 02| 5. 59|11. 75|10. 79|10. 64|15. 2 | 1. 28| . 94 | . 70 95 | 8 | 6. 6 | 6. 16| 5. 72|12. 12|11. 05|10. 8 |15. 6 | 1. 32| . 97 | . 72 100 | 8. 1 | 6. 75| 6. 3 | 5. 85|12. 5 |11. 32|10. 96|16 | 1. 36| 1. 00 | . 74 | | | | | | | | | | | 105 | 8. 24| 6. 87| 6. 41| 5. 95|12. 75|11. 53|11. 12|16. 3 | 1. 40| 1. 015| . 755 110 | 8. 38| 6. 99| 6. 52| 6. 05|13 |11. 74|11. 28|16. 6 | 1. 44| 1. 03 | . 77 115 | 8. 52| 7. 11| 6. 63| 6. 15|13. 25|11. 95|11. 44|16. 9 | 1. 48| 1. 045| . 785 120 | 8. 66| 7. 23| 6. 74| 6. 25|13. 5 |12. 16|11. 6 |17. 2 | 1. 52| 1. 06 | . 80 125 | 8. 8 | 7. 35| 6. 85| 6. 35|13. 75|12. 37|11. 8 |17. 5 | 1. 55| 1. 075| . 815 | | | | | | | | | | | 130 | 8. 94| 7. 46| 6. 96| 6. 45|14 |12. 58|12 |17. 8 | 1. 58| 1. 09 | . 83 135 | 9. 08| 7. 57| 7. 07| 6. 55|14. 25|12. 79|12. 2 |18. 1 | 1. 61| 1. 105| . 845 140 | 9. 22| 7. 69| 7. 18| 6. 65|14. 5 |13 |12. 4 |18. 4 | 1. 64| 1. 12 | . 86 145 | 9. 36| 7. 79| 7. 29| 6. 75|14. 75|13. 21|12. 6 |18. 7 | 1. 67| 1. 135| . 875 150 | 9. 5 | 7. 9 | 7. 4 | 6. 85|15 |13. 42|12. 8 |19 | 1. 70| 1. 15 | . 89 | | | | | | | | | | | 155 | 9. 63| 8. 01| 7. 5 | 6. 95|15. 25|13. 63|13 |19. 3 | 1. 73| 1. 165| . 905 160 | 9. 79| 8. 12| 7. 6 | 7. 05|15. 5 |13. 84|13. 2 |19. 6 | 1. 76| 1. 18 | . 92 165 | 9. 89| 8. 23| 7. 7 | 7. 15|15. 75|14. 05|13. 4 |19. 9 | 1. 79| 1. 195| . 935 170 |10. 02| 8. 34| 7. 8 | 7. 25|16 |14. 26|13. 6 |20. 2 | 1. 82| 1. 21 | . 95 175 |10. 15| 8. 45| 7. 9 | 7. 35|16. 25|14. 47|13. 8 |20. 5 | 1. 85| 1. 225| . 965 180 |10. 28| 8. 56| 8 | 7. 44|16. 5 |14. 68|14 |20. 8 | 1. 88| 1. 24 | . 98 185 |10. 41| 8. 67| 8. 1 | 7. 53|16. 75|14. 89|14. 2 |21. 1 | 1. 91| 1. 255| . 995 190 |10. 54| 8. 78| 8. 2 | 7. 62|17 |15. 11|14. 4 |21. 4 | 1. 94| 1. 27 | 1. 01 195 |10. 67| 8. 89| 8. 3 | 7. 71|17. 25|15. 32|14. 6 |21. 7 | 1. 97| 1. 285| 1. 025 200 |10. 8 | 9 | 8. 4 | 7. 8 |17. 5 |15. 53|14. 8 |22 | 2. 00| 1. 30 | 1. 04 | | | | | | | | | | | 210 |11. 07| 9. 23| 8. 61| 8 |17. 87|16 |15. 22|22. 3 | 2. 04| 1. 32 | 1. 06 220 |11. 34| 9. 46| 8. 82| 8. 2 |18. 25|16. 47|15. 64|22. 7 | 2. 08| 1. 34 | 1. 08 230 |11. 61| 9. 69| 9. 03| 8. 4 |18. 62|16. 95|16. 06|23. 1 | 2. 12| 1. 36 | 1. 10 240 |11. 88| 9. 92| 9. 24| 8. 6 |19 |17. 42|16. 48|23. 5 | 2. 16| 1. 38 | 1. 12 250 |12. 15|10. 15| 9. 45| 8. 8 |19. 37|17. 89|16. 9 |23. 9 | 2. 20| 1. 40 | 1. 14 | | | | | | | | | | | 260 |12. 42|10. 37| 9. 66| 8. 99|19. 75|18. 37|17. 32|24. 3 | 2. 24| 1. 42 | 1. 16 270 |12. 69|10. 59| 9. 87| 9. 18|20. 12|18. 84|17. 74|24. 7 | 2. 28| 1. 44 | 1. 18 280 |12. 96|10. 81|10. 08| 9. 37|20. 5 |19. 32|18. 16|25. 1 | 2. 32| 1. 46 | 1. 20 290 |13. 26|11. 03|10. 29| 9. 56|20. 87|19. 79|18. 58|25. 5 | 2. 36| 1. 48 | 1. 22 300 |13. 53|11. 25|10. 5 | 9. 75|21. 25|20. 26|19 |25. 9 | 2. 40| 1. 50 | 1. 24 | | | | | | | | | | | 310 |13. 8 |11. 48|10. 71| 9. 95|21. 6 |20. 53|19. 13|26. 7 | 2. 44| 1. 52 | 1. 25 320 |14. 07|11. 71|10. 92|10. 15|21. 95|20. 79|19. 25|27. 1 | 2. 48| 1. 54 | 1. 26 330 |14. 34|11. 94|11. 13|10. 35|23. 3 |21. 05|19. 37|27. 5 | 2. 52| 1. 56 | 1. 27 340 |14. 61|12. 17|11. 34|10. 55|22. 65|21. 32|19. 5 |27. 9 | 2. 56| 1. 58 | 1. 28 350 |14. 88|12. 4 |11. 55|10. 75|23 |21. 58|19. 62|28. 3 | 2. 60| 1. 60 | 1. 29 | | | | | | | | | | | 360 |15. 15|12. 62|11. 76|10. 94|23. 35|21. 84|19. 75|28. 7 | 2. 64| 1. 62 | 1. 30 370 |15. 42|12. 84|11. 97|11. 13|23. 7 |22. 11|19. 87|29. 1 | 2. 68| 1. 64 | 1. 31 380 |15. 68|13. 06|12. 18|11. 32|24. 05|22. 37|20 |29. 5 | 2. 72| 1. 66 | 1. 32 390 |15. 94|13. 28|12. 39|11. 51|24. 4 |22. 63|20. 5 |29. 9 | 2. 76| 1. 68 | 1. 33 400 |16. 2 |13. 5 |12. 6 |11. 7 |24. 75|22. 89|21 |30. 3 | 2. 80| 1. 70 | 1. 34 | | | | | | | | | | | 410 |16. 47|13. 72|12. 81|11. 89|25. 1 |23. 15|21. 12|30. 7 | . .. . | . .. . | . .. . 420 |16. 73|13. 94|13. 02|12. 08|25. 45|23. 41|21. 25|31. 1 | 2. 88| 1. 74 | 1. 36 430 |17 |14. 16|13. 23|12. 22|25. 80|23. 67|21. 37|31. 5 | . .. . | . .. . | . .. . 440 |17. 27|14. 38|13. 44|12. 46|26. 15|23. 93|21. 5 |31. 9 | 2. 96| 1. 78 | 1. 38 450 |17. 54|14. 60|13. 65|12. 65|26. 5 |24. 19|21. 62|32. 3 | . .. . | . .. . | . .. . | | | | | | | | | | | 460 |17. 80|14. 82|13. 86|12. 84|26. 85|24. 45|21. 75|32. 7 | 3. 04| 1. 82 | 1. 40 470 |18. 06|15. 04|14. 07|13. 03|27. 2 |24. 71|21. 87|33. 1 | . .. . | . .. . | . .. . 480 |18. 33|15. 26|14. 28|13. 22|27. 55|24. 97|22 |33. 5 | 3. 12| 1. 86 | 1. 42 490 |18. 60|15. 48|14. 49|13. 41|27. 9 |25. 23|22. 12|33. 9 | . .. . | . .. . | . .. . 500 |18. 87|15. 70|14. 70|13. 60|28. 15|25. 49|22. 25|34. 3 | 3. 20| 1. 90 | 1. 44 ------------------------------------------------------------------------- * Stock cattle or feeders and calves take 75 per cent. Of fat cattlerate; 31-foot car (internal measurement) is adopted as the standard forminimum weight, as per heading in table; 28-foot cars, 90 per cent. Ofabove; 33-foot 6-inch cars, 108 per cent. Of above; other lengths ofcars to take same proportion as above. INDEX. Abbett, Gov. , 113 Absentee ownership, 287 Abuses, 101 cardinal, 134 for protection against, must resort to polls and not to courts, 332 increased, 129 of railroads, 124 origin of, 434 still practiced, 400 Accidents, 450 Acworth, Mr. W. M. , 276 Adams, C. F. , Jr. , heresy, 260 difficulty not in legislation, 258 favors pooling, 260 on character of railroad men, 257 on Iowa law, 332 H. C. , motive for ownership, 436 Africa, 61 roads constructed, 22 Agriculture among Babylonians and Assyrians, 19 Albany _Evening Argus_, 340 Albia, 324 Algiers, 62 Algona, 328 American colonies, 100 experience, 303 investments a reproach, 313 Americans would avail themselves of low rates, 445 American Transfer Company, 119 Amsterdam, 97 owes to canal, 32 Ann Arbor Strikers, 449 Area of land grants, 329 Argentine Republic, 68 Arrogance, 453 Asia, 59 early nations of, 18 Athens connected with Piræns, protected road, 24 Atkinson, Edward, 248 fallacious argument of, 249 relies upon a figurehead commission, 249 Atlantic nurseryman, 148 Attorney-General held that legislature had not the power to prescribe rates, 330 Attorney, slow to accept fee, 402 Augustus instituted postal service, 27 Australia, 64 Austria, 54 Average fares per mile, 444 B. & M. Co. , 324 Baker, C. W. , 262 Balkan Peninsula, 59 physical features, important factor, 24 Ballou, H. S. , 139 Baltimore and Ohio, watered stock, 172 _Bankers' Magazine_, 301 Banks and insurance, not private, 403 Barosz, M. , 441 B. , C. R. & N. Railroad Co. , increased prosperity of, 344 Beach, C. F. , Jr. , 395 law of private corporations, 316 Bering Strait, 89 Belgium, 56, 409 cost of right of way, 370 Bessemer's invention, 374 Blackstone, T. B. , 413 Blatchford, Justice, 213, 290 Blinkensop, 48 Board of Railroad Commissioners, 428 Bolles, A. S. , 303 Bonded debt of M. & M. R. R. , 322 Bonham, John M. , 268 Boone, 327 Boston _Advertiser_, 340 Bradley, Justice, 213 Braithwaite, 49 Branch roads, 306 Brazil, 69 Brewer, Justice, 214, 215, 455 doctrine, 376 opinion of reasonable rates, 360 reply to ruling of, 364 Bridge across the Mississippi, 319 British railways, cost of right of way, 370 Brown, Justice, 214 Bryce, Prof. , 391 on decadence of bar, 222 on lobby, 222 Budd vs. N. Y. , 213, 290, 295 Buddha, commended roads to care of pious, 18 Burmah, 61 Burstall, 49 California railways, 122 Calmar, 328 Camden and Amboy charter, 113 Camden and Amboy Railroad Company, 102 Canada, 73 canals, 43 Canadian Pacific, 74 Canal, Erie, 40 from Bitter Lake to Red Sea, 23 Nicaragua, 44, 174 Canals, Canadian, 43 in Great Britain, 33 Italian, 34 private companies, 42 Spanish, 34 Candidates, railroad, 226 servile to railroads, 206 Cape Colony, 63 Capitalization of railroads, 86 Capital of Standard Oil Company, 121 Carey, H. C. , 110 Carload lots, 386 rates, 140 Carthage, harbor, fleets, roads, 24 Carthaginians, 91 commerce of, constructed roads, 22 Cars refused, 120 Cassat, Mr. , testimony of, 121 C. , B. & Q. R. R. Strike, 285 Cedar Rapids and Missouri River R. R. Co. , 324 Central America, 70 Central Pacific, 175 scheme, 347 Ceylon, 61 Charlemagne repaired and built roads, 28 Chicago and Milwaukee system, cost of, 235 and Omaha pool, 194 convention, 224 Iowa and Nebraska Railroad, 328 third-rate lawyer, 222 Chile, 68 Chinese built roads before the Christian era, 21 Classification, 363 rule, 361 unjust features, 151 Clay, Mr. , 303 Clews, Henry, 304 pictures evils, 404 "Twenty-eight Years in Wall Street, " 185 Clear Lake, 328 Clerk of U. S. Court, 217 Cleveland, President, 359 Clinton, 328 Club address of C. F. Adams, Jr. , 257 C. , M. & St. P. R. R. Co. Vs. Minn. , 213 Coal and kindred articles, 386 Coffin, Mr. L. S. , 452 Colbert, idea of postal service, 30 Coleridge, Lord, 454 Combinations, 189 regulate, 299 Commission evil, 420 Commission received, 119 Commissioner system, 246 Commission, Interstate, reviews Judge Brewer's rule, 365 Commissions acquire expert knowledge, 384 Commission's decisions, 359 acts subject to judicial review, 381 become a pliant tool, 429 character of, 359 Commission system adopted in Iowa, 335 Committee bill passed, 354 Commodities, character of, 373 Common law, sufficient in theory but fails in practice, 268 Competition, 190, 196 a great educator, 260 and enhanced rates, 352 in United States depended upon, 129 the death of trade, 298 vicious, 300 Communism, strength of, 454 Conduit company, 117 Confiscation of railroads, 293 Conflicts between labor and capital, 448 Congress, appropriations for improving rivers, 44 in three camps, 352 responds to demand of Pacific road, 183 to cease futile attempts 299 Congressmen imposed upon, 17 Connecticut railroad construction, 288 Conscientious managers cannot retain business, 399 Consolidation of C. , R. I. & P. R. R. Co. , 323 tendency to, 262 Conspiracies should not be legalized, 260 Conspiracy, 296 Constitutions made for, 457 Contests, expense of in Great Britain, 371 Contributions to Pacific roads, 180 Control, suggestions for, 425 Cooley, Judge, 315, 359 in reference to State and National Commissions, 426 Corporations, danger from, 223 willing to pay for questionable services, 222 Corrupt practice act in Mass. , 223 Cost of American roads, 187 of building roads at present, 186 of existing railway system, 422 of operating M. & M. R. R. , 322 of railroads, 172, 370, 417 Council Bluffs, 324 line completed to, 323 Courteous employes, 447 Courts ordered restoration of Erie securities, 170 should not aid, 381 C. , R. I. & P. Railroad, 284 Crosby, J. O. , story of tramp, 178 Crusaders, 92 Cuba, 70 Cullom committee report, 131 Senator, 353 Customs laws, 15 Dabney, W. D. , drift toward railroad centralization, 261 favors pooling, 261 favors State control, 261 Darius I. , work on canal, 23 Dartmouth College case, 315 decision, 259 Davis, C. Wood, 413 on cost of roads, 187 Dows, David, & Co. , 138 Davis, Jefferson, plea, 276 Delegates to conventions, 224 Demand in other States for reform, 331 Denmark, 35, 58 first-class passenger rates, 439 Depew, Mr. , 138 Depew says all railroad men are politicians, 366 Devices, various, 296 Differentials, 296 Discriminations, 118, 137, 143, 156, 147, 160 damaging, 248 in classifications, 148 in Iowa, 337 practiced openly, 331 Dillon, Judge, 411 Sidney, 273 on cost of Pacific roads, 185 Directors and officials of corporations, 316 character of, 406 with personal interests 317 Director-General, 431 should have power to remove managers, 432 Distance disregarded, 331 Dividends, 164, 187 by fluctuations, 302 Standard Oil Company, 121 Donations, 329 for benefit of public, 376 made by railroad companies, 446 to Pacific roads, 176 to railroads, 125 Donation to road completed, 320 Doud amendment, 331 Dual government, 401 Dual sovereignty must be recognized, 425 Dubuque & S. C. Co. , 324 Dutch East India Company, 97 Duties of common carriers, 315 Duty of state, 456 Earnings diverted, 403 of first Iowa railroad, 320 gross, larger in United States, 281 of C. , B. & Q. , 175 of Iowa roads increased, 264 of Massachusetts railroads, 175 of Lake Shore, 175 Earnings of Liverpool and Manchester, 50 of Terre Haute, 175 of railroads, 86 per employe, 372 per train mile in the United States and United Kingdom, 270 per train mile larger in United States, 281 East India Company, 99, 303 Economy of fuel, 375 Editors, 221, 231 controlled by counting-room, 339 Egyptians, commerce of, constructed roads, 22 Electoral Commission, 215 Eminent domain, 314 Spelling on, 317 Employes fare better under Government management, 412 in Iowa, compensation, 344 in Iowa, number, 344 number of, in various countries, 371 number of, per mile of road, 269 number of, as related to gross earnings, 269 organized for political work, 277 quasi-public officers, 447 should have passes, 209 England, 99 roads maintained by statute and parish labor, 32 English landlords, 287 Entrance into railway service regulated, 448 Ericsson, 449 Erie Canal, 40 Railroad, 170 European and American investments compared, 371 European history began in Greece, 24 Evans, Oliver, 47 Executive charged with construction and maintenance of roads and canals, 22 Executives influenced, 225 Experiments with wooden rail, 46 Extortion, effects of, 111 Farmers' Alliance, 300 Farmers' pool, 300 Federal agencies, need of improved, 430 Federal courts, influence of, 212 Ferocity of public opinion in the West, 312 Feudal features, 455 Field, Justice, 214, 269 Fink, Albert, 200 First rail tracks, 46 First railroad survey in Iowa, 319 Fort Dodge, 325 Fortunes, great, 400 made, 301 France, 54 duty of employes, 447 first system of roads, first artificial waterways, 30 large number of canals, 30 rates on freight and passengers, 293 Frederick the Great built turnpikes and canals, 31 Frederick William IV. , 53 Free competition, 407 Freight agents, 383 Freight carried by railroads in the United States, 292 Friction under Iowa law, 341 Galena and Chicago Union, 164 Gallatin advocated roads and canals, 38 Garfield, President, 224 on Dartmouth College case, 316 Garrett, J. W. , 83 Germany, first mail service, 31 first railroad, 53 German instructions to employes, 447 Georgia prescribed rates, 289 Glenwood, 337 Gibbon, 92 Gibbon concerning postal service, 27 Goodman, Mr. , testimony of, 138 Gospel of wealth, 404 Göta canal, 35 Gould's bulldozing, 452 Gould, Jay, 212, 224, 269 on cost of Pacific roads, 184 Governor called extra session of General Assembly, 321 importuned, 228 of Iowa, 311 influenced, 227 Government ownership drawbacks, 412 Granger cases, 212 Granger, Judge, 229 Granger law did not retard construction, 335 of Iowa, 332 Granger laws, moderate, 322 repealed, 246 Granger movement, 84 a necessary one, 258 spread, 332 Granger system in Wisconsin, 245 Grant and Conkling, 224 Grant, Judge, 411 Great Britain, canals, 33 crossed by Roman roads, 27 recent origin of public roads and postal service, 32 Great Northern Railroad Co. , 185 Grecian civilization passed to Romans and then to other nations, 24 Greek geographers, praise of highways of Hindostan, 19 Gresham, Judge, 212 Grinnell, Hon. J. B. , 411 Gross and net earnings in Iowa, 344 earnings, increase in Iowa, 287, 293 earnings of Iowa roads, 265 Hadley, Prof. A. T. , 245 on passenger rates, 278 on State legislation, 286 Hadley's address before Bankers' Association, 284 ignorance, 287 mistake, 290 Hadrian improved postal service, 27 Hagar, Mr. , 109 Hackworth, 49 Hale, Lord Chief Justice, 316 Harrison, President, 214 on watered stocks, 174 on Nicaragua Canal, 44 Hanseatic League, 94 object, extent, power, 95 Haul, length of, compared, 372 Hayes-Tilden contest, 215 Hayti, 71 Hepburn committee, 137, 146 Hindoo culture and broad statesmanship, 18 Hoe printing-press, 231 Holland, 98 largest canal of, 31 Hoyt, J. , & Co. , 138 Hudson, J. F. , 250, 266, 407 Hudson River Railroad accident, 451 Co. , 167 stock watering, 167 Humboldt said of roads of Incas, 36 Hungary, 54 Hungarian zone system, 282, 440 Huntington, C. P. , 347 letter of, 346 Illinois canals, 42 Granger laws, 331 Importance of transportation facilities, 17 Improved appliances should be used, 450 Income of railroads, 128 per capita, 292 Increase of traffic under zone system, 442 India supplied Nineveh and Babylon, Greece and Rome, 18 Individual entitled to full use, 392 Inflation, 163 Influences at work to create public sentiment, 294 Iniquitous taxation, 307 Injunction asked for, 323 Inspection service should be established, 432 Insurance provided for, 451 Interchangeable 1, 000-mile tickets, 445 Interstate Commerce Act, 85, 319 amended, 358 approved, 354 Interstate Commerce Commission, sixth annual report, 160 Interstate Commerce law attacked, 162 Intimidation of railroad employes, 226 Inventors, 126 Investments, none pay so well, 248 Iowa attorney, 210 Bill of Rights, 445 Central Air Line, 324 City, road built to, 319 Commissioners enjoined, 343 Commissioners' valuable service, 336 Falls & S. C. Co. , 325 General Assembly passed maximum tariff act, 264 General Assembly passed act authorizing commissioners to make _prima facie_ rates, 264 law, features of, 341 misunderstanding of, 342 vindicated, 266 legislation, 319 politics, 311 prosperity accelerated, 345 railroad construction, 288 the queen, 348 Irish tenants, 287 Iron strap rail, 46 Itaki Atabeck, road seen to this day, 19 Italy, 57 canals, 34 Jackson, President, 367 Japan, 60 Java, 61 Jeans, Mr. J. S. , 269 on railroad revenues, 437 on state railroad, 410 Jefferson's inquiries, 37 Judges, servile, 162 use passes, 208 Jurists, eminent, 234 Kansas Midland, 187 Kent, 314 Kirkman, M. M. , 239 Labor organizations, 448 Labor-saving causes, 375 Lake transportation, 453 Land grant policy, wisdom of, 320 to Dubuque & S. C. R. R. , 325 Land grants to Iowa railroads, 320 value of, 325 Languedoc Canal, 30 Lawyer and farmer, 209 Lawyers, briefless, 219 political, 223 third-rate, 222 Legislation, 299 of California, 123 Legislative campaign of 1887, 339 reform needed, 405 reports, 110 Lincoln, President, 216 story of the Irishman, and the pig, 271 Lines projected, 288 Lobbies frowned out of legislative halls, 402 Lobby, 219 formidable, 339 Locomotive, early inventors, 47 reward for, 49 Long and short haul clause, 297 of Iowa law, 341 Louis XIV. , 98 Louis XI. Transferred postal service to state, 30 Lowest rates in Europe, 409 Mails carried free in France, 373 Managers arrogant, 331 concede necessity of regulation, 369 have lost influence, 230 make law odious, 333 naturally despotical, 151 of great parties, 144 M. & M. R. R. Co. , 319 Marshall, Chief Justice, 350 Marshalltown, 324 Massachusetts Commission, 428 Mathews, Judge Stanley, 269 Maximilian established postal route, 31 Maximum charges, 331 McDill, Hon. J. W. , as a lobbyist, 238 McGregor grant resumed, 326, 327 McGregor Western R. R. Co. , 325 Means employed to control legislation, 218 Mesopotamia, inhabitants perfect cart, 19 Methods for control, 402 impracticable, 425 Mexico, 72 Mileage of the future, 389 to area, 112, 389 to population, 292 Minneapolis and Chicago conventions, 224 Minnesota case, 295 Granger laws, 331 politics, 311 Missouri Pacific, 187 Mitchell, Alexander, 232 Modern doctrine, Kent's rule, 314 Monopoly, 317 in transportation, 90 Morgan, Appleton, 250 Mortgaging prohibited, 434 Munn vs. Illinois, 213, 290 Muscatine, branch line to, 319 Mushroom millionaires, 307 National banking system, 303 National bureau should be established, 431 National control, 424 Nation inclined to follow beaten tracks, 425 Nations should profit by experience, 367 Napoleon Company, 108 Navigation act, 98 Nebraska maximum tariff, 346 Net earnings increased in Iowa, 265 in 1890 and 1891, 187 Netherlands, canals, 31 Net profit of passenger traffic in United Kingdom, 270 Nevada, 324 New England railroad construction, 288 New Orleans Cotton Exchange case, 360 Newton, 47 New York canals, 41 New York Central, gross earnings, 167 stock watering, 165 New York delegation, 224 Nicaragua, 70 Canal, 44, 174 Nile, canals, roads, people, 23 Notice given when rates are changed, 388 Number of employes per mile, 372 of hours' work of employes, 372 Office of railroad public, 368 Officers of railroads should not be allowed to use proxies, 432 should take oath, 432 Officials not likely to resist temptation, 436 Ohio canals, 42 Oliver Cromwell, 98 Operating expenses reduced, 375 Pacific railroad, 81 diplomacy, 180 prejudice, 45 Pacific roads before boards of equalization, 186 comparative cost, 186 cost to duplicate, 185 easy grade, 185 indebtedness to Government, 184 Papin, constructed steamboat, 47 Parliament compelled British railways, 451 Party organs, 221 Pass abuse, ruling of commission, 362 Pass, purposes for which given, 209 should be discarded, 446 Passenger rate-making principle wrong, 439 Passenger rates not reduced, 375 Passenger rates too high, 438 Passengers carried by railroads in the United States, 292 Passengers, English third-class, 270 killed and injured, 450 third-class, 269 Passes, 207, 208 plentiful, 420 to delegates, 226 Pauper tickets for the clergy should be abolished, 446 Pausanias shown well-kept road, 19 Pedigree of a proverb, 298 Peik vs. Chicago, 213 Pennsylvania canals, 41 Pennsylvania Central R. R. Co. , 171 People prone to believe, 245 People's parties called into existence, 404 People will not tolerate, 397 Perquisites abolished, 446 Persian Empire, magnitude, 20 Peru, 67 roads, 35 Phoenicians, 90 built great roads, traders of antiquity, 20 first great maritime nation, 19 Pipe line, 116, 119 Plan capable of being improved, 433 Policy of delay, 381 Political campaigns in Iowa, 339 Politicians as railroad employes, 229 Pooling, 261, 398 committee does not recommend prohibition, 354 contracts void, 317 grave effects of, 268 means of swelling railroad earnings, 267 should be prohibited, 203 Pools, 85, 194, 195, 251, 297 defended by Mr. Hadley, 247 defended by Mr. Morgan, 250 maintained in Iowa, 336 suppress competition, 198 Poor's, H. , opinion, 187 estimate of cost, 86, 173, 247 Poor's estimate of watered stock, 186 Porter, Horace, _North American Review_ article, 290 Porter, John, 104 Portugal, 58 Portuguese, 96 Postal communication, royal road from Susa to Sardes, 21 Postal service not carried on by state, 30 Potential value of interstate law, 367 Powderly, T. V. , 449 Prediction of Mr. Walker, 299 Predictions of railroad men, 332 Press abuse, 221 Press, efforts of railroads to control, 271 servile to railroads, 228 _Prima facie_ rates, 341 Prize worth contending for, 380 Procopius, statement of, concerning Via Appia, 27 Problem would be solved if abuses, 297 Providence, 136 Psammitichus cuts canal, 33 Ptolemaic kings built canals, 24 Public at mercy of managers, 381 not unreasonable, 450 Public opinion dormant, 400 efforts to influence, 273 rules, 400 Publicity advantageous, 402 Purchasers of land made the donation, 321 Question not settled until settled right, 377 Railroad attorneys, 214 Railroad-building after 1873, 246 Railroad business not private, 403 safe, 436 changes in Iowa, 393 company public agent, 388 competition, 190, 338 consolidation, 82 construction, 287 diplomate, 228 first line, 77 first steam engine, 47 improved highway, 339 like common road, 391 literature, 231 magazine literature, 273 managers do not do things by halves, 223 managers' opportunities to speculate, 399 men always oppose reductions of rates, 283 officials, 257 papers, 340 precursor of, 46 president's letters, 229 Railroads, abandoned, 79 bonded for more than cost, 175 capitalization of, 86 but few that do not pay, 52 cost to build, 186 earnings of, 86 in Asia, 59 in Austria, 54 in Belgium, 56 in Denmark, 58 in France, 54 in Germany, 53 in Granger States did not comply with law, 246 in Hungary, 54 in Italy, 57 in politics, 205 in Portugal, 58 in Russia, 58 in Switzerland, 56 in Spain, 57 in the Balkan Peninsula, 59 in the Scandinavian Peninsula, 58 in the United States, 76 in Turkey, 60 land grants to, 80 partake of two natures, 392 propitiate judiciary, 211 public tax collectors, 396 rebelled against Iowa law, 344 Railroad stations, number of, 190 Railroad tax, amount of, 393 Railway acts, first in England, 127 _Railway Age_, 288 Railway benefits, 231 employes in politics, 308 first act, 49 organs, 229 Pan-American, 88 Railways, highways, 13 weakened their arguments, 237 Railway system, growth of, 87 length of in the world, 87 Rate-making a legislative and not a judicial function, 332 Rate-making difficult, 244 not a judicial question, 378 Rate of 1870, 248, 249 per ton per mile on Camden and Amboy Railroad, 109 question, 370 Rates, fixing of by commission demanded, 430 fundamental principles in making, 385 in France, 293 lower will prevail, 256 lower, reason for, 374 might be reduced, 417 on Milwaukee road, 233 reduced by zone tariff in Austria-Hungary, 283 should be lower here than in Europe, 373 should be referred to National and State boards, 379 under Granger laws, 246 under Wisconsin Granger laws, 236 what are reasonable, 376 Reagan, John H. , bill of, 352 Reform demanded, 295 Reasonable rates, 376, 387 fixing of, 361 Rebates Standard Oil Company, 115 Redfield, J. F. , 312 Reduced rates on Government business in France, 293 increased business, 282 Refineries closed, 116 Reforms needed, 438 Remedies, 389 proposed by committee, 352 Remedy proposed by Mr. Hudson of doubtful efficiency, 268 Reorganization of the M. &. M. R. R. , 322 Report of Cullom committee, 353 Reports of Interstate Commission, 366 Revenues increased by Granger law, 246, 332 uniform, 437 Revolution and anarchy, 299 Rhenish League, 94 Ricks, Judge, 449 Ridgeway, Jacob, 106 Right of control rests upon firmer ground, 318 Right of way, cost of, 370 River and harbor improvements, 453 Rivers, improvement of, 44 Robber knights, 93, 149 Robbers and feudal knights, depredations being tax, 29 Rob Roy, 258 policy, 102 Robinson, H. P. , railway in politics, 308 Rocket, the, 49 Rogers, Thorold, 454 Roman Empire, after downfall roads destroyed, 28 Roman postal service, 27 Romans learned art of paving roads from Carthaginians, 24 Rome, 91 connecting link between antiquity and mediævalism, 24 extent, population, roads, etc. , 25 Roads built from proceeds of stocks and bonds, 373 Roads built only when immediately profitable, 328 early, 37 pioneers of enlightenment and political eminence, 17 subject to legislative control, 327 utility of good, recognized in colonial times, 36 Russia, 58 roads, 35 Rutter, J. H. , agent of New York Central, 116 Salaries, American railways pay the highest, 420 Saloon men politicians, 366 San Domingo, 71 San Salvador, 70 Sanspareil, the, 49 Savings under Government management, 422 Scandinavian Peninsula, 58 Scandinavian roads and canals, 35 Schedule rates made by Iowa Commission, 342 Schedules should be submitted to bureau, 432 Scriptures, roads of the, 22 Second-class passenger rates, why not successful, 282 Secrecy a source of evils, 402 Select committee, 353 Select Committee on Transportation, 351 Senate committee, 172 Senators and Congressmen raise campaign funds, 436 Servility of Interstate Commerce Commission, 203 Sesostris cut canal, 23 Shippers given favors, 219, 221 powerless, 382 Sioux City, 325 Smyth Judge, 229 South America, 66 Southern Pacific Railroad Company, 122 Southern pool, 200 Southern Railway and Steamship Association, 194 South Sea Company, 303 Spain, 57 canals, 34 Spain and Gaul, roads of, 27 Special arrangements, 295 Special-car aristocracy, 445 Special contracts, 137 rate agreement, 141 rates, 120, 138 Speed of railroads, 279 Spelling, T. Carl, 317 Speculative element should be removed, 433 Speculators and gamblers, 434 Spirit of Interstate Law, 369 Standard Oil monopoly, 114 discrimination, 160, 362 State control encourages building, 130 in Iowa asserted early, 330 Spelling on, 318 State, duty of, 391 management, advantages of, 410 ownership and regulation, 409 with private management, 422 railway system, 277 States to cease futile attempts, 299 Steam engine, first account, 47 Stephenson, 48 Stevens, Mr. , 107 Stewart, A. T. , & Co. , 138 Stickney, A. B. , criticises President Mitchell's letter, 23 his criticism of Iowa rates, 343 his error, 256 favors entire control by Nation, 255 on interstate law, 255 on national control, 424 Stock a bonus, 434 Stock and bond inflation, 163 Stockholders, 131 dissatisfied, 112 interested in publicity, 403 Stock market controlled by few, 308 Stocks, fluctuations of, 435 should be paid in full, 438 shrinkage of value, 284 Stockton, R. F. , 103 Stock watered 50 per cent. , 307 Stock-watering, 164, 165 in America, 270 English, 371 Stock wiped out, 326 Stone, Governor, 324 Subordinates have to suffer for superiors, 203 Subsidies, 329 to press, 271 Sunday trains restricted, 451 Superintendents responsible for uncivil subordinates, 447 Supreme Court, 215, 289 Switzerland, 56 Taney, Justice, 216 Tariff, a tax, 135 prepared by sworn officials, 381 Tariffs impeachable, 382 official, should stand until proved unreasonable, 382 Texas legislation, 346 Text books, 312 Thiers, M. , 51 Third-class passengers in Europe, 443 _Times_, New York, 340 Tipping, 447 Traffic associations, 149, 300 Trainmen should be allowed rest, 451 Train mile earnings, 269 Trains, number of, per mile, per annum, 281 should connect, 451 Transportation not a commodity, 368 Trevithick, Richard, 48 _Tribune_, Chicago, 244 New York, 340 Turkey, 60 Turnpike, first American, 37 Turnpikes in Great Britain, 32 Turnpike tolls, 396 Twelfth General Assembly, 323, 330 Umpires, high-priced, 420 Unanimous vote on Iowa law, 341 Union Pacific, 175 United States Bank, 303, 366 Unscrupulous men attracted, 390 Value of land grants, 329 Vanderbilt, 82, 452 Vedas, testimony of, 18 Venetian council, 253 Venezuela, 66 Venice, 93 Via Appia and other roads, 26 Violations of law encouraged by courts, 430 Wabash Railroad, 212 Walker, A. F. , 294, 295, 311 Wall Street, defense of, 340 managers, 346 method, 302 War, 399 War rule, 331 Washington among the first to advocate internal improvements, 39 Water courses as levelers, 453 Watering stock, Mr. Jeans on, 270 methods of, 174 Water transportation, 145 Watered stocks, 172 Hadley on, 247 Watt and Stephenson's inventions, 126 Watt, James, 47 Weak roads helped, 344 Western candidates, 224 Water classification, 343 West Indies, 71 Western politician outwitted, 225 pool, failure of, 200 Traffic Association, 299 Union Telegraph Company, 127 White House, the, 215 Whitney, Asa, 81 Whitney's cotton gin, 231 Why Western people do not invest in railroad stocks, 308 Wells, David A. , 374 Windom committee, 351 Wisconsin Granger laws, 331 Witnesses recusant, 134 Wrecking roads, 305 Wrought-iron rails patented, 47 _World_, New York, 340 Zone tariff, 409 ridiculed, 441 A Standard Book on an Important Subject. THE RAILROAD QUESTION. A HISTORICAL AND PRACTICAL TREATISE ON RAILROADS, AND REMEDIES FOR THEIR ABUSES. BY =_William Larrabee_=, Late Governor of Iowa. 12mo, cloth extra, gilt top (488 pages), $1. 50. I. --History of Transportation. II. --The History of Railroads. III. --History of Railroads in the United States. IV. --Monopoly inTransportation. V. --Railroad Abuses. VI. --Stock and Bond Inflation. VII. --Combinations. VIII. --Railroads in Politics. IX. , X. --RailroadLiterature. XI. --Railroads and Railroad Legislation in Iowa. XII. --TheInter-State Commerce Act. XIII. --The Rate Question. XIV. --Remedies. Appendix:--Tables and Statistics. There is also a bibliography on thesubject of Railroads, embracing ninety-eight titles, and a carefullyprepared alphabetical index. Opinions of the Press. "No work has ever before told so completely and clearly what the publicwant to know, and ought to know, about the secret management and truelegal status of railroads. What journalists and magazine writers havestudiously left unsaid, whether from lack of knowledge or from motivesof 'revenue only, ' Governor Larrabee has said, and said itwell. "--_Western Rural. _ "This book is evidently the result of long study and experience and muchthinking. While it is radical in its treatment of the question, no sideof it has been overlooked. It deserves careful reading by every personwho is interested in this great question. No subject is more worthy theprofound study of the statesman, the man of affairs, the scholar and thecitizen. Surely all who are trying to understand the good and evil ofrailroads can turn to the pages of this book with the certainexpectation of learning much both in the way of fact andsuggestion. "--_Bankers' Magazine. _ "Perhaps the most interesting chapters are the two in which the authorreviews and criticises former publications on railway questions, and theone in which he reviews the various remedies which have been from timeto time advanced for railway abuses. The book is concisely and clearlywritten. "--_Engineering News. _ "Ex. -Gov. Larrabee of Iowa has written a highly meaty book on therailroad question. It is a topic he is well qualified to handle, viewingthat he was no small part of the movement in former days to repressrailroad abuses in the West, and particularly in his ownState. "--_Chicago Tribune. _ "A careful study of an important question, fortified by facts andfigures which are both interesting and valuable. "--_New York Recorder. _ Hon. Thomas M. Cooley says: "I have read the book with interest, especially that part which discusses State ownership and management. Ihave not before seen the side you advocate so clearly and so ablypresented. " "The book is the most valuable work yet issued on its subject. "--_DesMoines News. _ "Mr. Larrabee is eminently fitted for the task to which he has sethimself. He is not a mere theorizer. He brings to the discussion theripe knowledge that comes from long experience in dealing with therailroad question, not only as a State Senator and Governor, but also'as a shipper and as a railroad promoter, owner and stockholder, ' andlikewise as 'a director, president and manager of a railroad company. 'In his treatment of the railroad problem, moreover, Mr. Larrabeedisplays a breadth of view and an earnestness of purpose that mustcommand respect even where they fail to carry conviction. "--_PublicOpinion. _ "It is devoid of the animus which usually enters into the works of thereformers, but on the contrary is written in admirable style, enhancedby happy anecdotes, and altogether is a much more readable book than oneis accustomed to find upon so practical a question. "--_Kansas CityJournal. _ "It justifies a claim to a place among the standard books upon therailroad problem. It is particularly in those portions of the work whichdeal with the relations of the Government to the railroads and thesolution of the difficulties that have arisen between the railways andthe people that the experience of the author both in guiding andexecuting the railway legislation of Iowa comes into prominentplay. "--_Omaha Bee. _ "We commend the book to the careful reading of the railroadstockholder. "--_Railroad Record and Investor's Guide. _ "A thoughtful volume, showing careful research andreflection. "--_Chicago Inter-Ocean. _ "A most interesting, valuable and timely book. Every student of thesubject will need to read it, and the popular vein of narrative makes itvery interesting and instructive to the general reader. "--_New EnglandHome. _ "This work will present Governor Larrabee in a new and novel lightbefore the public. Heretofore he has been known as the successful man ofaffairs and business; as the earnest and zealous legislator; as thepersistent and vigorous executive; and now he comes as the laboriousstudent upon a great economic and practical question who has aptly andclearly put his views into a book. "--_Dubuque Herald. _ "A thorough treatise by an able mind. The authorities quoted are thebest in print. "--_Coming Nation. _ "By far the best work on the popular side of the railroadquestion. "--_Gen. M. M. Trumbull in the Open Court. _ "Gov. Larrabee's book will rank among the greatest productions of theday on that question. "--_Cedar Rapids Gazette. _ "The book is the result of extraordinary observation, great reading andcareful study. * * * This element of completeness, of massing so muchinformation between the covers of a book of ordinary size, makes itinvaluable for reference. Of all the many books called out by theagitation of the railroad question, this one will be oftenest referredto, not so much for its opinions as for its stores of facts. "--_Davenport Democrat. _ "Governor Larrabee has always been a careful and conscientious studentof the railroad question, and in exposing the abuses to which therailroad system has committed itself he renders a service from which thepublic may derive great benefit. "--_Good Roads. _ "The high character and well known reputation of the author will createa demand for this book, aside from the fact that it contains a vastamount of information as well as sound reasoning on the railroadquestion. "--_American Journal of Politics. _ "The author's attitude, while firm, is by no means a sinister orfantastic one. He writes obviously from honest conviction, and he writeswith skill and force. "--_Philadelphia Press. _ "A temperate and instructive contribution to railroadliterature. "--_Chicago Times. _ "A mine of facts gathered by a man who has made a specialty of hissubject and who is evidently in earnest in his desire to lessen theburdens of the American people. "--_San Francisco Chronicle. _ "In point of authenticity the book is absolutely to be reliedupon. "--_St. Louis Post-Dispatch. _ "Governor Larrabee came to Iowa before any railroad had reached theMississippi. Engaging in manufacturing, the inconveniences which hesuffered from want of transportation facilities instilled liberalopinions concerning railroads. He made private donations to new roadsand he advocated public aid to them. As a legislator he introduced abill authorizing a 5 per cent. Tax in aid of railroad construction. Hebelieved that the common law and competition could be relied upon tocorrect abuses and to solve the rate problem. It has not been untilsince these efforts were made that he has become convinced, as he saysin his preface, that 'where combination is possible competition isimpossible. ' The object of this work is explained to be to set forth theobjections which lie against the management of railroads as privateproperty. They are used by their managers for speculative purposes. Theycannot perform their proper functions so long as they are used only forthe interests of their stockholders. In order to serve their realpurpose, 'they must become in fact what they are in theory, highways tobe controlled by the Government as thoroughly and effectively as thecommon road, the turnpike and the ferry, the post-office and thecustom-house. '"--_Council Bluffs Nonpareil. _ ="THE RAILROAD QUESTION"= may be ordered through any bookseller, or will be sent by mail to any address, on receipt of price, by the publishers. The Schulte Publishing Company, 334 DEARBORN STREET, CHICAGO. +-----------------------------------------------+ | Transcriber's Note: | | | | Inconsistent hyphenation and spelling in the | | original document have been preserved. | | | | Roman numeral page numbers in the Appendix | | have been changed to Arabic numerals. | | | | Typographical errors corrected in the text: | | | | Page 13 Ackworth changed to Acworth | | Page 25 Jerusalen changed to Jerusalem | | Page 26 Brundusium changed to Brundisium | | Page 27 af changed to of | | Page 27 if changed to of | | Page 29 Strasburg changed to Strasbourg | | Page 37 Pittsburg changed to Pittsburgh | | Page 45 subsides changed to subsidies | | Page 65 Williamston changed to Williamstown | | Page 70 Cabello changed to Caballo | | Page 107 resolulution changed to resolution | | Page 215 prejudiee changed to prejudice | | Page 232 aquainted changed to acquainted | | Page 236 omiting changed to omitting | | Page 252 Bastile changed to Bastille | | Page 266 possiple changed to possible | | Page 342 Is changed to It | | Page 346 their changed to there | | Page 350 cammerce changed to commerce | | Page 361 upan changed to upon | | Page 368 iujustice changed to injustice | | Page 373 Eurpean changed to European | | Page 407 despatcher changed to dispatcher | | Page 408 despatcher changed to dispatcher | | Page 417 Sante changed to Santa | | Page 422 aquire changed to acquire | | Page 478 reasonaable changed to reasonable | | Page 482 addres changed to address | | Page 485 Potuguese changed to Portuguese | +-----------------------------------------------+