uotwnr
op ? ao
Remarks of h. H. Porter, at a meeting of The Chicago Commer-
ciaf Club, field'on February 21,1891, when the subject for
discussion was:
11 Has the litter-state Commerce Law Proved Beneficial to the
Business Interests of the Country? "
he
57 5 7
7b
LI8HA"Y
railway <oowmio» /« ' /
fe & -pj ^
*j?f# \<»s ^lacp
m«?-' ^ 24»ite
j 3' /
Remarks of H. H. Porter, at a meeting of The Chicago Commer¬
cial <iub, field'on February 21,1891, when the subject for
%
discussion was:
'' Has the Inter-state Commerce Law Proved Beneficial to the
Business Interests of the Country f "
I assume that by the "business interests of the country"
is intended the whole interests of commerce, manufactures,
transportation and the people, and that in its broadest sense;
and that these benefits mean, under proper business manage¬
ment, a fair remuneration to investors, producers, transport¬
ers, and the interested public generally, being just to all, and
especially favoring no one interest as against another. TJnder
the various state laws and the inter-state commerce law this
can hardly be said to be the condition now. How much of
the present dissatisfaction is attributable to the inter-state
commerce law, and how much to the other conditions, I will
not discuss. But to my mind the railroad problem can be
worked out, and successfully worked out, as thought trans¬
portation has been, and that way lias not been fully appre¬
ciated.
The application of steam and the application of electricity
came about the same time. Companies were organized for
9
the construction of railways and at about the same time were
organized for the construction of telegraph lines, and so fast
as railroad was built a telegraph line was built on the same
right of way. Their construction was equally chaotic and
they were each used for similar purposes. They were organ¬
ized under similar corporate charters—the railroads to trans¬
port passengers and property, the telegraph line to transport
thought. Their principles of operation were alike. The
railroad transported freight and passengers to various stations
situated on its line, and for this transportation had various
tariffs for the different classes of freight and for the different
speeds and comforts of its passengers.
The fact that the telegraph line cost so much less than the
railroad made the same telegraph corporation frequently
operate telegraph lines on various railroads. But the area
occupied by each telegraph company was, compared to the
telegraph companies, of to-day, small.
When the passengers or freight were carried over more than
one railroad, the tariffs of the various roads were added
together to make the rate of transportation from origin to
terminus. Each railroad had its own charge for service per¬
formed, and the connecting railroads added these charges to
their own, until, at destination, the total was the added-to-
gether charges of all the roads performing the service.
That was equally true of, and practically in the same man¬
ner performed by, the telegraph lines.
The fear of monopoly and the fear of the power to be ex¬
ecuted by the growth, through combination, of telegraph lines,
was the same as the fear from railroad growth and combi¬
nation. The telegraph manipulation being the less important,
the legislation of the various states and of the general gov¬
ernment to prevent these combinations by the railroad com¬
panies was greater than the legislation to prevent these com¬
binations by the telegraph companies.
But if we look back, we find that telegraph companies were
organized to build connecting and competing lines exactly
011 the same principle as railroads were, both as to continuous
lines and active parallel competing lines.
Prices of the different companies for transporting messages
were different from one common point to another exactly
t)
as the railroads' were for transporting passengers and prop*
erty. Large expenses were incurred in carrying on this com¬
petition, and the corporations themselves were as generally on
the verge of bankruptcy as the railroad companies now are.
In short, the telegraph companies were organized in the same
manner and for the same reasons as were the railroad com¬
panies, but fortunately for them state and governmental leg¬
islation was not applied to them to prevent their amalgama¬
ting under such conditions as they should find necessary, as
have been applied to railroads, and hence their different con¬
dition to-day. But a few years ago there were any number of
telegraph corporations in the United States. Some allies,
some competitors; all quarreling. The rates as unsteady, and
the same devices to secure business adopted. New companies
being constantly organized; some with a legitimate purpose,
some for the purpose of injuring the credit and value of exist¬
ing ones. The conditions were practically the same as exist
to-day among the railroads. Their necessities found a rem¬
edy, and found it by taking just such action as the railroad
companies have been continually for years asking the right to
take and that has by state and governmental laws been denied
them. They were allowed the freedom of considering prac¬
ticable remedies, and if thought best, acting on them,—such
as pooling business on terms they could, in cases where thought
wise; pooling earnings in cases where thought best; leasing in
cases where thought best, and consolidating in other cases, as
well as controlling by other methods in other cases. Now
the whole telegraph business of the United States is practically
done by two corporations,—the Western Union and the Pos¬
tal, because telegraph companies were not denied by statute
the right to adopt the methods they have. Their charges as
a whole are not now as unsatisfactory as the railroad trans¬
portation charges, because they are reasonable and not continu¬
ally changing or particularly favoring localities.
The kinds of business they perform are analogous to that of
railroads. Railroads have an increased price for carrying
passengers on fast trains in specially appointed cars and
perishable property on special freight trains having prefer¬
ence over ordinary freight trains. Telegraph companies have
an increased price for those telegrams, the time and correct-
4
ness of which are very important, and to these they give pre¬
cedence and require them to be repeated to insure against
error.
Railroads have ordinary passenger trains carrying the gen¬
eral passenger, and freight trains carrying the general miscel¬
laneous freight at a lesser rate. Telegraph companies have
rates for transporting ordinary messages in the business hours
of the day, forwarding them at a lesser rate than the important
repeated messages.
Railroads for cheap, coarse products, such as coal, iron ore,
lumber, etc., have still lower rates and carry them in slower
trains and as their facilities will conveniently permit. Tele¬
graph companies at similarly reduced rates take messages
that are to be transported in the night and delivered at their
convenience in the morning.
Railroads make reductions in their rates for a number of
people going at one time, and a lesser rate for full carloads
of freight going at one time, than they would for one passen¬
ger or less than one carload of freight. Telegraph com¬
panies make a reduction for long messages per word from
their standard prices for messages of ten words.
Now, the effect of this consolidation or unification of tele¬
graph lines I think will be generally admitted has not proved
harmful to any interest; on the contrary, has been of benefit
to their owners, to their employes and to the public, and the
whole work has been done better and more satisfactorily to
every interest. Why should not this be the result if rail¬
roads were allowed to move on the same lines, and why
should not they in the end produce as satisfactory a public
result ?
I remember well how often a few years ago in picking up
the morning papers I found great head lines of a new tele¬
graph company organized for the purpose of competing with
an existing one. How security holders in the various tele¬
graph companies were in a constant fever heat from the violent
fluctuations in their values occasioned by the threatened
new competition, and no one man was more unpopular with
the public, throughout the whole country, than the man who
was supposed to be the moving spirit in many of those then
newly organized telegraph companies. The largest telegraph
company at that time was the Western Union, and this was
even then the outgrowth, by absorption, of many smaller com¬
panies. But there were many other independent companies
existing and actively competing with it.
The values of Western Union Telegraph stock were con¬
stantly changing up and down, according to the supposed will
of this one man who was presumed to be attacking the rival
companies and helping the Western Union when that stock was
rising and using some rival company to attack the Western
Union when its stock was dropping. I think I may say that,
all in all, he was about the most unpopular man in the United
States. Yet, that same man, with all the distrust of the
public towards him, finally, more than any one man, after
securing the control that he had been supposed for years to
have been trying to secure through these methods, practi¬
cally effected the consolidation of the various companies into
what is now this Western Union Telegraph Company.
It was a distrusted move on his part, and one that, had
there been organized power at the time to defeat, would have
been defeated. Charges were made everywhere that the
whole telegraphing public would be his slave ; that it was
giving him the control of all the important information
that passed over the country from one private individual to
another, or one financial institution to another, and that he
could use it in any way he chose and for any purpose he
chose.
That man is now dead. Were the prophecies with refer¬
ence to the injury that was to be done from this combina¬
tion, during his life, realized? I think we will all say No.
Shall we not all agree that the results of that combination
were favorable as a whole, if not in every detail, to every
branch of business in this country?
If this is the worked-out result of thought transporta¬
tion, why not try on these lines to work a result out for rail¬
roads transporting the people and their property? The moves
heretofore made on present lines have certainly resulted in
disaster. Will not a continuance of them bring upon all a
greater risk than the change? There certainly is as much
experience and brain power connected with the railroads of
this country as there was with the telegraph companies rela-
(•»
tive to the work to be performed. There is certainly as much
honesty, good judgment, and loyalty to the people and country
at large. The success of the railroads is indissolubly bound
up with financial, social, business, and, I think, religious and
moral success. They are never prosperous when the people
are not prosperous. They cannot be prosperous unless the
people are prosperous. The people cannot be prosperous in
the broad, fair-minded sense of the word prosperity, when
railroads, properly managed, are not equally prosperous.
That there will be at all times incidental wrongs must be
admitted. That there will be errors made. That there will
be stupidity of action, but does not that apply everywhere,
and have we any right to suppose that there will be more
of it in railroad management if left free to the extent I have
before indicated? At any rate, is it not worth trying?
In 1865 at the close of our last war there were but thirty-
five thousand (35,000) miles of railroad in the United States.
At the end of 1892 Poors'' Manual shows there were one hun¬
dred and seventy-two thousand (172,000) miles. This means
that about eighty per cent, of the railways of this country have
been built since 1865. Their cost is represented by about six
thousand million dollars of mortgage debt and five thousand
million dollars of capital stock, and their total earnings for
1892 were over twelve hundred millions of dollars. To earn
this money there were eight hundred and sixty-five million
miles run by trains which is equivalent to one train around
the world every fifteen minutes. The state of Illinois, and
those states bordering it, Indiana, Wisconsin, Iowa, Minne¬
sota, and Kentucky—to-day have over 40,000 miles of rail¬
road, being 5,000 miles more than existed in the whole Uni¬
ted States when the war of the Rebellion closed. The state
of Illinois has over 10,000 miles of railroad in it, the most of
any state in our Union. All this railroad had to be paid for
from some source, and from the day of its completion until
to-day it has been and probably will, at least for the imme¬
diate future, continue to be operated. Is it not of vital im¬
portance to the whole people of this country that this invest¬
ment may have a reasonable earning power through which
the investors may be justly compensated ?
We all know that the one great strength of our country is
7
its credit; the universal belief that any obligation it incurs
will be paid exactly as promised. Can the United States
continue to be prosperous and have that one industry, in
which the largest amount of capital is invested, and which
performs such a necessary daily work, and on which all are so
dependent for its performance every moment of time, resting
neither days, nights nor Sundays, whether it rains or shines,
much of it bankrupt now, and more of it fast becoming so?
Chicago, February 24th, 1894.