TOWNSEND BILL
...In tervie w...
D
OF
Representative F. C. STEVENS
Of Minnesota.
Opinion of Experts.
Sober Consideration of Rate Question.
(a9)
From the Seattle Times, March 3, 1905.
RAILROADS WORRY STATESMEN.
Many Difficulties Confront Congress on Proposed Rate Legis
lation.
Important Question Requires Investigation on the Part of
Legislators.
Washington Bureau
OE
The Seattle Daily Times.
and
The Puget Sound American.
Representative Stevens of Minnesota, one of the leacling
members of the Interstate and Foreign Commerce Committee,
in discussing proposed railroad rate legislation to-day, pointed
out a few of the difficulties which are confronting Congress in
its efforts to respond to the public demand for the regulation
of the great carrying companies.
Confusion Pointed Out.
Mr. Stevens points out that great confusion as to rates is
likely to come as the result of Congressional and State legisla¬
tive action. At present three different rate methods are before
the country.
First, is the method which is based on the pressure of busi¬
ness. This is competition, with which the public is familiar.
Second, is a legal rate to be fixed by a commission, or estab¬
lished by judgment of the courts. This method proceeds upon
a theory entirely different from that just named. It tries to
2
approximate the reasonable worth of tlie service rendered,
which the competitive metiiod has generali}- ignored.
Third, is a system of rates fixed by authority of State legisla¬
tures, and operative only within State limits.
Mr. Stevens points out that there can be no co-ordination
between these three methods, and that nobody can tell how
much or how little confusion may result from the attempt that
will be made to have the three in operation in the country at
one and the same time. Everybody, he thinks, understands
the first method referred to, that of competition, which has
been in operation from the beginning of railway enterprises.
Eâch-Townsend Billí
As to the second method he says :
"The Esch-Townsend bill embodies its principal ideas.
Under the operations of this bill rates would be established
very gradually over the country, one section being taken up at
a time, and montbs, not to say years, would elapse before the
Interstate Commerce Commission could fix rates covering the
country as a whole.
Rates Rigid and Inelastic.
"The rates thus established would be rigid and inelastic, for
it would require a legislative enactment to make them operative,
and another legislative enactment to amend them, which would
take much time."
The third method, that of rates fixed by State Commissions,
would also be rigid and inelastic, for the reason just given.
As an illustration of what Mr. Stevens has in mind, let it be
supposed that the Esch-Townsend bill is the law of the land,
and that the legislatures of the Middle West States, such as
Minnesota, Wisconsin, Iowa, Kansas and Nebraska, enact legis¬
lation that is now pending, to increase the rate-making power
of Railroad Commissions within those States.
System of Rates.
Let is be supposed, further, that the Interstate Commerce
Commission, in response to the loudest calls for hel|). which
3
are now coming from the Southwest, were to hold protracted
hearings and fix a system of rates for all traffic to the Gulf
ports. Much time would elapse before other sections of the
country could have rates similarly established, and during this
interval much harm might be accomplished.
For example : The most troublesome rate in the Middle
West and the territory between Chicago and the Atlantic Coast,
both by rail and water, is the rate on grain.
There is always difficulty in adjusting this rate so as to
satisfy shippers from the Missouri River to the Gulf and ship¬
pers from the same point to the Atlantic Coast by way of Chi¬
cago, or by way of Minneapolis and Duluth.
Now, the primary factor in determining this rate is the cost
of loading and shipping grain in barges from the Upper Missis¬
sippi to New Orleans, and placing it upon its arrival in the
latter city, either in elevators or ocean vessels. This comes
about because the great highway of the Mississippi is always
open, and men who can buy grain can always own or hire
barges.
Railroads Must Compete.
The railroads to the Gulf must meet this barge competition,
and they do it by considering the haul in both directions. The
return haul is now very large, owing to the active movement of
lumber, cotton and other Southern products.
The railroads east from the Missouri River, as Mr. Stevens
points out, must meet this Gulf competition, for unless they do
so all Middle West grain moves in a steady stream to the Gulf.
They must also consider the return half, and the relative export
rates to Liverpool from Gulf ports and from the North.
Atlantic Seaboard.
A third factor in this situation is the demand of the Minne¬
apolis flour mills that grain be diverted toward the Northwest.
There are times when the local demands of Minneapolis and
Duluth are alone sufficient to take grain in that direction, when
the rates in other directions are not sufficiently low.
4
The situation above outlined is based on the natural pressure
of business, or on competition.
"Suppose," says Mr. Stevens, "on complaint, the rates from
the Missouri River to New Orleans are fixed by the Interstate
Commerce Commission, under, say, the Esch-Townsend bill,
and that the Railroad Commissions of Kansas and Nebraska
have fixed rates, the former from all State points to Omaha,
and the latter from all State points to Kansas City, Kan.
Investigation Necessary.
"These rates, fixed by the process of law, could only be
changed by a subsequent investigation and order made in pro¬
cess of law, and the territory where they are operative is re¬
moved from the domain of competition. Meanwhile suppose
that the Interstate Commerce Commission has to fix rates from
the Missouri River to the Atlantic Coast, either by way of
Chicago or Minneapolis and Duluth.
Effect on Quif Ports.
"What is the inevitable result? The rates to the Atlantic
being controlled by competition, the transportation lines in that
direction monopolize the grain trade, and the lines to the gulf,
having the inelastic rate fixed by law, and no competition, are
unable to attract the grain business, and both they and the
country which they traverse suffer.
"Of course, after a while the Interstate Commerce Commis¬
sion will get around to the fixing of rates from the Missouri
to the Atlantic, but what is to become of the Gulf traffic from
that section in the meantime?
"Obviously, the rates under the Esch-Townsend, or under
any other bill, could not be extended over the entire country
for years, and the result meanwhile would certainly be to
enrich railways and shippers in one section and to impoverish
those in another section.
"This is one of the questions which has come up in the minds
of members of Congress who want to give the people what
they demand, .so far as that may be done fairly to all interests.
Period of Transition Would be One of Distress.
"The period of transition from the present competitive
system to the system of fixed federal rate's would be a period
5
of distress for some parts of the country, and increased pros¬
perity for others, no matter what form the legislation might
take. The concrete illustration of the Missouri River and the
Gulf and Atlantic ports is typical of every other portion of the
country.
"I have merely selected it because the heavy grain shipments
from the Missouri River make the illustration familiar south,
east and west. Chicago, Minneapolis and New York have
been complaining of late years of the rapid development of
Gulf ports as points of shipment of grain for export.
"If the Esch-Townsend bill were to become effective to¬
morrow, and under its provisions the Interstate Commerce
Commission, responding to the most clamorous demand, were
to fix rates to the Gulf, the cities just named would have no
further cause for complaint, perhaps for years."
From New York Times, of February 10, 1905.
SAY ROOSEVELT PLAN WOULD INCREASE RATES.
Railroad Men Discuss the Esch-Townsend Bill.
Truesdale Gives Examples.
Roads Would |Not Consider Favorable Conditions—All Com¬
modities Would Fare Alike.
Prominent railroad men, asked for their views yesterday,
expressed the belief that the ultimate effect of giving to the
Interstate Commerce Commission power to fix rates as pro¬
posed by the Esch-Townsend bill, would be to increase the rates
themselves. Gn the question as to whether in specific cases the
Commission would be obliged to increase the rates of any given
road upon complaint of a competitor that the rates were unduly
low, there was some difference of opinion. The prevailing
belief was that the temper of the Commission, as at present
constituted, would not lead it to a favorable consideration of
such an appeal for relief.
6
William H. Truesdale, President of the Delaware, Lacka¬
wanna & Western, was strongly of the belief that rates would
not in the end be as low as at present if power to fix them were
placed in the hands of the Commission. He said:
"The railroad rate is the product of a great many forces and
must be determined, in order to be fair to everybody concerned,
according to these, and not according to any fixed standard
externally imposed. If the Interstate Commerce Commission
should have power arbitrarily to fix rates and these rates were
supported by whatever court of appeal might be constituted,
the result would be to overturn the natural agencies and sub¬
stitute for them the arbitrary judgment of five men, who, how¬
ever expert they may be as individuals, cannot be famijj^ar with
all the conditions underlying all rates the country over.
How Rates Would be Increased.
"The Commission, therefore, must adopt fixed standards if
it is going to exercise this supervisory power, and the roads
must be governed accordingly. Let us suppose, for instance,
that a railroad is carrying grain from one of the Middle States
to New Orleans for shipment, and at a very low rate because of
the conditions of the haul and the amount of the traffic. It is
probably charging a higher rate on other commodities, accord¬
ing to the conditions of their shipment, and, in carrying grain
elsewhere than to New Orleans, it may be charging more.
"Now how long do you suppose that road would maintain
its low rate on the New Orleans traffic if it thought that such a
rate would be taken as a basis for establishing like rates else¬
where on its lines where conditions were very different? If
the Interstate Commerce Commission were omniscient and
infallible there might be no occasion for a road to fear this,
but in any other case it is impossible to escape the danger,
and no road is going to keep rates down with a club like that
hanging over its head.
"This gives a specific example of the disturbance of business
by having rate-fixing power in the hands of the Interstate Com¬
merce Commission. Beyond that, it may be said that any
general disturbance of railroading, interfering with economies
of operation and with stable conditions, is going to increase the
cost of furnishing transportation, and hence the price that
people have to pay for it.
"I do not believe that in specific instances the Commission
would be likely to raise rates on complaint of a road that a
7
competitor had reduced its rates below the point where profit
is possible, first because the disposition of the Commission is
not to come to the aid of the railroads, and second because in
one of the earlier cases before it the Commission declined to
do exactly that thing. A railroad had made a complaint that
a competitor to freeze it out on a certain class of business had
reduced its rates below the point of profit and asked the Com¬
mission to take steps looking to the restoration of rates in
existence before the cutting began. This the Commission de¬
clined to do on the ground that it was not its business how
low the railroads might place their rates.
"The railroads only wish that the Commission would show
some such consideration for them as would have been given in
raising the rate in the case above. But, unfortunately, the
reverse appears to be the case, and everybody has it in for the
railroads. Now I don't claim for them the possession of any
greater virtues than are found in other business enterprises, or
in the legislators at Washington, Albany, or at the City Hall,
but I thing that the history of railroading in this country shows
that the railroads have had about as much consideration for the
welfare of all classes of interest as any line of activity where
money has been invested."
Usury Law as an Example.
The president of another great railroad system agreed with
Mr. Truesdale on the result of rate fixing by the Interstate
Commerce Commission, and illustrated the point by the work¬
ing of the law against usury in this State.
"That law was passed by the farmer vote," he said. "I
fought it, not because I wanted to lend money at usurious rates,
but because I wanted to have a chance to borrow it cheaply.
After that law had been passed, fixing the legal rate at 6 per
cent, another was passed for the benefit of the financial com¬
munity, which allowed loans on collateral, where there was a
written agreement, to be made at any rate agreeable to the
parties. Ever since then the broker has been able to borrow
money at an average, the year around, of not over 4 per cent
at the outside, although he may have to pay 10 or 15 per cent
in some particular week, or 50 per cent for an hour or two in
some one day.
"But Mr. Farmer up-State who wants to borrow money on
his farm—a security that is not subject to market fluctuations
8
—has got to pay 6 per cent for his money on account of his
own law interfering with the operations of natural conditions
of supply and demand. I've got a place up-State myself, and
I could probably borrow money on it at 2 or 3 per cent if the
market was right, but, actually, they wouldn't be lending money
on the place ; they'd be lending it on my note. And if my
next-door neighbor, who is a farmer and not a railroad man
in addition, wanted to get some money on his place he'd have
to pay 6 per cent,
"When any one talks about giving the Federal Government
power over rates, he ought to distinguish between the fixing
and the control of a rate. You control a rate by passing laws
against specific acts tending to produce unfairness. We may
take the word 'rebate' as a generic term. Then if any indi¬
vidual has suffered because of unfair rates or rebates he can go
before the Interstate Commerce Commission and get it to
advise the institution of a suit, if he has a good case, or else
seek redress himself in the courts, according to circumstances.
"Any such control of rates so as to do away with rebates in
every form or description no one will welcome more quickly
than the railroads, and this is shown in the present instance.
Rut the fixing of a rate by the Government means a very dif¬
ferent thing. It is the fixing of a price for which transporta¬
tion shall be furnished, and when you have extended the sphere
of the Government as far as that, you are establishing Govern¬
ment interference with industry that is almost mediaeval in its
severity and possibility for evil.
"Furthermore, the Interstate Commerce Commission as now
organized is constantly subjected to a certain set of influences
that can be appreciated when it is said that the Pennsylvania
Road owns every railroad track on which one can enter Wash¬
ington on a pass. If you chose a commission from the most
rabid State in the West you would have the Commission under
the 'influence' in ten minutes from its arrival in Washington,
and thoroughly 'Easternized' inside of a year. The result
would be just what the result has been—a Commission that is
always laying for the Western svstems and those reaching the
Gulf.
Favors New Department.
"My idea would be the one that was suggested when Mr.
Roosevelt called a number of railroad presidents, including
Paul Morton, together a year or so ago, when the Department
of Commerce and Labor was being worked out. He asked
tiiem to meet with the Interstate Commerce Commission and
9
the Attorney General with a view to creating a new Commis¬
sion or Commissioner under the Department of Commerce and
Labor. A few letters were exchanged, and although all the
railroad men were in favor of the scheme, the matter was
pigeonholed.
"But if you made the Commission—or better, a single Com¬
missioner—a part of one of the Federal Departments, as it was
originally a part of the Department of the Interior, you do away
with all this and create a responsible agent of the Federal Gov¬
ernment, and one that has the regular machinery of the Govern¬
ment at his disposition. Such an official ought to attain as
high a place in the public esteem as the Controller of the Cur¬
rency now holds, and his word would probably be recognized
as the final word on the subject.
"What a contrast between that situation and the present
one—a Commission that in seventeen years has, cost the Gov¬
ernment approximately $3,804,915.76, that has tried 355 cases,
exclusiive of the safety appliance cases, at an average cost of
$10,778.80 a case, has decided 194 cases in favor of the com¬
plainants at a rate of $19,612.97 a case, and has had the Federal
courts sustain its findings in two cases, which have, therefore,
cost the Government nearly $2,000,000 apiece!"
Henry Fink's Views.
Henry Fink, Chairman of the Board of Directors of the
Norfolk & Western Railroad said :
"The conditions that would follow the passage of the Towns-
end bill by the Senate are almost too terrible to contemplate.
Arrangements that have taken years to perfect would be broken
up, to the utter confusion of the railroad situation. I do not
think that rates, in the readjustment, would tend to be higher,
but rather that many roads struggling under rates artificially
imposed would find the burden too heavy to bear.
"What people are disposed to forget is that rate making is
purely a commercial process, not financial nor operative. And
as a commercial problem the rate problem can only be handled
according to specific conditions, and not on the basis of theo¬
rizing. The Interstate Commerce Commission, no matter how
able its members, cannot make rates for the whole country, as
it would have power to do under the bill, without making a
great many mistakes, and the Townsend bill provides no relief
for those railroads on which an unjust rate has been imposed
until the final decision of the court or Courts of revew.
lO
"This feature of the bill, to my mind, is the worst one. If
it were provided, as was suggested, that an existing rate be
allowed to stand until the final decision of the case, the shipper
could be protected by a regulation that a railroad, on losing its
case in the court of review, should make up to the shipper the
difference between what he paid and the new rate. But any
such provision is omitted in the bill.
"An illustration of how this would work may be found in
the decision of the Commission in 1894 that the rates charged
by several of the Southern railroads on a great number of
articles should be lowered. It was three years before the
courts finally reversed the decision, and in the meantime if the
railroads had been obliged to lower their rates under the Com¬
mission's order, some of them must have been forced into
bankruptcy. That is what the railroads would have constantly
hanging over them if the Senate passed the Townsend bill."
Samuel Spencer Before interstate and Foreign Commerce
Committee of the House, January 13, 1905.
Granting Such Authority Would Cause Irreparable Injury.
Mr. Spencer. Again, the granting of that authority to name
a rate, under the circumstances described in this bill, would
inflict an irreparable injury upon the carrier in a case where
the matter was appealed to the courts. The rate having already
taken effect, if the courts should decide that the original rate of
the railway company was reasonable and just, there would be
no possible means for the railway company to recoup that loss.
Now, the process is that the Interstate Commerce Commission
has the power, and it is one of its duties, that having found
what it regards to be an unreasonable rate, either by its own
motion or after hearing, it shall condemn that rate; We have
seen that in the great majority of cases, something over 90 per
cent, where they have done that thing, the railway companies
11
have acquiesced, and stated : "All right, we accept your judg¬
ment." But where it has gone into court, the Commission has
not established one single case of an unreasonable rate per se,
and they have only established two cases of discriminatory
rates as between localities, that being less than ten per cent of
total of the cases which have gone to the courts. If that is the
case, is it not fair to the railroad companies that before a rate,
on a record like that, is put into effect, the courts should pass
upon it, if the railroad company is going to suffer irreparable
loss if they finally gain the case?
Additional Loss Resulting From Such a Measure.
Mr. SpSncëR. As I have said, the bill inflicts the irreparable
injury in the loss of revenue which is going on while the case
is pending. That is not the only part of that irreparable injury.
You may run into this difficulty; We will assume that the
Commission has put a rate into effect and a railroad company
has appealed it to the courts. Now, that very fact that the
rate goes into effect is a material deterrent, irrespective of the
reasonableness or unreasonableness of the rate itself. One of
the greatest difficulties we have to deal with—and that is the
reason that our unreasonably low rates exist, to a very large
extent, because something has occurred—it may be one thing
or it may be another ; it may be fierce competition ; it may be an
abortive effort to create new business that did not work out—
for various reasons these low rates have gone into effect; and
one of the most serious difficulties we have to deal with in
practice is to ever get them back. It is not only that people are
loth to pay an increased rate above what they have paid. That
is natural. None of us like to pay more for a thing than we
paid yesterday or the day before yesterday or last year, if we can
help it. Beyond that, however, and apart from any individual
or personal reluctance in paying more, the rate having gone
into effect, the commerce of that particular article, its distribu¬
tion, the commerce of that particular community, becomes set¬
tled around that rate.
12
From the Testimony of 5tuyvesant Fish Before Senate
Committee on Interstate Commerce.
Necessity Por Additional Legislation—Opinion of Hon. Qeorge
P. Edmunds.
The Hon. George F. Edmunds, for so many years a Senator
from Vermont, recently wrote me as follows:
"I do not think it necessary for the public interests to clothe
any board at present with the general power to fix rates. The
powers of the Interstate Commerce Commission and of the
judicial branch of the Government (including in this descrip¬
tion the executive duties of prosecution, etc.) provided for in
the so-called Sherman law have been and are, I believe, entirely
adequate to punish, and, in the main, prevent every one of the
unjust and illegal performances of the railway management
and of the private persons who have been or are parties thereto.
A study of the history of the 'Sherman Act,' as shown in the
Congressional Record and the journals of the two Houses, will
show, I think, first, that Congress intended to prevent and to
punish every unjust and unfair action both of railway mana¬
gers and of private persons in connection with interstate and
foreign transportation, and, second, that the law was entirely
adequate to accomplish it if only the executive branch of the
Government, including Attorneys-General, district attorneys,
etc., and the strictly judicial branch would perform the plain
duties that the law required of them. Every intelligent person
acquainted with public and business affairs, I am confident,
understands perfectly well that the evils that the act of July 2,
1890, provided for the correction of were left substantially un-
assailed, and continued to grow and expand until they have
now reached a stage that compels attention, and will, if not
speedily overcome, be visited with a heavy retribution.
"I have expressed these views so many times during the last
ten or fifteen years that it seems like supererogation to repeat
them to you. What is really needed is not legislation but ad¬
ministration."
I desire to say that Senator Edmunds is in no way related to
me or to the Illinois Central Railroad Company as counsel. I
simply wrote to him on the subject as a friend.
13
From thí Chronicle, March II, 1903.
The Bnemies of Progress.
After reading the accounts of last Saturday's inauguration
ceremonies, the conclusion seemed unavoidable that our people
occupied the most favored of lands, and from it sprung all that
was wisest and best; that there was nothing mean or even
second rate connected with the United States. On the contrary
we had such an abundance of sweets for disposal in one hand
and harmless bullets in the other that the benign influence of
our democratic institutions was felt everywhere as a wholesome
agency, dispensing peace on earth and good will to men. We
could not help thinking as we read these comforting assurances,
how it is, if they are all true, that the ends which have been
most persistently advocated and pushed at Washington, and
even in the White House, during the previous four months,
have been in aid of a Governmental policy so inconsiderate and
harsh that if pursued to the bitter end it cannot but serve to
confiscate a considerable part of the property of a very large
class of Americans of both sexes, of almost every age, and of
all grades of investors, not one of whom had done or been
charged with doing, any wrong. Advocating such proceed¬
ings is thoroughly inconsistent with our idea of a high-minded,
beneficent Government, scattering its kindly influence among all
the nations of the earth.
The Holders of Railway Securities.
The foregoing does not by any means disclose fully the
grievousness of the policy so zealously pursued to-day by this
Government against the stockholders of our railroads. Two
weeks ago we gave in our "Financial Situation" (page 838) an
item of considerable length indicating in a summary way the
number of railroad stocks and bonds held by some of our lead¬
ing corporations and closing with an accurate compilation of
the holdings of such securities by the life insurance companies
doing business in Massachusetts. While we were preparing
14
that item our contemporary, the "Railroad Gazette" seems to
have been at work in the same field and had prepared for it a
more detailed article by Mr. H. T. Newcomb, publishing his
thesis on the same day we published ours. We have room
only to give the closing summary of Mr. Newcomb's com¬
pilation, wbich is still only partial—a mere hint of the extent in
which the business life of the nation is based upon railroad
values.
VALUE OF RAILROAD SECURITIES HELD BY—
The insurance companies investigated $845,889,038
The savings banks investigated 442,354,086
The educational institutions investigated 47,468,327
Total $1,335,711,451
Six States only: (i)New York, (2) New Jersey, (3) Con¬
necticut, (4) Massachusetts, (5) Maine and (6) New Hamp¬
shire.
Rich and Poor Both interested.
The foregoing, we have said, is only partial, disclosing prob¬
ably the location of only about one-sixth of the railroad prop¬
erty of the country. It is enough, however, to dissipate the idea
that railroad securities are the property of the few very rieb
men. Even if the rich were alone the holders of railroad se¬
curities, we know no law which permits Government protection
to be withdrawn from the rich. Still here are railroad securi¬
ties of the declared value of $1,335,711,451 belonging not to the
rich but the most worthy members of the class of moderate
investors—the bulwark of the nation—the more provident
members of the working classes, in large part covering prob¬
ably their entire property. These are to be committed to the
Interstate Commerce Commission with arbitrary power to cut
down the rates now charged by the roads, which, of course,
means to cut down the ruling values while depriving the holder
of any appeal to the courts. That seems to be the kind of
Government we glory in.
15
Deprived of the Protection of the Courts.
The disaster now invited differs in no degree from that
threatened by the free-silver-coinage party. Our people will
soon see the likeness. It took a long time for a good many to
appreciate fully how very short the road was between the
adoption of free-silver-coinage and industrial confusion. Not
one whit longer will the way prove between the taking by
statute from railroad directors the right to make rates conferred
upon them by their stockholders and turning that right over to
a Commission appointed by the Government, from whose de¬
cision, according to the present program laid down, the man¬
agement is to be deprived of even the protection of the courts.
Of course stockholders everywhere rebel against that action
believing they will thereby be virtually deprived of the value of
their property. That conclusion cannot be avoided. The ob¬
ject of this change is everywhere stated to be by its advocates
to lower rates ; the literature of the Interstate Commerce Com¬
missioners and their followers shows beyond question that the
purpose of the legislation is to lower the rates the railroad man¬
agers have made. The fact is so obvious it does not need argu¬
ment to prove that the indiscriminate lowering of rates of a
road and shutting out that road from the refuge of the courts
is a kind of treatment not so very different from that the high¬
wayman awards the citizen walking home of a dark night. The
power is lodged with the official, the victim is at his mercy;
while the instrument of destruction in both cases is deadly.
Political Courage Save the Country.
It would be just as arbitrary and not a bit more objectionable
if the Commission should be given the absolute power to cite
the savings banks directors to appear before it and force the
directors to raise the rate of distribution among its depositors.
Congress having first taken away from the banks the right of
appeal to the courts. When acts like that are authorized, it is
a very fitting prelude to do what our Lower House of Congress
did this winter—cut off discussion and force a speedy vote.
i6
When the silver issue was being worked in behalf of the poor
man and his currency, both parties were wedded to the idea of
its popularity and so afraid of losing that class of voters that
each for years dropped the word gold from its platforms except
to express repugnance and aversion. Politics make fearful
cowards and both parties at times get in bondage to the
cowardly membership. Finally, in the silver struggle, one
political division had its courage raised to such an extent as to
induce its organization to come out distinctly for a sound cur¬
rency. It was speedily found (excluding the Southern States,
which were largely held in the opposition by another issue)
what an absurdly small party they had been so long living in
fear of. The truth is, almost every live American has more
or less property, and all of them, except the stupid ones—a
small fraction—have brains. Consequently, in the United
States it is never safe for an ambitious youth to ally himself
with error or adopt any political standard that is tainted with
dishonesty.
Shall Prosperity be Continued or Checked ?
Again, it is well enough to remember that the danger to
democratic institutions lies in corruption and not in money.
Capital now-a-days is the most vulnerable of agencies. A
breath of suspicion and it is gone. To gather it and make it
the prime agent of growth in wealth as it has been in recent
years, stability and confidence are the essentials. To be sure
Goldsmith wrote, and wrote truly at that time: "111 fares the
land, to hastening ills a prey, where wealth accumulates and
men decay." That was a natural connection when the trade of
each country was more nearly isolated and capital stayed where
it was, and festered. Now the world's interests are so allied
with every other that the whole body of nations is very like a
single country. Every State's gold chest is open to every
other. Fluidity of capital is its controlling feature. Hence
when we established our currency on a gold basis the poor men
got rich because the wealth of every nation came here to be
invested and the wheels of commerce went round as never be-
I?
fore. Instead of men decaying under the influence of the new
flood of wealth, it came in and fructified this rich field for
enterprise, and hence we have seen such growth in wealth, in
population and in power as has never been noted before in a
like cycle of years, and can glory in it now even when we are
doing our best to prevent its continuance.
Editorial from Derrick, Oil City, Pa.
An Unwise JVleasure.
Tlie opposition to the rate-making bill is not confined alone
to the railways, which are the principal interests that will be
affected thereby. The mere proposition to place such a power
in the hands of an appointive board is contrary to democratic
principles and if granted would prove highly dangerous to a
republican form of government. The exercise of such a pre¬
rogative is contrary to the fundamental ideas of free govern¬
ment. Because railroad and other interests are arrayed
against this measure constitutes no reason why any portion of
the people should favor it.
Unjust Exercise of Oovernment Power
The most serious thing that now threatens our business and
commercial prosperity, and which would exercise the most
depressing influence upon railroad interests everywhere would
be the passage of a rate-making bill by Congress. The railroad
authorities consider such an enactment would he an encroach¬
ment of the Government upon individual rights, that it has no
business tb interfere between the railroads and the people fur¬
ther than to enforce even-handed justice on all sides. Rate-
making would be an unjust exerci.se of Government power.
No Commission that can be organized would be competent to
deal with such a vast and complicated piece of work. It might
i8
as logically attempt to fix the price of butter and eggs with dif¬
ferent conditions in innumerable markets.
Effect on Employees and Security Holders.
Comparative statistics demonstrate that our railroads now
perform the cheapest and best service in the world; a most
conclusive demonstration of the superiority of private manage¬
ment over any paternalistic schemes. Further, our railroads
have over 1,200,000 employees and pay about $800,000,000 a
year in wages. Should the Government fix the rate and make
it lower, the loss would fall chieñy upon labor, which already
receives about one-half of the gross earnings of the roads.
There is still another class who would suffer under such a
policy, and that is the millions of stockholders whose rights are
often entirely ignored in unreasonable anti-railroad agitation.
The most enlightened public opinion is opposed to the enact¬
ment of this bill and will applaud the determination of the
Senate to prevent its being placed on the statute books of the
land.
Editorial from Journal of Commerce, Feb. 27, 1905.
For Sober Consideration of the Rate Question.
Since the House of Representatives exhibited its unseemly
haste in rushing through the Townsend bill, the essential pro¬
vision of which would give the Interstate Commerce Commis¬
sion power to fix the rates to be charged by railroads, there has
been a respite for sober reflection. The Senate Committee has
been giving hearings and getting considerable light upon the
question of rate-making from responsible officers of railroad
companies. It has reached the conclusion that adequate atten¬
tion cannot be given to a matter of such importance during the
remaining week of the session and will ask for authority to sit
19
during the recess and report at the next session. In the mean¬
time Senators who were inclined to join in the hot haste of the
Representatives have been sobering down and are ready to
acquiesce in tbe postponement of the subject, and even the
President seems to have concluded that it is just as well to
think twice. Public opinion, which was assumed to be clamor¬
ing for the passage of some measure conferring the rate-
making power upon the Interstate Commerce Commission,
appears to accept the change of programme with equanimity,
not to say entire satisfaction.
No Real Settled Public Opinion Behind Townsend Bill.
The fact of the matter is that there has been no real settled
public opinion behind this ill-considered measure. There is
one thing upon which the sentiment of the country is fairly
aroused, the long standing abuse of discrimination by railroad
companies between different shippers or classes of shippers and
between different shipping points, whereby some profit at the
expense of others. This iniquity has done a vast deal of harm
in building up monopoly, strangling competition and ruining
independent business entrprise. Whetber it is effected by
allowing special rates to favored shippers, paying back part of
the charges in rebates, making undue allowances to private
cars and terminal tracks or by other underhand devices, it is a
violation of law and a crime against the authority- from which
railroad franchises are derived. Public opinion has un¬
doubtedly demanded that it be stopped, by means of additional
legislation if that is necessary to make the law cover all the
practices by which it is accomplished, and by a vigorous en¬
forcement of legal provisions applicable to it. Tbe attempt
was made to turn this public opinion to tbe support of the
Townsend bill, and it was represented that it actually did
demand its passage. But the Townsend bill did not touch the
evil complained of, for variations from published schedules
would be just as easy after these had been tinkered by the
Commission as before.
2Q
Peril in the Exercise of Rate-Making Power.
Few cases have been revealed among the innumerable sched¬
ules of rates filed by the railroads which were complained of as
in themselves unreasonable or "unjustly discriminatory" if ap-
idied equally and fairly to all. Where they are shown by in¬
vestigation to be so they have in nearly all cases been corrected
on the mere recommendation of the Commission. In the few
cases in which the courts have been called upon to review the
rulings of the Commission the}' have been set aside as erroneous
with barely three exceptions since the Interstate Commerce law
was passed iiT 1887. The unreasonableness of the open sched¬
ule rates is not the abuse complained of, and no reason has been
shown for giving the Commission the dangerous power of pre¬
scribing what a rate shall be, while the peril of the exercise of
such a power has been clearly pointed out. Now that there is
to be time for a sober consideration of the subject and the
Senate Committee is to devote attention to it during the sum¬
mer, there will be a chance for public opinion to be intelligently
formed and directed. It is not a matter to be settled by clamor
and excitement and a headlong rush into measures dished up
in a hurry. While this committee is occupied in getting at
what is really the matter and what is needed to remedy it, there
is no occasion for the Administration to refrain from enforcing
the penalties of the present law wherever it is shown to be
violated.