A REPLY
To Those Portions of Governor La Follette's
Message of 1905 which Relate
to Railways.
by
BURTON HANSON,
General Solicitor Chicago, Milwaukee and St. Paul
Railway Company.
A - L-Ö,
A Reply to Those Portions of Governor La Follette's Mes¬
sage of 1905, Which Relate to Railways.
The railways are an important factor in develop¬
ing the resources of Wisconsin. That the people
are prosperous is indisputable. The high position
Wisconsin occupies in agriculture, commerce, and
manufactures is largely due to the co-operation of the
railways with the foresight and industry of the people ;
and yet in the extended consideration of railroads
by Governor La Follette, in his message, there is
not to be found one word of commendation or ap¬
proval. It would indeed be remarkable, if it were
credible, that there is nothing in the relations of these
great enterprises with the people of the state which
merits favorable consideration, even from their se¬
verest critics. This shows a lack of that impartial
consideration of the subject which its importance
should command at the hands of the executive of a
great state. A general survey of the executive mes¬
sage does not disclose the calm and deliberate exercise
of that unbiased judgment which we have a right to
expect from him who is the governor of the corpora¬
tions as well as the people, and to whom, in the consti¬
tutional exercise of his legal functions, all have the
right to look for equal justice.
State Control of Transportation.
The state has the right to regulate and control rail¬
way rates. No one questions this. Upon the details
2
involved in that control, there naturally would be some
differences of opinion. The application of the under¬
lying principles of railway regulation to the question
at issue will undoubtedly result in such mutual adjust¬
ment of varying views, as will work a result both satis¬
factory and successful. There are many questions of
expediency involved, upon which men may honestly
differ, without involving any degree of moral turpi¬
tude upon either side.
Powers State Commission Should Have.
The paramount question is the power to be given a
commission. The wise solution of this will determine
the success of the regulation of railway transporta¬
tion in Wisconsin.
The Governor's assumption that upon this point the
interests of the carriers and the people are antagon¬
istic is an error. It is here that their interests are
most completely one. The carriers, and the people
will suffer more from unwise regulation, than either
could possibly suffer from no regulation.
The avowed object of the law is to protect the peo¬
ple from discriminations or injustice in the adminis¬
tration of the transportation facilities of the state.
What reason, then, is there for giving the commission
power to change rates that are just and equitable? It
is not enough to say, as does the Governor, that there
are unjust rates from which nobody directly suffers,
and therefore that no complaints concerning them
would be made. If there is no injury there is no
wrong. If the commission is to have the power to
originate complaints, it should not, in all fairness be
3
empowered to try them. If it is to have the power
to determine complaints it should be kept as free from
making them as judges are. If the law prescribes the
general principles upon which the rates shall be made,
leaving the details to those who are expert in that
business, and the correction of injustices or inequal¬
ities to the commission, it is more likely to result in
the requisite measure of protection to the interests of
both shipper and carrier, than would a law which seeks
to impose a responsibility upon the commission, which
in the nature of things it could not satisfactorily dis¬
charge.
The rates for transportation in Wisconsin are now
so adjusted that the diversified agricultural products
of the state move profitably to their respective
markets ; the factories are supplied with raw material,
and their manufactured products are distributed to
consumers. An infinite variety of conflicting interests
have been harmonized in the adjustment of these
tariffs. They represent, not the arbitrary determina¬
tions of any man or men, but the result of years of
development in both business and transportation con¬
ditions. If there is any injustice or inequity in the
result of this development, it might be possible to or¬
ganize a commission which could satisfactorily deter¬
mine what modification would be required to correct
such conditions as might be shown to need correction.
But it is certain that no commission of three men, how¬
ever wise or efficient they might be, could reconstruct
or materially modify the general rate conditions of
Wisconsin, without creating a commercial and indus¬
trial upheaval that would result in dire disaster to the
people of the state. It is not clear upon what ground
4
the Governor can logically demand for the state the
power to make rates in the first instance. That is not
regulation—it is the assumption of a power, which,
properly exercised, is inherent in the right to do busi¬
ness as a carrier, so long as the rate prescribed is
just and equitable. All that fair or reasonable regula¬
tion demands, is ample power reserved to the state to
determine whether or not a rate made by the carrier
is reasonable, and to correct it if it is not. It may
be observed that in the light of experience, care should
be exercised to have the general provisions of such a
statute broad enough to afford the relief desired, while
equal care should be exercised not to encumber it with
details which are purely administrative. In the in¬
flexible form of law, these might, as they did under
the Potter Law, hamper the Commissioners in the ex¬
ercise of a wise discretion, which, properly safe¬
guarded, should be conferred upon them.
Commodity Kates.
The Governor states that the legislation proposed
would not interfere with commodity rates. This is not
at all certain. The commodity tariffs depend for their
existence on the general average of traffic results. If
the regular schedules of the carriers are to be cut
down by the operation of the law proposed by the
Governor, to a basis where the net result of the busi¬
ness is unfavorable, the commodity tariffs will have to
be abolished altogether, or raised. This is a business
necessity. It is idle for the Governor to say that the
commission will be empowered to make commodity tar¬
iffs. Even if they were given the power to make them,
5
they could not enforce them, unless made high enough
to be remunerative.
If raw material is shipped into a factory under a
contract that its product when manufactured shall be
shipped out over the road bringing it in, the carrier
does make, and has the right to make a rate in order
to get that business, which, in and of itself is not a
profitable rate. A large proportion of the business
that would be subject to the jurisdiction of a state
commission, is business of this nature. If the smaller
proportion of the "Wisconsin local business should be
reduced in rate enough to effect any practical net re¬
duction, it would immediately make the commodity
rates impossible as a business proposition. The com¬
mission could not enforce them ; for each rate made
by the commission must stand or fall on the question
whether or not of itself it produces a reasonable profit.
The commission could not enforce its rates simply on
the ground that in the average they might be remuner¬
ative. The reason for this is that they could not
guarantee to make the average of rates good in the
average of business. It would not be contended by the
Governor that the state could compel a contract be¬
tween the shipper and the carrier that the product of
raw material should be shipped out over the road
bringing in the raw material. That contract is the
absolute basis of the commodity rate, and is the result
of mutual agreement, the making of which can not be
enforced upon either party by law.
In his message the Governor says that low com¬
modity rates are an absolute necessity to the business
interests of the state in the maintenance of its indus-
6
tries and their further development. He asserts that
the state can lawfully empower a commission to make
such commodity rates, and to vary them as the require¬
ments of any situation may demand. He thus admits
the necessity of commodity rates, and the justice of
discrimination in favor of persons and places when¬
ever in the judgment of the commission commercial
necessities require it. But the law is well settled that
it is beyond the power of the state to confer such au¬
thority upon a commission. The most it can do is to
permit the carriers to extend the benefit of such rates
to shippers ; it cannot compel them. And what carrier
will voluntarily grant such rates, when all its profitable
rates have been reduced as near the profit line as the
law can go ?
It is this menace to the existence of the industrial
commodity tariffs which accounts for the opposition of
the manufacturers of the state to the proposed legisla¬
tion.
Group Eates.
These rates have done quite as much to develop the
resources of the state as have commodity rates. They
are just as essential to the continued prosperity of the
state. Under these rates agricultural and industrial
products from the same locality and subject to sub¬
stantially the same elements of cost in production,
are largely distributed to their markets on the same
rates, without reference to difference of distance.
Thus the farmers in the extreme western part of the
state, two hundred and more miles from Milwaukee,
have practically the same rates as have the farmers
who are a hundred miles from Milwaukee. The ship-
7
pers of lumber at Tomahawk have the same rates as
Babcock to Milwaukee, Janesville, Beloit and all points
in Southern "Wisconsin, although there is a difference
in haul of over eighty miles. These group rates apply
to many other products of the forest, the farm and the
factory. Does the Governor wish to be understood
that the railway companies can be compelled by law
to haul a carload of farm products or lumber or manu¬
factured articles 200 miles at the same rate that they
haid the same commodity 100 miles?
The Securing of Competent Men.
The question whether competent men can he secured
to serve on the commission, depends very largely on
the duties to be performed. If the commission is con¬
stituted with power to review rates which are estab¬
lished by the carriers, and the selection, either by elec¬
tion or appointment, is made with due consideration
for the fitness of those selected, there will doubtless
be very little difficulty in getting perfectly competent
men for commissioners. If the commission is clothed
with the initial power to make rates, it will be much
more difficult. The Governor says that the railroads
have no difficulty in securing competent men. This is
not strictly true. There are very many important traf¬
fic positions which it is not easy to find the right man
to fill just at the time one is wanted. The only way
that the railroads find men to fill traffic positions is
by educating them in all the positions from office boy
up. And even then, railway managers have come to
believe that good traffic men "are born, not made."
It is no argument to say that the railroads have no
8
trouble in finding competent men, if the law provides
that no railway official shall be appointed to the com¬
mission. It would be as though the law provided that
no lawyer should be elected to the bench, or no vet¬
erinary surgeon should be appointed state veteri¬
narian, or no doctor on the state board of health. If
the commission were to be charged with the technical
duties of the transportation business it should be com¬
posed of men trained in its technical intricacies. Then
competent men could be secured, but not otherwise.
Elective or Appointive Commission.
The suggestion that the encroachments of the great
railway systems, allied with industrial trusts and com¬
binations, upon democracy, is a constant menace to
whatever degree we may perfect the laws providing
for the machinery of popular government, does not
ring true with the various suggestions for government
by commission and centralization of all governmental
power in the appointive hands of an executive, that
runs through all the rest of the message. The so¬
licitous interest in the welfare of the common people
seems to be rather grotesquely linked with a broad
and underlying distrust of the honesty or capacity of
the people. The question as to whether the commis¬
sion, if established, shall be elected or appointed is
one upon both sides of which much can be said. An
elective commission, as everyone must acknowledge,
will more clearly represent the direct will of the
people. It seems rather presumptuous for the Gov¬
ernor to assert that he could appoint a better com¬
mission than the peojjle could elect. It is, in any case,
9
a matter for the deliberative determination of the Leg¬
islature, and by the side of the decision as to what
powers shall be conferred upon a commission, it is
comparatively unimportant.
Discrimination Against Places.
With the statement of the Governor that the rail¬
roads have no right to show favoritism to individuals,
there will be found none to differ. With his statement
that the railroads have no right to discriminate be¬
tween places, every fact of commerce and nature, as
well as all the experience of the business of transpor¬
tation, rises to dispute. In fact, elsewhere in his mes¬
sage, the Governor admits the justice of such dis¬
criminations in conceding the necessity for commodity
rates, and that they should be so adjusted from time
to time as may be required to meet business situations.
Discrimination between places, as related to commerce,
is the law of nature. She has given rivers to some,
harbors to some, mines to some, lumber to some; in
nothing has she attempted uniform or equal distribu¬
tion of advantages. In order to make the success of
business enterprises possible, it is necessary for the
railroads to provide for the places where business is
done, the facilities which are required. This must be
done positively, with reference to where business is,
and not negatively, with reference to where it is not.
If traffic can be made, so that business is promoted,
the rates on certain commodities may justly be made
lower than the rates on the same commodity at other
points where it produces no resultant traffic. It is a
sound principle of transportation that upon commodi-
10
ties that will produce other traffic, a place must be dis¬
criminated in favor of. There is no principle of either
transportation or business, on which any place may be
discriminated against. This important distinction is
overlooked by the Governor. The Wisconsin Railway
Commissioners, who served under the Potter Law, had
the conditions which then were and still are peculiar
to this state under their jurisdiction for about two
years, and, upon this subject, in their second annual
report they said:
" A fixed, specific, tariff, excludes the element of discrim¬
ination, which is certainly a necessary prerogative of suc¬
cessful railway management. Such discriminations as have
been made in the days of irresponsible management between
citizens and localities on grounds purely selfish and personal,
cannot be too strongly denounced, or too carefully guarded
against. But any law that would take from railroad man¬
agers the right to make discriminations based on fixed facts
in nature and on sound commercial principles, would fetter
the corporations to their own great injury and the public
disadvantage."
Control of Market by Railroads.
The Governor states that it is unreasonable, unjust
and intolerable that the carrier should be empowered
to so arrange its schedules of rates as to force produce
and merchandise and manufactured products to the
market which it chooses to build up. Specific reference
is made to the fact that Milwaukee must sit by while
the products of her own state, and the states naturally
tributary to her, are carried by her doors. This is
an argument which is refuted by facts and nature.
Milwaukee does not sit by; she is an active and pros¬
perous market. She has as favorable railway rates
as any city similarly situated. She has the same
11
rates both to and from the seaboard that Chicago has.
If a railroad could control the location of market
cities, it is easy to see that the railroads of Wisconsin
would have much more interest in making a market of
Milwaukee, rather than Chicago, for it would give
them the collateral traffic resulting from that
business, and on a shorter haul. Commerce
moves in its natural channels, and railroads
must follow them ; they cannot cut new ones.
By the adjustment of railroad rates Milwaukee
cannot be made a market beyond her natu¬
ral supremacy, any more than Sheboygan, Manitowoc
or Green Bay. So far as the territory to the north
and west of them are concerned they have the natural
advantage of Milwaukee, by the shorter haul on both
rail and water. As long as so many lines run into
Chicago that do not run into so many other places that
other lines do, Chicago will have the benefit of the
excess of competition, and no regulation of rates in
any one state can stop it. The only regulation that
could prevent it would be a prohibition against lower¬
ing rates. It is unfair to charge the railroads with re¬
sponsibility for what neither they nor the power of
the state can remedy.
Overcapitalization .
The argument concerning overcapitalization, based
on net earnings, is not founded on correct data. Gov¬
ernor LaFollette has taken the net earnings of one of
the most prosperous sections of the St. Paul road, for
one of the most prosperous years it has ever had, and
applied it to a mileage which includes the entire
12
system. The railroad company is entitled to earn a
fair return 011 all its investment out of all its traffic.
It is only on this basis that a fair valuation of the
property can be arrived at on the basis of its earning
capacity. The average of ten years, for any business
in which the income is of a fluctuating nature, is as
short a period as any authority would consider fair,
and on many properties of varying incomes this would
not be considered a fair average. The average annual
net earnings of the Chicago, Milwaukee & St. Paul
Railway Company for the last ten years have been
$2,165.67 per mile. Capitalized at 6% this would fix
the value $36,089 per mile. This is $561.00 more than
the actual capitalization, and $4,630.00 less than the
value fixed by the state tax commission, which assessed
it at $40,719 per mile. On the basis of the tax com¬
mission assessment it would be entitled to earn, on a
6% basis, $2,443.14, or $277.57 per mile more than it
has averaged to earn for the last ten years, and $33.87
more than it actually earned last year.
Comparisons op Iowa and Wisconsin Freight Rates.
Much stress has been laid by Governor LaFollette
on certain comparisons of tariff rates in Iowa and
Wisconsin. He now states the excess of Wisconsin
rates over Iowa to be from twenty to nearly seventy
per cent. Two years, ago he stated it at from twenty-
eight to forty per cent. Since then the local rates in
Wisconsin have been materially reduced, and the local
rates in Iowa have not been changed. It would be
interesting to know what has wrought the change in
both extremes of the Governor's percentages. Ail
13
these comparisons have been fully answered and shown
to be erroneous. The tabulation of the rates from
Milwaukee to 260 or any other number of stations,
compared with like distances in Illinois or Iowa or
any other states, proves nothing, until the traffic ivhich
is moved under them is applied to the rales tabulated.
The reports made by the railroad companies to the
Eailroad Commissioner, as shown by his report for
1902, give the following percentages of traffic moved
in the state :
Avg. rate
Per cent, of
applying to
total traffic.
Wisconsin.
Agricultural Products. . .
22.12%
10.
Products of Animals. . .
3.66%
14,
Products of Mines
18.01%
3.00
Lumber
17.61%
10.
Logs
14.31%
2.50
Merchandise
7.27%
20.
Other Commodities
17.02%
15.
This shows that of the entire traffic of the state, and
the figures of no essentially "logging roads" are in¬
cluded, 49.93% is low rate traffic, 25.78% is agricultural
traffic, 7.27% is merchandise, and 17.02% is miscellane¬
ous commodities, most of which is manufactured pro¬
ducts.
The railroads whose reports are included in the
above figures are the following: Chicago, Milwaukee
& St. Paul; Chicago & North-Western; Chicago, St.
Paul, Minneapolis & Omaha; Chicago, Madison &
Northern; Duluth, South Shore & Atlantic; Green Bay
& Western; Kewaunee, Green Bay & Western; North¬
ern Pacific; Wisconsin & Michigan; Minneapolis, St.
Paul and Sault Ste. Marie; and Wisconsin Central.
14
In each case the report of "Wisconsin business only is
used, except in the case of the Wisconsin Central,
which only reports for the whole line, but of the busi¬
ness of which 95% or more is Wisconsin business.
The tables prepared by Governor LaFollette on
freight rates apply only to about 25% of the traffic
actually handled by the railroads of Wisconsin, and
he has never prepared tables showing the rates on
which 75% of the business is shipped.
It is conceded by the Governor that the commodity
tariffs under which 75% of the Wisconsin business is
handled should be maintained. It is necessary to carry
this traffic at low rates. The benefit from its trans¬
portation is shared by the workers who are employed
in the mills and factories, by the merchants who de¬
pend lipon them very largely for their trade, and by
the farmers whose produce they consume, as well as
by the manufacturers who ship under these tariffs.
These low rates must be counterbalanced by the aver¬
age of business. It is but fair that the burden of
these rates should be equitably distributed upon those
who derive the benefits.
Governor LaFollette treats freight rates as a tax
upon commerce, and properly so. Considered from
this standpoint, the present distribution of rates is
equitable. It is the common experience of every mer¬
chant in the state that his freight does not amount to
2% of the cost of his goods; and yet he ships under
the highest rates. The raw material, which is shipped
under the lowest rates, pays from 15% to 35% of its
value for transportation.
But comparisons of rates do not tell the story. It
15
is what is shipped. The facts are that in one year
the railroads of Iowa transported 17,090,233 tons of
freight on which they earned $36,832,344.75, while the
same year in Wisconsin the railroads transported
25,731,734 tons on which they earned $29,181,470.06.
The freight tonnage of Wisconsin exceeded that of
Iowa by more than half, while the amount received
was more than a quarter less. The rate per ton per
mile in Iowa was 20.7 per cent, greater than that of
Wisconsin. That is the net result of the rates actually
charged applied to the freight actually hauled, and not
what the rate would have been for what was not hauled,
as the Governor's comparisons necessarily are.
Wisconsin Gross Earnings.
If one were going to discuss gross earnings, it would
seem that the data to be used would be gross earnings.
These figures are easily obtainable. Instead of that
Governor La Follette gives the figures on train revenue
miles, and from them argues that the gross earnings
in Wisconsin are larger than the gross earnings of the
same roads in the other states through which they run.
Train revenue mileage has nothing whatever to do
with gross earnings. It is purely an operating compu¬
tation, and all it shows is the economy of operation.
It is the average revenue per mile of train operation.
It depends more on the tonnage, the distance, and the
economy of operation, than on the freight rate. In fact
a lower average of rates is likely to produce a higher
train mile revenue, because it will produce a larger
volume of traffic, and consequent economy of opera¬
tion. This is proved by the fact that while, as Gov-
16
ernor LaFollette shows, the train mile revenue is
higher in Wisconsin, and the gross revenue is less, as
shown by his message of two years ago, the tonnage is
greater. The fact that Wisconsin rates on traffic actu¬
ally handled are 20.7 per cent, less than Iowa, accounts
in some measure for the increased tonnage and ac¬
counts entirely for the smaller gross revenue. The ac¬
curacy of this explanation is proved by the following
statement made by the Governor in another connection,
and in an effort to prove something else. He says:
"Thus, from 1897 to 1903 the average load of each
loaded car increased from 10.74 tons to 13.24 tons.
The average number of loaded cars per train increased
from 15.56 to 18.45, and the average number of tons
of freight to each train mile increased from 167.02 to
244.23. * * * This reduction of cost has been
brought about by * * * heavier loads to each car,
and more loaded cars to each train."
And it is exactly this reduction of cost which the
heavier tonnage of Wisconsin makes possible that
gives the higher train mile revenue which Wisconsin
shows, despite the lower average of rates, and the
smaller gross revenue.
Perhaps the experience which Governor La Follette
had with gross earnings in his message of 1903 may
account for his attempt at demonstrating them by in¬
direction this year. It will be recalled that in that mes¬
sage he included passenger revenue and earnings from
sleeping cars, parlor cars, mail and express with the
freight earnings, and made those figures the basis of
his computations on freight. In exposing the error of
those figures the actual figures were brought to his at¬
tention. These figures would have given the members
of the legislature the facts concerning gross earnings
17
better than the figures of train mile revenue. As just
quoted above they show that in Iowa the roads re¬
ceived $36,852,344.75 for transporting 17,090,233 tons,
and the rate per ton mile was 1.40 cents. In Wiscon¬
sin they received $29,181,470.06 for transporting 25,-
731,734 tons of freight, and the rate per ton mile was
1.16 cents. There is no system of mathematical com¬
putation out of which a higher rate of gross earnings
in Wisconsin than in Iowa can be computed from that
data. Perhaps that is why it was not used.
Substantially every table of figures or specification
of data which Governor La Follette has contributed to
the discussion of railway regulation in Wisconsin has
either been full of error or so compiled as to be mis¬
leading. It is significant that all the errors have been
on the side of the contentions he was supporting. This
should at least preclude the acceptance of his state¬
ments of fact as conclusive, in framing important legis¬
lation. The subject will bear independent investiga¬
tion.
Railway Rates.
Governor La Follette cites the fact that for trans¬
porting a hundred pounds of stationery and wrapping
paper the same distance, the one bears a rate
of 67 cents and the other 47 cents, as an
evidence that there is neither justice nor sci¬
ence employed in fixing freight rates. The Gov¬
ernor knows why there is this difference in
rate, and every man who ships under either rate knows
why it is so. When goods are delivered for shipment,
the carrier becomes an insurer of their safe delivery in
18
good condition. The stationery is worth thirty dollars
a hundred pounds, the wrapping paper is worth three.
The risk assumed by the carrier is ten times as great
and the compensation is a third more. The difference
in value between the other items cited by the governor
is in every case more glaring than in case of the paper.
A hundred pounds of brass hinges is worth fifty dollars
and a hundred pounds of iron hinges about four; a
hundred pounds of clock springs is worth from sixty
to eight hundred dollars, and a hundred pounds of iron
casting about two dollars and a half. The rule is
universal. If there were any point to the argument,
the Governor would have found every railroad tariff
that was ever made, furnishing him evidence to sus¬
tain it at every line of every page. The rates on silk
are higher than the rates on calico ; the rate on coal is
higher than the rate on stone; it is the universal law
of rate-making that the larger the risk the greater
the rate.
It is interesting to note in this connection, that the
customs tariff is arranged on precisely the same basis.
That is a system which the governor had a not in¬
considerable part in devising. The low grades of
paper, for instance, bear a specific duty of from three-
tenths to eight-tenths of a cent a pound up to fifteen
cents a pound in value, and above that value 15%
ad valorem. But on writing paper, weighing from ten
to fifteen pounds to the ream, the duty is two cents a
pound, while above fifteen pounds to the ream it is
three and a half cents a pound and 15% ad valorem.
The action of Governor LaFollette in supporting in
Congress the McKinley bill with these arbitrary dif-
19
ferences, based wholly on value, sustain the theory
of the railroad companies in adjusting their rates,
somewhat at least, to the risk assumed, and the ser¬
vice performed.
But, as Governor LaFollette well knows when he
talks about these rates, it is not in them, nor in rates
like them, that the problems of transportation arise.
The skill which is demanded in the traffic official, and
in which the vital interests of the whole people are
centered, is in the adjustment of the industrial and
agricultural tariffs, under which the great bulk of the
traffic of this country is moved. It is the adjustment
of these tariffs which requires the exercise of the most
intricate and expert knowledge. It is upon them that
the farmer depends for the market for his products,
and the merchant for customers to buy his goods.
And yet in all his discussions of the railroad question
Governor La Follette has devoted not one line to an
exposition of these tariffs. Presumably he does not
understand them.
Does the Governor propose to have the freight
tariffs so adjusted that a rate on a box of stationery
weighing one hundred pounds, valued at thirty dol¬
lars, shall be the same as on a like quantity of wrap¬
ping paper valued at only three dollars; and that the
rate on a box of clock springs weighing one hundred
pounds, valued at from sixty to eight hundred dollars,
shall he the same as on a like quantity of iron cast¬
ings worth about two dollars and a half? It would
seem that he does, for he says in his message there is
little of scientific application and less justice, in mak¬
ing a higher rate on stationery, brass hinges, clock
20
springs and granite iron ware, than on a like quan¬
tity of wrapping paper, iron hinges, iron castings and
iron skillets.
Reduction or Wisconsin Rates.
Governor La Follette calls attention to the fact that
on January 1, 1904, the railroads of Wisconsin made
a general reduction in the freight tariffs of the state.
He argues that this was a confession on the part of
the railroads that their rates had been exorbitant. He
also charges that if the fear of restrictive legislation
were removed from the railroads they would imme¬
diately restore their former tariffs and make such fur¬
ther advances from time to time as the traffic would
bear.
In view of the assumption of this position by the
governor, it is difficult to see exactly what course the
railroads could pursue and escape criticism. It would
appear to be the governor's theory that if the railroads
do not reduce their rates they are too high, and that
if they do reduce them it is a confession that they
ought to be reduced still more.
The readjustment of tariff rates in a given terri¬
tory is seldom made by general and sweeping changes.
From time to time, however, as business may require,
such general changes are made. The reduction in
Wisconsin affecting all terminal and merchandise tar¬
iffs was one of these reductions. Practically the en¬
tire change in rates is effected by the constant read¬
justment of single rates where business or traffic con¬
ditions require their amendment. In the general
freight department of the Chicago, Milwaukee & St.
21
Paul Company there are from twenty-five to thirty
changes a day in the tariffs of that company. Not
one in a hundred of these changes is an advance in
rates, and practically all of such advances as are
made are restorations of rates which had been modi¬
fied to meet temporary conditions. Such a thing
as a general tariff advance, or anything approaching it,
has never been promulgated in the State of Wisconsin
since railroads were operated there. It would not be
possible to do this, and every one at all familiar with
the inexorable control which traffic exercises over rates
knows that this is so. The general trend of railway
rates, not only in Wisconsin, but throughout the en¬
tire country, for the period of twenty-five years has
been steadily downward. The rate per ton mile has de¬
creased from a cent and a quarter to three quarters
of a cent, and in all that period there has hardly been
a year that has shown the slightest reaction from the
steady unbroken decline. The only thing that has made
increased earnings possible has been the economies
which have been brought about in railway operation,
and the phenomenal development of the resources of
the country in which the railways have played a not
inconsiderable part.
Rebates.
The discussion of the question of rebates may be
disposed of in a few words. The railway companies
welcome and will loyally and sincerely support any
measure that will prevent both the railway company
from granting and the shipper from receiving or at¬
tempting to receive rebates, or preferences of any kind
in any manner whatsoever.
22
Killed and Injubed by the Kailboads.
The four principal railroads of Wisconsin trans¬
ported over thirty million passengers in 1902, the
last year for which the figures are accessible te
the public, and of them one hundred and eighteen were
injured, and FOUR were killed. It would be difficult
to reduce these results to percentages that would be
visible to the naked eye. There were over twenty-six
thousand employes on these four railroads, and of
them 347 were injured and 45 were killed. There is
not a man responsibly connected with the manage¬
ment of any one of these four railroads, who would
not put forth just as much effort to still further re¬
duce these very small figures, as the Governor would
if he occupied a like position. But, however regret-
able the facts as they exist may be, they surely do
not warrant the extreme of intemperate language into
which the governor has permitted them to lead him.
Pbotection to Railway Employes.
That every safeguard which can possibly be thrown
around the life and personal safety of every railway
employe should be, is not only dictated by the sense
of duty which every railway manager feels, but it
may properly be made the subject of such legislative
action as is at once fair to the companies and just
to the employes. The railroad business is, at the
best, a hazardous employment, and, being so, the com¬
panies should justly be required to do everything
which can be done to make it as safe as it can be
made, both in respect of proper and necessary equip-
23
ment and appliances, and the requisite rules for their
use and operation. Upon this, there can be no dis¬
cussion. When this has been done, it seems but fair
that to some extent at least the employe should be
charged with some measure of the burdens of risk
which the company cannot by the exercise of foresight
or prudence guard against, and with reference to
which, and in the full knowledge of which the employe
contracts when he voluntarily seeks what is known to
be a hazardous employment. The railroad companies
will seek to avoid none of their liabilities in this con¬
nection, and indeed they voluntarily go beyond the
limit of their legal obligations in this regard almost
daily. But they should not be accused of unfairness
or want of consideration for their employes, if they
resist, so far as they can, any legislative attempt to
place upon them legal responsibility for what neither
in law or morals belongs upon them. On the Chicago,
Milwaukee & St. Paul Railway for the year ending
June 30, 1904, 217 employes were injured, of which
cases 200 have been settled and 17 remain unsettled;
24 employes were killed, of which 15 cases have been
settled and 9 are in process of settlement. Not one
suit is pending on account of these cases.
The truth is, no employer is more deeply concerned
in the safety of his employes, or treats them more
considerately and liberally when injured, or has less
litigation with them, than the railways of Wisconsin.
24
The Railway in Politics.
The charge which Governor La Follette makes that
the railway companies coerce the political action of
their employes, is untrue. That railway employes
have taken an interest in the campaign which has
been waged against the companies, and that they have
very generally voted against the Governor, is true.
But that they have been coerced, is false. There is
abundant reason for their opposition. Every rail¬
way employe knows that the result of taking eleven
million dollars out of the revenues of the railways,
as Governor La Follette has repeatedly stated would
be done if his railway measures are adopted, would in¬
evitably result in the reduction of the wages which
the companies could pay. Every railway employe
knows that the removal of the industrial tariffs or
material interference with them, would result in les¬
sening the business of the companies, and the conse¬
quent reduction of the number of men who could be
given employment. In making his assault upon the
railways of Wisconsin, the governor has struck at
the wages and employment of every railway employe
in the state, and it is in defense of their own employ¬
ment and their own wages that they have used every
effort they could, as citizens of the state, to protect
their own interests. There is no citizen of the state
who is more sovereign in the exercise of his citizen¬
ship than the railway employe; none would more vig¬
orously resent any undue interference with his right
to vote as he pleases than he.
25
In Conclusion.
Narrowing the consideration of the question down
to what is actually in controversy, there is no very gen¬
uine or real difference of opinion, except upon the
power it is proposed to give a commission. Other
than that, the diversity of judgment is largely over
matters of detail. The powers of the commission in¬
volve the whole event of failure or success in the regu¬
lation of the railways. If the commission is given
power to review and revise rates, that of itself will
practically assure the adoption of rates by the rail¬
way companies, which will stand the test of that re¬
view. The right to make rates would then remain in
the hands of men made competent by years of train¬
ing and experience. Whereas, if the rate making
power is transferred to inexperienced and untried
hands, however honestly the law may be adminis¬
tered, it will surely hamper the transportation busi¬
ness of the state and end in failure. To this question,
then, the best wisdom and most deliberate judgment
should be brought, and upon its wise and conservative
determination depends much of the future welfare of
Wisconsin.
Chicago, January 30, 1905.
Burton Hanson.