REBATES THE REAL EVIL.
Press, Public and Railways in
Agreement.
The current comment in the press and in the public
discussion of the proposed railway legislation now be¬
fore Congress is rapidly leading to a clearer understand¬
ing of the subject and is bringing into general notice
the fact that there is unanimity of opinion between the
public, legislators and railway men alike as to the neces¬
sity for putting an end to rebates and discriminating
rates wherever such may be found to exist. This discus¬
sion is also bringing out the fact that there is no serious
objection to existing rates throughout the country and
that, on the other hand, many communities feel that they
will be assured of fairer treatment if the power to make
rates is left with the railroads, than if this power is
vested in the Interstate Commerce Commission. Will
hasty legislation accomplish the object desired?
2
S. SPENCER ON REBATES.
"They Must Be Stopped"—Head of Southern Dis¬
cusses Roosevelt's Philadelphia Speech.
(From New York Tribune, February i, 1905.)
Samuel Spencer, president of the Southern Railway, who,
as their officially designated spokesman, represented many
of the leading railroads of the country before the House
committee which has been considering the various bills in
regard to the regulation of rates, in response to numerous
requests for an expression on the President's speech before
the Union League, of Philadelphia, on Monday night, gave
out yesterday the following statement :
"It is strange to note a tendency to read into the Presi¬
dent's speech before the Union League, in Philadelphia,
and, indeed, into his various utterances on the railroad ques¬
tion, an attack on railroads and railroad men. I do not so
construe it. This misconception of the President's purpose
seems to me to rest on the rather curious confusion in the
public mind between the rebate abuse and the making of
rates, two opposed things, which really have no necessary
connection—which should be considered entirely separately.
"If there are abuses—and there undoubtedly have been
some—the railroads of this country, I think I may safely
say, are a unit, in agreeing with the President that such
abuses should be controlled. Anyone who will read the
testimony taken during the last few months before the
House Committee on Interstate Commerce will be im¬
pressed by the unanimity of statement of the railroad rep¬
resentatives of their opposition to rebates and other il-
3
legal abuses, where such exist, and of their desire to put a
stop to them. On this point there can be no question.
The President is right and the vast majority of the mana¬
gers of the railroads warmly second him, when he recog¬
nizes that conscientious and public spirited railway men
should be protected from illegal acts of "less scrupulous
competitors and from unscrupulous big shippers," but the
legislation now proposed for granting rate making power to
the Interstate Commerce Commission not only does not af¬
ford such protection, but it necessarily visits on the inno¬
cent punishment intended for the guilty.
Under the Terms of the Statute.
If there are abuses connected with private cars, private
tracks and similar matters, these also should be remedied,
and this might be done by subjecting these private car lines
and private tracks to the provisions of the Interstate Com¬
merce law. Then, if a criminal act be committed it can
be punished, as other criminal acts are punished, under the
terms of the statute, but in this case, again, the mere fact
that such an abuse exists is no warrant for assuming con¬
trol of railway rates. The occurrence of robbery is not a
sufficient reason for saying that the government should
virtually take possession of all private property, with a view
to protecting it from robbers. Yet such a proposition would
be as logical as the suggestion that the prevention of re¬
bates and other abuses would be secured by giving tc the
commission the power to fix rates.
It is a great pity that the public has not a better under¬
standing of what is, after all, the most difficult, highly
technical and laborious task before railroad men—the mak¬
ing of rates. A man goes into a railroad office arid the
clerk, turning to a tariff book, tells him the rate. This
4
seems a simple transaction, but, as a matter of fact,
months of work by many people at an expense of thousands
of dollars and years of experience, have been involved in the
establishment of that particular rate. Exery railroad man
knows the great difficulty of securing exact justice in fixing
rates, and experience is demonstrating that the rate which
develops traffic—and therefore the rate which the railroad
should prefer, from pure self-interest—is almost certainly
the nearest possible approach to justice. But the adjustment
of rates in such a way as to develop traffic is possible only
at the hands of railway officials responsible for the re¬
sults, trained for years to understand local needs and the
limits of possible change in a wonderfully and, necessarily,
complex organization. With all these difficulties, the In¬
terstate Commerce Commission itself has repeatedly admit¬
ted that excessive rates almost never exist, and the success
of the railways in maintaining rates at a fair level is conclu¬
sively proved by the fact that there has been established in
the courts, since the foundation of the Commission, not a
single case of rates unreasonable in themselves.
Magnitude of the Question.
I am glad to see that the President repeatedly cautions
against, what he calls "violent and ill advised action," and
urges that "the effort to make progress should be tentative
and cautious." When one realizes that, according to the
report of the Interstate Commerce Commission for 1903,
there were then on file 2,196,536 tariffs, of which 165,174
were filed during that year, and that more than one-third of
the commission's clerical force, or about thirty clerks, were
constantly occupied in the mere detail of filing, indexing and
furnishing information in reference to these tariffs, some
idea of the magnitude of this question may be gathered.
5
As I said before the'interstate Commerce Commission, I
desire to add emphatically, in behalf of a very large propor¬
tion of the railways of this country—a very much larger
proportion than I have any direct authority to speak for,
but I can say it safely—that there is a difference of opinion
between the railroads, the country, the Congress and the
President on the subject that rebates are wrong and that
they must be stopped ; that secret and discriminatory devices
of all kinds, direct or indirect, must meet with the same fate,
and, to use the President's own expression, "the highways
of transportation must be kept open to all upon equal terms."
On that basis the railway companies are ready and anxious
to aid and co-operate.
RAILROADS AGAINST REBATES.
{From an Editorial in the New York Times, Feb. 2, 1905.)
***** It seems to us that Mr. Spencer's statement pub¬
lished in yesterday's papers, in which he reviews the recom¬
mendations of the President and the railroad position, is
one of the soundest and most helpful attempts at guidance
that has anywhere been made. Mr. Spencer assures the Pres¬
ident that the railroads, with substantial and entire unan¬
imity, would hold up his hand and support him to the end
in the attempt to abolish railroad rebates, discriminating
rates, and all the tricks and devices of private lines and secret
understandings by which the principle that the routes of
transportation should be open to all upon equal terms is
violated. As to that there is not the slightest difference be¬
tween the President and the railroad corporations. But that
evil, universally admitted to be an evil and defended by
none; an evil, too, that is admittedly the most far-reaching
6
and mischievous of any that originates in railroad practice,
the President subordinates to his demand that the Interstate
Railroad Commission shall have power to fix rates.
The making of rates by a federal commission would not
cure the rebate evil, would afford no protection against it,
but, as Mr. Spencer points out, it would visit on the inno¬
cent the punishment intended for the guilty. The fixing of
rates is a pretty close approach to taking possession of the
property. The railroads oppose the lodging of this power in
the hands of a federal commission because their experience
teaches them that rate-making is an exceedingly complex
work, and one in which mistakes would work injury that
would be felt, not by the makers of the blunder, but by the
railroads or the shippers. They feel that the interests of the
railroad companies and of the multitudes who own the se¬
curities would have little protection—sometimes none at all
—under the federal statute establishing at Washington this
degree of control over their destinies.
For these reasons and countless others Mr. Spencer and
other representatives of the railroads are seeking to guide
the Executive intention into that channel where it would
be most effective, most helpful, and least resisted. They are
not trying to thwart the President, but to persuade him
that in abandoning his resolution to secure the absolute con¬
trol of rates, and in concentrating his efforts upon measures
to protect the public against unfair discriminating rates and
unlawful secret favors he would be advancing along the path
of wisdom and safety. * * * *
7
ASSAILS PLAN TO TRANSFER R. R. RATE-
MAKING POWER.
{From the Philadelphia North American, Jan. 26, 1905.)
To the Editor of the North American :
In your editorial of the 9th instant, entitled "The Strong
Hand for the Railroads," you state that what the people
want is :
"i. The same cost always for the same conditions.
"2. No short haul to cost more than a long haul.
"3. No pass ever to be issued to any man not actually
upon the payroll of a railroad company.
"4. A heavy penalty whenever, after due notice, cars are
not supplied to a shipper.
"5. A fixed rate for private cars.
"6. Absolute prohibition of direct or indirect control of a
competitive company.
"7. No fines, but imprisonment always, for discrimination
in either freight rates, pass-issuing, hauling of private cars
or any other matter inflicting hurt upon individuals or com¬
munities."
Permit me to suggest to you that all of these things, if de¬
sired by the people, can be accomplished without giving the
Interstate Commerce Commission the rate-making power.
Indeed, giving the commission that power will not accom¬
plish any of them. It has been clearly established that the
rate-making power if given to the commission will neces¬
sarily be a general rate-making power, extending to every
interstate rate in the country, and that the commission will,
as proved by its past experience, wield the authority in the
most general and sweeping way.
In other words, the power proposed would be so great
and complicated as to be beyond the ability of any tribunal
8
that could be formed, and, consequently, would be of the
most dangerous character. Certainly, such a radical de¬
parture in legislation ought not to be entered upon without
absolute necessity, and the demands which you mention do
not require it.
Requirements of Existing Law.
The first demand as stated by you is: "The same cost
always for the same conditions." This is absolutely re¬
quired by the present law as supplemented by the Elkins
law of 1903. All that is necessary to accomplish "the
same cost for the same conditions" is for the Interstate Com¬
merce Commission to exercise energetically and persistently
the tremendous powers of investigation and prosecution it
now possesses, to the end that the present law may be fully
enforced.
"No short haul to cost more than a long haul." I do not
believe that there is any general demand for this, but if there
is, the way to accomplish it is to make an absolute prohibi¬
tion in the statute of charging more for a short than for a
long haul, instead of qualifying that prohibition, as at pres¬
ent, by the use of the words "under substantially similar
circumstances and conditions." The Interstate Commerce
Commission itself and numerous courts, including the Su¬
preme Court, have, however, pointed out that traffic condi¬
tions are such that it would not be advisable to make any
such iron-clad long and short haul law. If any injustice
results in any instance, under the present law, from a rail¬
road company's charging more for a short haul than a long
one, there is ample power in the commission to correct that
injustice.
9
As To Passes.
"No pass ever to be issued to any man not actually upon
the payroll of a railroad company." To give the rate-making
power to the commission would, of course, not accomplish
this requirement. It can only be accomplished by amend¬
ment to the law, to which probably not a railroad in the
United States would object.
"A heavy penalty whenever, after due notice, cais are not
supplied to a shipper." Of course, the rate-making power
would not accomplish this object. The railroad company is
now liable for any unreasonable failure to furnish cars. The
reason the liability is not more frequently imposed upon the
railroad companies is that their failures to furnish cars are.
as a rule, unavoidable. Certainly, if they are avoidable, the
railroad company is liable for all damages that result. Of
course, additional penalties could be imposed upon the rail¬
roads for delay in furnishing cars, but it would have to be
legislation of an entirely different character from that now
proposed.
"A fixed rate for private cars." If unreasonably high
rates are now charged for private cars, it is believed they
can be corrected under the present law. If fluctuating or
discriminating rates are charged for private cars, that cer¬
tainly can be corrected under the present law. The com¬
mission has wholly failed to demonstrate that the present
law is unequal to correcting any and every private car abuse
in existence; but if additional legislation is demanded with
respect to this evil, the legislation should be limited tc the
evil sought to be corrected, and should not extend to a gen¬
eral rate-making power which would substitute the commis¬
sion for the traffic managers of all the railroads in the
country.
lO
Control of Competitors.
"Absolute prohibition of direct or indirect control of a
competitive company." Of course, this vrould not be
reached in any way by giving the commission the rate-
making power, but will require legislation along entirely
different lines, and legislation which is not now seriously
sought.
"No fines, but imprisonment always for discrimination
in either freight rates, pass-issuing, hauling of private cars
or any other matter inflicting hurt upon individuals or com¬
munities." Of course, this object cannot be accomplished
by giving the commission the rate-making power. Impris¬
onment was provided for violations of the Interstate Com¬
merce act for sixteen years, and that length of experience
demonstrated that it was almost impossible to secure con¬
victions. Therefore, in 1903, Congress, at the instance or
with the approval of the Interstate Commerce Commission,
abolished the penalty of imprisonment and substituted in all
cases merely pecuniary penalties.
One great difficulty in railroad regulation is that various
grievances may and do exist, of greater or less magnitude,
and that by some strange misconception a considerable num¬
ber of people, actuated by entirely different grievances, are
asking that the commission be given the rate-making power,
which will not remedy any of the grievances of the people
who are discontented.
It is difficult to imagine a grievance against a railroad
which is not now subject to substantial correction either in
■court or by the commission ; and certainly it is not necessary
-for the correction of any grievance now existing to give the
commission a rate-making power which would make it by
far the most powerful tribunal in this country, with a final
11
and absolute control over the commerce of the country which
would be utterly beyond the ability of the commission, and
which in practice would become increasingly hurtful to the
prosperity of the country.
INJUSTICE TO COMMUNITIES.
Fairer Treatment by Railways Than by Interstate Com¬
merce Commission.
{Editorial from the Boston {Mass.) Advertiser, Jan. 28,
1905-)
The hearing at Washington over the "differentials" al¬
lowed to Philadelphia and Baltimore is interesting to Boston
business men, but it is not final. If the Interstate Commerce
Commission refuses to interfere—as it has steadily refused
every time the subject has been brought up, in past years—
there is still a chance that the railroads themselves will cor¬
rect the rate on the facts brought out. All that Boston or
New York wants, in brief, is that each port shall have an
equal show; that is, that no matter what port the export
goes through, the rates may be the same between Chicago
and Liverpool. This would throw on every port the re¬
sponsibility for getting business, which would depend largely
on the facilities that a port would be willing to give. That
is the only fair way, and the railroads themselves may take
that view, so long as the law stands as it now is. But the
Interstate Commerce Commissioners have refused so many
times to interfere with the "differentials," which repiesent
a cut below the regular export rate, that the Boston men
who are carrying on the fight are not very hopeful as to the
outlook, in that direction.
12
Costly Appeal For Shippers.
The very fact that the Interstate Commerce Commission
has steadily refused to interfere with these "differentials"
which seem so unjust to Boston bears on the Hepburn bill,
which Congress now has before it. If the Hepburn bill had
been a law, and if the Interstate Commerce Commissioners
had found the rates all right, as they did before, the differ¬
entials would then be established by the full force of the
government's order. Instead of still having the chance to-
appeal to the railroads, as they will have now, if the Com¬
missioners hold to their old decision, the Boston men would
have no further chance from the ruling of the Hepburn court
of commerce, except in a costly suit before the final appellate
court. Boston business men can still remember the "export
rate" case of a dozen years ago, when they failed to get a
ruling from the commission. The protest was against the
then "export" rate which was the same as the "local" rate.
The case was hard fought, but no ruling could be coaxed
from the Interstate Commerce Commissioners. Then the
Chamber of Commerce took its case to the railroads, and
the Boston & Maine, as well as the Boston & Albany, an¬
nounced that Boston would have the "flat" export rate, the
same as New York. Some months afterwards the Inter¬
state Commerce Commissioners endorsed the agreement.
The "ruling" was regarded at the time rather humorously in
this city.
No Demand For Rate Legislation.
There has been no clamor in Boston for the passage of
the Hepburn bill, because as a rule Boston has been better
treated by the railroads in the export cases, the refrigerator
car cases and the grain rate cases, than by the Interstate
13
Commerce Commission. The two Massachusetts Senators
are not working for the Hepburn bill, but against it. Their
idea of a rate bill is for the United States government to
adopt something like the Massachusetts law; that is, for a
special court of commerce, to have the right to say if there
is anything unfair or unjust going on, like rebates or spe¬
cial privileges to favored shippers; and to issue orders to
the offending road to stop such unfair rates. But the idea
of letting any body of men fix absolutely the prices of all
railroad service is no more favored by the Massachusetts
men than a law fixing the price of bread or meat or coal
would be. Senator Lodge says that the position of the Mas¬
sachusetts men is satisfactory to the President, so we nat¬
urally do not expect to see any such legislation as the Hep¬
burn bill become a law at this session of Congress, anyway.
HARNESSING THE RAILROADS.
{Editorial from the New Haven (Conn.) Register, Jan. 28,
1905-)
Whatever comes of President Roosevelt's determination
to compel the railroads doing an interstate business to play
the game more fairly, he can at least pride himself that, he
has been the cause of a discussion which can be regarded
as educational in its character. That he may succeed in
effecting his object is a general wish, but the manner and
method of its being attained is of immense importance, and
it is for this reason that business men and theoretical men
of affairs are thinking with such success that a great deal
is being learned by the wayfarer, not only in regard to
modern business habits and practices, but also to what an
extent they are hitched to practices hitherto unseen of men
as a class.
14
The newspapers, as well as the magazines, are foremost
in the discussion, and upon both sides of the subject they
are saying many sensible things. The Indianapolis Star,
for example, speaking for the conservative element, says a
great deal that is bound to impress and dignify wliat in it¬
self is a moral movement. It takes it to be a fair assumption
that the shippers of the United States do not wish to punish
railroad extortion in a spirit of blind resentment through
methods which would injure themselves as much as the
roads. But we are compelled to doubt whether it would
be a true assumption. Are there not evidences that the
hard-headed man of business, who is often as warm-hearted
and impulsive as the rest of us, has taken the cruel wrongs
of rebates, delays, demurrage discrimination and cavalier
treatment so heavily to heart as to lose sight of the ultimate
effect of radical legislation on his own interests, in a pas¬
sionate desire to humble these arrogant corporations for the
injustice he has suffered at their hands? What we want in
this matter is results.
Not a Question of Punishment.
The question is not how to punish the roads, but how to
get justice in the future; and we must say that the implicit
confidence which shippers generally are disposed to rest in
a state or interstate commission with practically unlimited
power to fix and enforce rates betokens a credulity which
would do credit to a Parsee fire worshiper. There are few
successful business men who would think for a moment of
calling in a board of government officials to manage their
own business, and it is certainly not in the achievements of
the Interstate Commerce Commission hitherto that justifica¬
tion is afforded for the belief that it can succeed where traf¬
fic managers and shippers have failed.
IS
The Star declares that the most delicate and complicated
problem of modern railroading is the establishment and
maintenance of rates. To this involved and difiicult task
are devoted the highest acumen and executive ability of the
railroad world at immense salaries. The main object of
railroading is to get business, and these immense salaries
are not paid for men who cannot do the work. The suc¬
cessful discharge of this onerous class of duties demands a
lifetime of experience, a shrewd sense of both the theory
and the practice of transportation, an intimate knowledge
of commodity and crop conditions throughout the United
States and the world at large, and a grasp of human nature
fitting one to deal with an army of subordinates on the one
hand and a legion of patrons on the other.
Action of National Board of Trade.
Perhaps it is indicative of a dawning intelligence
on these subjects that the National Board of
Trade, in session at Washington, declares itself
for: "Such legislation as will secure a more
speedy and more effectual correction of abuses in transporta¬
tion methods, and to that end that power be given to the
Interstate Commerce Commission to revise any rates, not
to take effect until the action of the commission shall have
been upon review, confirmed by the circuit court of the
United States. Here is an unqualified abandonment of the
extreme contention embodied in the Quarles bill in Congress
and the new house bill in the Indiana legislature, authorizing
a commission to declare rates and put them into instant
effect. We shall not say it is wise. The matter is only to
be settled upon thorough consideration, and not offhand in
a spirit of reckless animosity or of servile compliance with
railroad demands.
i6
RAILROAD LEGISLATION.
Views of the Govemor of Nevada.
{From the Salt Lake City News, Jan. 27, 1905.)
In these times when there is a disposition among many
people, particularly in what is called the "laboring class,"
to throw obstacles in the way of the great railroad enter¬
prises of the country, and when legislatures are importuned
to pass restrictive measures against railway corporations, as
though they were enemies to the body politic instead of
benefactors to the community at large, it is quite refreshing
to note that portion of the message of Governor John
Sparks to the legislature of the state of Nevada at its pres¬
ent session, that has reference to railroad legislation. Here
is what he said on this important subject :
"For the first time in the history of Nevada prospective
railroad building begins to meet general favor with the
great magnates engaged in transportation, and it is not be¬
yond reasonable expectation to predict the construction of
railroads not only as trans-continental extensions, but that
will radiate in all directions, thus connecting hitherto remote
districts and completing a system of transportation long
hoped for by our people. This is an age of enterprise and
progress, but it will require facilities for intercourse to ac¬
commodate business. Our natural and undeveloped v;ealth
will bring railroads, and business will follow.
Railroads Are Developers of New Countries.
"It is, therefore, highly important that encouragement be
given to the promotion of this enterprise, by adopting a fair
and liberal policy of taxation, and also by enacting laws giv¬
ing full and safe protection. This accomplished, taxable
17
property will increase, cities will be built which will become
terminals, and, naturally, transportation charges will be re¬
duced. More main lines will produce more branches, reach¬
ing undeveloped regions in our state. It is a fact that rail¬
roads are the developers of all new countries, and especially
contribute to the success of mining districts.
"The last two meetings of the State Board of Assessors
have shown a very conservative disposition in favor of rail¬
road assessments, and other classes of property throughout
the state.
"As an illustration, the San Pedro & Los Angeles Rail¬
road, running through Lincoln County for a distance of
about 200 miles, will so benefit the country as to enable it,
in a few years, to be relieved from a very burdensome
bonded debt now hanging over it."
The benefits accruing to the country from the building
and operation of railroads are too great and well known to
be disputed by any reasonable person. Competition among
them regulates their tariffs and prevents to a large extent
excessive charges. Of course, when they "pool their issues"
and combine against the public, those benefits are minimdzed.
But people doing business requiring transportation of large
quantities of freight, and the general traveling public, very
soon interpose objections and raise a rumpus which
cannot be unheeded by the magnates who regulate railroad
affairs.
Obstructive Legislation Injurious.
That some legislation is required on these matters of gen¬
eral interest is conceded ; but it is not necessary to the gen¬
eral welfare that obstructions shall be placed in the way of
those enterprises, nor that unusual and oppressive condi¬
tions shall be imposed, which would have the effect of in-
i8
juring them and preventing the introduction of new lines
and the establishment of industries connected with them.
Wisdom and good judgment, rather than a disposition to
yield to popular clamor, should guide every legislative body
in its dealings with the railroad companies, and with other
organized investors of wealth for the upbuilding of the state
and of the nation.
THE PRESIDENT'S PLAN.
New England Against Rate-"Fixing" Power.
{Editorial from the Boston (Mass.) Advertiser, Jan. 31,
1905-)
The keynote of President Roosevelt's speech at Philadel¬
phia last night, of course, was in his statement that "in tem¬
perate, resolute fashion, there must be lodged in some
tribunal the power over rates, and especially over rebates—
whether secured by means of private cars, of private tracks,
in the form of damages, or commissions, or in any other
manner—which will protect alike the railroad and the ship¬
per, and put the big shipper and the little shipper on an
equal footing." This, of course, means a new interstate
commerce law; but it does not mean the Hepburn act, or
anything like it. The President does not call for power tO'
"fix" rates, but merely for power "over" rates, with all the
emphasis on stopping rebates. Perhaps that is the reason
why New England shows so little interest in the President's
crusade. For nobody believes that rebates are given in New
England, and certainly there is no more use of private cars
here than anywhere else in the country.
19
Canadian Roads Would Benefit.
Some time ago it was proposed to take a vote of the Bos¬
ton Chamber of Commerce on the Hepburn bill. The prop¬
osition was dropped very suddenly, for it was found that if
the chamber voted, it would be pretty solidly against what
(according to the Washington dispatches just about that
time) was the President's own bill. Boston has invariably
had more consideration from the railroads themselves than
from the Interstate Commerce Commission. And if the
commissioners were to advance the Boston rate even so lit¬
tle as one-fourth of a cent, a good deal of the business would
be handed over to the Canadian roads, which can and do
violate the interstate commerce act without any fear of con¬
sequences. Curiously enough, although these Canadian
roads are a factor in almost every through rate, the Presi¬
dent did not explain what is to be done to them. Yet there
is no way of forcing them to obey a railroad rate law.
20
NOT THE RIGHT WAY.
New York Chamber of Commerce on Freight Rates.
ADMITS THAT EVILS EXIST.
Should Be Righted, but Not by Rate-Making Plan
Proposed.
Granting of Power to Interstate Commerce Commis¬
sion, Resolutions Declare, Would Be a Fundar
mental Departure in Governmental Administra¬
tion and Fraught with Grave Danger—Statutes to
Define Duties of Railroads.
{From the Washington Post, Feb. 3, 1905.)
New York, Feb. 2.—The proposition to authorize the
Interstate Commerce Commission to fix railroad rates was
opposed by the report of a committee on internal trade and
improvements made to the New York Chamber of Com¬
merce to-day, and the report was adopted by the chamber.
The committee was composed of A. Barton Hepburn,
formerly Comptroller of the Currency, and now a banker
of this city, chairman; Cleveland H. Dodge, a capitalist
interested in railroads and other corporations; Frank S.
Witherbee, a capitalist; George Gray Ward, third vice-
president of the Postal Telegraph-Cable Company ; Thomas
P. Fowler, the president of the New York, Ontario & West¬
ern Railway Company; F. B. Underwood, president of the
Erie Railroad Company, and Levi C. Weir, president of the
Adams Express Company.
The committee declared that they were opposed to un-
21
just discrimination in favor of individuals, corporations, or
localities; secret rates, rebates, or drawbacks, and believed
that possession of the private terminals should convey no
exception in rates. It seemed to be generally conceded, the
report said, that in many localities the ownership of ter¬
minal tracks or special cars was made the basis of discrimi¬
nating rates to such owners.
Center of Discrimination.
The committee believed that the railroads should own or
control the cars used, and that a uniform rate should be
fixed for the use of special cars. In New York discrimina¬
tions had been fairly done away with, the committee re¬
ported, but there was much evidence that Chicago is the
center of it. The report concluded with the following:
"The President has our cordial sympathy in his efforts to
right these wrongs, and both the President and Congress
shall have our earnest co-operation, but we cannot persuade
ourselves, in the light of our experience, that granting the
rate-making power to the Interstate Commerce Commission
will realize the good that advocates of the measure hoped
for.
"It is a proposition to directly determine the earning
capacity of certain properties, and, therefore, to fix their
value. It grants great power over such earning capacity
without any responsibility on the part of the men who exer¬
cise that power, to protect the values or the income of the
same, other than the responsibility to properly discharge
an official trust.
Grave Danger Foreseen.
"It is a fundamental departure in governmental adminis¬
tration, the success of which is at least problematical and
22
fraught, we fear, with grave danger. It would undoubtedly
be well administered under the present administration, it
might be under many administrations, but it is easy to con¬
ceive an administration of such a power that would be
prejudicial to the public interest.
"Let the statutes clearly define the duties of railroads as
common carriers, with proper penalties for all infractions
of the law; let the commission exercise their power of in¬
quisition to the fullest extent; bring all questions which the
railroads fail to adjust before the courts, and then let the
courts redress the wrongs and enforce the rights thus
brought before them.
"We believe a vigorous exercise of the powers which the
commission now possesses, and a vigorous enforcement of
existing laws, would go very far toward correcting existing
evils."
The committee also approved the proposed amendment
to the state constitution to create a state debt for improving
the highways, and favored increasing New York state's ap¬
propriation for the Lewis and Clark Exposition from $35,-
000 to $100,000, and this part of its report was adopted.
RATE-MAKING DIFFICULTIES.
{Editorial from the Chicago Chronicle, Jan. 31, 1905.)
Every day seems to disclose to statesmen in Washington
new vistas of difficulties in railroad rate-making by com¬
mission.
One provision of the Cooper-Quarles bill is interpreted
as meaning that not only a challenged rate may be changed
by the commission, but that correlated rates must be ad¬
justed to correspond with the change. It was to this that
23
E. P. Bacon, chief spokesman for the shippers, referred
when in addressing the committee he said it was his belief
that the commission should have power to require that when
a shipper complains of rates he must limit himself to a
series of rates that are interdependent.
Correlated Rates.
This remark set Congressmen to thinking what might
happen under the provision regarding correlated rates. One
member wants to know what there is to prevent a shipper
in Joliet, 111., from complaining of a rate on a given article
or a series of articles between Joliet and New York, Joliet
and Minneapolis, Joliet and San Francisco and Joliet and
New Orleans.
"On the interpretation that correlated rates may be ad¬
justed," he remarks, "under this bill a situation might arise,
whether the commission willed it or no, whereby every rate
between Joliet and the four points named, together with
every intervening local rate along the road, might have to
be completely readjusted. Such a condition would swamp
the Interstate Commerce Commission." So it would. It
would be the same under any bill which could be framed,
only the swamping would occur in somewhat different ways
under different bills.
Suppose the bill said nothing about correlated rates, but
provided merely for the fixing of a single rate complained
of by a shipper. If the commission changed that rate the
correlation would still exist and a multitude of local rates
all the way along from Joliet to San Francisco, say, would
become unreasonable, and the commission would be
swamped by complaints, and it would be under the necessity
of effecting the adjustments, one at a time, which under the
24
Cooper-Quarles bill it could adjust after the hearing of one
complaint.
If shippers should find it a profitable business to make
complaints we may be ^ure that complaints by hundreds
would pour in from every quarter, each carrying a long
train of correlated rates behind or in it, and practically the
commission would find itself charged with the business of
making the freight tariffs for all the roads in the country
engaged in interstate commerce. The making of tariff
schedules of rates on imports would be child's play as com¬
pared with this making of freight schedules which the Inter¬
state Commerce Commission would have to undertake in
one way or another under any law giving it the power to
make a rate on complaint of a shipper.
Army of Experts Would be Required.
It would be necessary to provide that body with an army
of experts to adjust correlated rates, and even with that
help complaints would pour in about as fast as they could be
filed, to say nothing of hearings. Here would be only the
beginning of troubles, for every rate fixed by the commission
would be subject to review by the courts. If the courts
should decide that a rate fixed by the commission was un¬
reasonable either the rate complained of would be restored
or the commission would have to change it again subject to
another appeal. In either case the correlated rates would
have to be readjusted and there would be more work for the
experts.
Thus any plan under which the commission could be
called on to fix rates, either singly or by correlated groups
or by making schedules for all roads, with the right in any
case of appeal to the courts, would swamp not only the com-
25
mission but the courts. It would keep them swamped in¬
definitely, even if they could accomplish the immense task
of dismembering an evolutionary growth and substituting
an artificial construction. Railroading, like other kinds of
business, is progressive and subject to changes of conditions.
Reasonable schedules last year may be unreasonable this
year and reasonable schedules this year may become unrea¬
sonable next year, and so on indefinitely.
Rigid Rates Would Involve Loss.
The commission must, therefore, change rates from time
to time in order to keep them reasonable, and so the work
of rate-making must go on forever. Can any one believe
that by the slow process of hearings before the commission
and appeals to the courts as satisfactory results can be
secured as by leaving the whole business to evolution and
that competition which is no less effective because it is often
imperceptible to the untrained eye ?
If any one can so believe after a studious examination of
the subject his mind must be peculiarly constituted.
THE REAL RAILROAD EVIL.
{Editorial from the Philadelphia Record, Jan. 25, 1905.)
The railroad legislation that is really needed is an extir¬
pation of the iniquities in freight rebates and in the Private
Car Trusts. But by a strange perversion of the legislative
mind the question is diverted from these abuses to one of
railroad freight rates, which are not seriously in issue.
The attempt to take from the railroad companies the
power to manage their own business and to put it in the
26
hands of the Interstate Commerce Commission is a long
stride in paternal government.
Thus the railroad companies, in order to protect them¬
selves, are driven to making common cause with the Car
Trust monopolies and the beneficiaries of rebates. While
these are substantial evils, all the alleged evils in railroad
rates are but trivial in comparison with the mischiefs threat¬
ened by the attempt to put the whole transportation business
of the country under control of the Interstate Commerce
Commission. It is much too large a job, and it is not
strange, therefore, that the commission should shrink from
the undertaking.
MAXIMUM AND MINIMUM RATES.
{Editorial from the Philadelphia Record, Jan. 31, 1905.)
A little consideration of the manner in which the power
to make rates would work, if that authority were to be con¬
ferred on the Interstate Commerce Commission, might serve
to render the proposal less attractive. The right to establish
maximum rates for the transportation of freight involves
the right also to declare minimum rates and to condemn as
unfair any charges lower than those officially fixed. For a
railway company could not be denied the privilege of ap¬
pealing to the commission against ruinous undercutting by
a rival in business. Instead of rates established by the free
play of competition there would be uniform rates officially
adjudged "fair." And officially approved minimum rates
would in ninety-nine cases out of one hundred be higher
than competitive.
27
HASTY LEGISLATION UNWISE.
{From an Editorial in the Baltimore {Md.) News, Jan. 23,
1905-)
* * * After all, however, railway rate-fixing is a very im¬
portant piece of legislation. Time spent in considering and
perfecting it would not be time wasted. Seeing that the coun¬
try has worried along without it up to the present time, it
can undoubtedly get along a few months, or even a year or
two longer, and no great harm will result. It is far more im¬
portant that a reasonable and effective measure be finally
placed upon the statute books than that some measure be
rushed through this session—some measure that the courts
may find it necesary to nullify at their leisure.
MR. ROOSEVELT'S "MUST."
{From the New York Sun, Feb. 4, 1905.)
Washington, Feb. 3.—Notwithstanding various asser¬
tions of Congressional unanimity on the railway rate ques¬
tion, the fact is that the matter has now become so tangled
and involved that few know the real meaning or have any
clear appreciation of the results of the proposed legislation.
About the wisest comment that has yet been made upon the
matter is the counsel given at Philadelphia on January 30,
when the President said: "In entering a field where the
progress must of necessity be so largely experimental it is
essential that the effort to make progress should be tentative
and cautious."
An exuberant element in Congress and outside it evidently
regards the regulation of railway rates by a Federal com¬
mission as a sort of Pool of Bethesda into which tlie nation
may step and be healed of all its commercial diseases. A
28
close examination, however, makes it evident that the angel,
or some one else, has "troubled the water" so vigorously
that it is quite impossible to see the bottom. A plunge in it
would certainly soil the plunger, and might easily leave him
badly stuck in the mire.
United on Recognized Evils.
Mr. Roosevelt's message proposed the suppression of
recognized evils, and the country, railways and all, is be¬
hind him on that proposition. But somebody has started
the House of Representatives on a wild hunt for some vio¬
lent remedy for an evil which does not exist. Seeing in
the machinery proposed for the cure of this non-existent
evil a possibility of securing lower rates on the transporta¬
tion of their merchandise, thousands of shippers are besieg¬
ing their Congressmen to create the machineiy. The hope of
personal gain arrays itself in the garb of public interest
and clamors for a system which will enable claimants to
transfer money from other pockets to their own. If only
those who were actually injured by excessive rates were al¬
lowed a voice, their feeble piping would be quite inaudible.
The noise comes not from those who are really hurt, but
from those who hope to gain at the expense of others.
The progenitor of the measure has now said, "There must
be no hurry." He does not say "should," but "must."
Those Representatives who think they are following Mr.
Roosevelt in their effort to rush a bill for Federal super¬
vision and control of rates through the House sliould
hearken to this "must" which is sounded from behind them.
A few months of careful consideration may well be devoted
to so far reaching a measure. The present rates will not
ruin the country before next December, and by that time
our overeager Representatives may see what was really
29
called for in the Presidential message and realize the differ¬
ence between the correction of evils by lawful methods and
the creation of cumbersome machinery of doubtful constitu¬
tionality for the mere purpose of reducing rates about which
few have ever made complaint.
It will be much better and safer to let Bethesda settle a bit
before taking a plunge in it. Happily for the country, the
Senate is- less eager for immersion in that particular pool
than is the House.