Chapter XL: Appendix (3)

General Manager Van Etten of the B. & A. says discrimination is the
American principle. You find it everywhere. You buy goods at wholesale
much cheaper than you can get them at retail. It is the same with gas
and water and electric light.

A number of railroad men take the view that “railroad service” is a
commodity to be sold like any other sort of private property at
whatever price the owner can get or chooses to take.

The trouble with these statements (aside from the quantity plea which
may be allowed within reasonable limits) is that the differences
between railway service and ordinary mercantile service are not taken
into account.

If people found they were unfairly treated by the bakeries or
groceries or shoe stores of a town, it would be easy to establish a
new store co-operatively or otherwise, that would be fair and
reasonable, and that possibility keeps the store fair as a rule even
where there is no direct competition. But when the railways do not
deal justly with the people of a town they cannot build a new road to
Chicago or San Francisco. It is the monopoly element, together with
the vital and all-pervading influence of transportation, that
differentiates the railroad service from any ordinary sort of
commerce. If bread stores or shoe stores combined, and, by means of
control of raw material or transportation facilities, erected a
practical monopoly or group of monopolies, and favoritism were shown
in the sale of goods by means of which those who were favored by the
monopolists got all the chromos and low rates, and grew prosperous and
fat, while those who were not favored went chromoless and grew thin in
body and emaciated in purse, it is not improbable that the President
would write a message on the bread question and the leather question,
and a Senate committee would be considering legislation to alleviate
the worst evils of the bread and shoe monopolies without stopping the
game entirely.

Footnote 347:

In their established tariffs our railroads do apply the same rates per
hundred whether the goods moved in carloads or train loads. The
Commission has held that the law requires this, and Commissioner
Prouty says that the open adoption of any different rule would create
an insurrection that Congress would hear from from all parts of the
country; but he thinks that in certain cases, live-stock and
perishable fruit for example, the railroads should have a right to
make lower rates by the train-load than by the carload. In reference
to cost of service there is ground for such a difference, but on
grounds of public policy is it not a mistake to favor the giant
shipper in this way and so help the building of trusts and monopolies?

Footnote 348:

Sixth Annual Report, Interstate Commerce Commission, p. 7.

Footnote 349:

_Outlook_, July 1, 1905, p. 577.

Footnote 350:

We have seen earlier in this chapter that a number of railroad men and
others told the Senate Committee that they believed rebates and
discriminations to have ceased. In his excellent book, “The Strategy
of Great Railroads,” Mr. Spearman says: “Alexander J. Cassatt has made
unjust discrimination in railroad traffic a thing of the past.”
Sometimes we are assured: “There can be no doubt but that, on the
whole, the freight rates of the country have been adjusted in very
nearly the best way possible for the upbuilding of the country’s
commerce.” (See “Freight Rates that were made by the Railroads,” W. D.
Taylor, _Review of Reviews_, July, 1905, p. 73.) For one who has in
mind the facts brought out in this book, comment on these statements
is hardly necessary. There is no doubt that President Cassatt is a
railroad commander of exceptional power, but he has not vanquished the
smokeless rebate, nor driven the hosts of unjust discrimination from
the railroads of the United States.

Footnote 351:

Ind. Com. Q. & Ans. iv, p. 596.

Footnote 352:

Sen. Com. 1905, p. 1474.

Footnote 353:

Sen. Com. 1905, p. 1521. The Texas Railway Commission says: “It is
plain that, if a railway company is permitted to become interested in
any kind of business competitive with business in the carrying on of
which for others it is engaged, the business in which it is interested
can be made to prosper at the expense of the business in which it has
no interest. The temptation to unfair discrimination in such a case is
so powerful that it ought to be removed.” (Report, 1896, p. 29.)

Footnote 354:

Sen. Com. 1905, p. 17.

Footnote 355:

I. C. C. Rep. 1898, p. 6.

Footnote 356:

I. C. C. Rep. 1898, p. 8.

Footnote 357:

On pages 65 and 66 of the last Report, Dec. 1905, the Commission
discusses a decision of the Circuit Court for the Southern District of
New York, in June last, to the effect that a _subpœna duces tecum_,
commanding the secretary and treasurer of a corporation supposed to
have violated the law to testify before the grand jury, and bring
numerous agreements, letters, telegrams, etc.,—practically all the
correspondence and documents of the company originating since the date
of its origin,—to enable the district attorney to ascertain whether
evidence of the alleged breach of law exists, constitutes an
unreasonable search and seizure of papers prohibited by the Fourth
Amendment to the Constitution.

Footnote 358:

Sen. Com. 1905, pp. 2899–2901, 2911.

Footnote 359:

Sen. Com. 1905, p. 829.

Footnote 360:

I. C. C. Beef Hearing, Dec. 1901, pp. 100, 101.

Footnote 361:

I. C. C. Beef Hearing, Dec. 1901, pp. 114–115.

Footnote 362:

_Ibid._, p. 126.

Footnote 363:

Report of Oregon Railway Commission, 1889, p. 32.

Footnote 364:

See above, p. 237.

Footnote 365:

See above, p. 113.

Footnote 366:

“There is ample law to-day” to stop rebates and unjust
discriminations, says President Tuttle of the Boston and Maine (Sen.
Com. 1905, p. 951), and he backs up his statement with vigorous
reasons for believing that the Government has never earnestly enforced
existing laws. President Ramsey of the Wabash also says that the
present law is ample to cover every unjust charge, and no further
legislation is needed to stop discrimination (Same, p. 1959).

George R. Peck, general counsel for the Chicago, Milwaukee & St. Paul,
testified that “existing law is entirely adequate” (Same, p. 1301).

Mr. Robbins, manager of the Armour Car-Lines and director in Armour &
Co., declares that the “Elkins Law is ample” (Same, p. 2387). See also
p. 2117, James J. Hill; pp. 2179, 2181, Carle; p. 2228, Grinnell; p.
3068, Faxon; pp. 3274, 3276, 3285, 3290, Elliott; p. 2360, Woodworth;
p. 2829, Smith.

Footnote 367:

A number of witnesses declare that the delays and uncertainties and
inadequacies of redress under existing laws discourage shippers from
efforts to obtain relief. Mr. C. W. Robinson, representing the New
Orleans Board of Trade and the Central Yellow Pine Association, says
they had such bad luck with their lumber cases before the United
States courts that they are discouraged.

“‘Don’t you think that the question of rebates and discriminations is
already covered by law and can be stopped by summary proceedings?’

“MR. ROBINSON. That they are not stopped is patent to every one who
uses a railway company as a shipper and who keeps his eyes open.

“‘Has there been any suit brought within the last two or three years
for rebates and discriminations in this section of the country?’

“MR. ROBINSON. No; generally speaking, we have decided down there that
life is too short to litigate with the railroad companies” (Sen. Com.
1905, p. 2492).

Governor Cummins of Iowa says that no suits have been brought in Iowa
for discrimination under the Elkins Law because the remedy under that
law is regarded as inadequate (Sen. Com. p. 2081). It appears that
only one case, the Wichita sugar differential, is before the I. C. C.
under the Elkins Law (Sen. Com. p. 2874).

Footnote 368:

Fifer, Adams, etc., Sen. Com. pp. 2923, 3338.

Footnote 369:

Vining, Sen. Com. p. 1691, Knapp, p. 3294, etc. Robbins, however,
manager of the Armour Car-Lines, says they are opposed to being made
common carriers (pp. 2384, 2397, 2400). He says they do not indulge in
rebates, generally speaking (pp. 2382, 2387, 2403), and thinks they
would be worse off if put under the Interstate Law (pp. 2390, 2397,
2401).

Footnote 370:

President Roosevelt, Governor La Follette, Governor Cummins, Sen. Com.
p. 2046; Professor Ripley, pp. 2330, 2338: Commissioner Knapp, p.
3305, Commissioner Prouty, pp. 2794, 2873, 2881, and 2886, where he
says: “I do not think the Commission has to-day in its docket a case
that can be satisfactorily disposed of without determining the rate
for the future.” Commissioner Clements, p. 3243, Commissioner Fifer,
pp. 3344, 3350, and many other witnesses; also writers and speakers
throughout the country.

On the other hand, James J. Hill, President of the Great Northern,
says he cannot imagine a greater misfortune than to attempt to fix
rates by law, p. 1486; it would hamper transportation and hinder
development. President Tuttle says that rate-making is practically the
only property right the railways have, p. 913. Railway men generally
are strongly opposed to fixing rates by commissions.

Footnote 371:

Sen. Com. p. 3482, N. Y. Chamber of Commerce.

Footnote 372:

Several witnesses suggest this. See, for example, Sen. Com. p. 3280.
But James J. Hill says that if present laws were enforced not one of
the car-lines could exist a moment, p. 1486.

Footnote 373:

Professor Ripley, p. 2345, Fordyce, p. 2202, and many railroad men;
see below, p. 265. But see p. 61, Cowan; p. 822, Victor Morawetz; pp.
973 and 1003, President Tuttle.

Footnote 374:

James J. Hill, p. 1521.

Footnote 375:

Knapp, p. 3299; without such a provision the old roads can cripple a
new road unless it goes clear across the continent.

Footnote 376:

Morawetz, pp. 818, 824; Bacon, pp. 16, 23; Davies, p. 3470; and Report
of Industrial Commission. Publicity is an excellent aid, but is
insufficient alone. It must keep steady company with adequate
legislation and efficient enforcement of it. What has been the effect
of publicity on the Standard Oil Trust up to date?

Footnote 377:

Commissioner Prouty, p. 2912. “That would stop discriminations,” said
the Commissioner. “Unless they got possession of the man,” said
Senator Dolliver.

Footnote 378:

Judge Gaynor proposes that the traffic managers shall be appointed by
the Government. The present writer has suggested that the public might
be represented on the board of direction in consideration of the
franchises, etc.

Footnote 379:

_Arena_, vol. 24, p. 569, Parsons.

Footnote 380:

Many of the States have strong laws, but the inharmonious,
uncoordinated efforts of individual States have proved of little avail
against the giant railway systems. Of the 31 States which have
established railway commissions, 22 have given the commissions more or
less of the rate-making power. For example, the Alabama Code, 1886,
gives the Commission authority “to revise the tariffs and increase or
reduce any of the rates.” The California Constitution, 1880, confers
power “to establish rates;” Florida Laws, 1887, “to make and fix
reasonable and just rates;” Georgia Code, 1882, “to make reasonable
and just rates;” Illinois Laws, 1878, “to make for each railway a
schedule of reasonable maximum rates;” Iowa, 1888, and South Carolina,
1888, the same as Illinois; Minnesota, 1887, power “to compel railways
to adopt such rates and classification as the Commission declares to
he equal and reasonable;” South Dakota, 1890, the same; Mississippi,
1884, “to revise tariffs;” New Hampshire, 1883, “to fix tables of
maximum charges.” (See 63 N. H. 259.) Kansas: on complaint and proof
of unreasonable charge Commission may fix reasonable rates, and if
companies don’t comply they may be sued for damages. The Massachusetts
Commission has “authority to revise the tariffs and fix the rates for
the transportation of milk” (158 Mass. 1). In New York the board may
notify the railways of changes in the rates, etc., it deems requisite,
and the Supreme Court may in its discretion issue mandamus, etc.,
subject to appeal. In Nebraska the State Supreme Court has held that
general language prohibiting unreasonable rates, and giving the
Commission power to enforce the law, is sufficient to confer authority
to fix reasonable rates in place of those found unreasonable, such
authority being essential to the efficient execution of the law
against excessive rates (22 Neb. 313).

In none of the States does the power to regulate rates appear to have
produced results of much value. In some States, Georgia, Texas,
Nebraska, Iowa, etc., the power has been at times vigorously used, but
the effect has been to antagonize the railroads, which have so much
power that is beyond the reach of any State Commission that they can
arrange their tariffs and service so as to work against the aggressive
States and disgust the people with the consequences of trying to
control the rates. Senator Newlands, who is sincerely on the people’s
side in the struggle for justice in transportation, voiced the common
opinion when he said in the United States Senate, January 11, 1905,
“As to the rate-regulating power, my judgment is, and it is the belief
of almost all experienced men in this country, that the
rate-regulating power exercised by the States has not, as a rule, been
beneficially exercised.”

Footnote 381:

The Bill provides that “Whenever ... the Interstate Commerce
Commission shall ... make any finding or ruling declaring any rate,
regulation or practice whatsoever affecting the transportation of
persons or property to be unreasonable or unjustly discriminatory the
Commission shall have power and it shall be its duty to declare and
order what shall be a just and reasonable rate, practice or regulation
to be ... imposed or followed in the future in place of that found to
be unreasonable” etc. It also provides that the order of the
Commission shall take effect 30 days after notice, but may on appeal
within 60 days be reviewed by a special transportation court having
exclusive jurisdiction of all such cases. By Section 12, the case is
to be reviewed on the original record, except when there is newly
discovered evidence which was not known at the hearing before the
Commission, or could not have been known with due diligence, and the
findings of fact by the Commission are _prima facie_ evidence of each
and every fact found. The only appeal from the court of transportation
is to the United States Supreme Court.

Footnote 382:

I. C. C. Rep. 1905, p. 9.

Footnote 383:

The granting of such power of inspection and publicity has been urged
by the Commission upon Congress in previous reports. On page 11 of the
Report for December, 1905, the Commission says: “We have also called
attention to the fact that certain carriers now refuse to make the
statistical returns required by the Commission. For example, railways
are required, among other things, to indicate what permanent
improvements have been charged to operating expenses. Without an
answer to this question it is impossible to determine to what extent
gross earnings have been used in improving the property and the actual
cost of operation proper.... Certain important railways decline to
furnish this information at all, and others furnish it in a very
imperfect and unsatisfactory manner.”

Footnote 384:

I. C. C. Rep. 1905, pp. 9, 10.

Footnote 385:

This clause together with the words italicized in the next paragraph
make the ruling of the Commission final so far as the merits of the
case are concerned. (See Appendix B.)

Footnote 386:

As the galley proofs of this book go back to the printer, the Hepburn
Bill has passed the House by a big majority. If passed by the Senate
and put in force, it promises to operate as a serious check upon the
abuses connected with private cars, terminal railroads and midnight
tariffs, but it does not touch at all nine-tenths of the methods of
discrimination. We have seen that between 60 and 70 different methods
of unjust discrimination between persons and places are in use in our
railway business to-day. The fixing of a maximum rate cannot prevent
either secret rate cutting or favoritism in facilities and services,
or even open discrimination in the arrangement of classifications and
adjustment of rates between different localities.

No doubt this law in the hands of an able and honest commission would
do much good, but it cannot reach the heart of the railroad problem,
which is the unjust discrimination between persons and places. No
amount of maximum rate-fixing or prescribing of regulations can
destroy discrimination so long as we have the pressure of great
private interests driving the railroads into the practice of
favoritism.

The history of railroad legislation in this country shows that the
railways do not respect or obey the law when it conflicts with the
fundamental financial interests and orders of the railway owners and
trust magnates, whose gigantic power represents the real sovereignty
and control in America to-day.

On page 3 of the House Report, 59th Congress, 1st Session, No. 591,
January 27, 1906, accompanying the Hepburn Bill the Committee on
Interstate and Foreign Commerce says: “It is proper to say to those
who complain of this legislation that the necessity for it is the
result of the misconduct of carriers.... If the carriers had in good
faith accepted existing statutes and obeyed them there would have been
no necessity for increasing the powers of the Commission or the
enactment of new coercive measures.”

What reason is there to believe that the railroads will accept a new
statute in good faith and obey it any more than any former law? On the
contrary, the probability is that if the Hepburn Bill becomes a law
the main effect will be to compel railway managers and counsel to sit
up nights for a time planning methods to evade and overcome the new
provisions. Even if Congress gave the full power at first demanded by
the President, to fix the precise rate to be charged, the general
effect would probably be that railways would exert themselves to
control the Commission. They have always at hand the weapon of
practically interminable litigation, and it is very doubtful whether
the railroad representatives in the United States Senate will permit
any law to pass until it is amended so that the review in the courts
shall go to the merits of the Commission’s order in each case.
Powerful interests are opposed to any provision that will permit the
fixing of a rate, even a maximum, to go into effect before it is
connected already with the Federal courts.

Footnote 387:

See statement earlier in this discussion.

Footnote 388:

Sen. Com. 1905, p. 3485.

Footnote 389:

Dept. of Commerce, Monthly Summary, April, 1900, p. 3991.

Footnote 390:

See Ind. Com. vols. iv and ix, and Hudson, Hadley, etc.

Footnote 391:

They tend to stability, economy, and efficiency, diminishing the
fluctuation of rates, railroad wars, and the wastes of competition,
and improving the service by better co-ordination, distribution of
traffic, etc.

Footnote 392:

See the powerful statements of President Ingalls, President Fish, Paul
Morton, Professor Seligman, Commissioner Prouty, etc., Ind. Com. vol.
iv; and statements of Professor Ripley, Morawetz, Fordyce, etc., Sen.
Com. 1905. It is absurd to forbid co-operation for the maintenance of
reasonable rates and prevention of superfluous transportation, or any
other honest purpose. Traffic agreements may secure a co-ordination of
service approaching that which would be attained by unity of
management. The fetish-worship of competition is one of the prime
curses of our economic ignorance. We might as well worship
destruction, injustice, and inefficiency. Moreover, competition of the
kind that protects the public from oppressive rates cannot be
maintained in the railway world. Let the railways unite, and then
control them, insisting on the dominance of the public interest so far
as necessary to accomplish justice.

Footnote 393:

The United States Supreme Court held in the Trans-Missouri Case, March
22, 1897, and the Joint Traffic Association Case, Oct. 24, 1898, that
railroads cannot lawfully agree on rates to competitive points. But no
law or decision can well prevent railroad managers from meeting and
coming to an understanding that they will adopt the same rates to such
points. No contract in restraint of trade or to limit competition is
necessary,—if each railroad publishes the same rates between
“competitive” points and maintains them, competition as to rates is
killed as effectually as if there were a pool or a traffic association
with a written agreement.

Footnote 394:

Sen. Com. 1905, pp. 2923, 3338.

Footnote 395:

Sen. Com. 1905, p. 3482.

Footnote 396:

_Ibid._, pp. 3485, 3486. The railroad managers decided to notify
offending railroads that unless rates were restored, the lowest cut
rates that had been made by any line would be adopted by all, to
punish the rebaters and stop them from getting business thereby. At a
meeting July 26, 1882, 30 railroads being represented, a resolution
was unanimously adopted, directing agents at connecting points to
examine waybills, and when rates were found to have been cut, to hold
the freight at the expense of the initial line until the waybills had
been corrected.

Footnote 397:

Sen. Com. 1905, p. 1908, and index, “Rate-Making.”

Footnote 398:

The Senate is too full of men interested in railroads in one way or
another to make it easy to pass any measure that might seriously
affect either the power or the profits of the roads.

Footnote 399:

President Tuttle agrees with the Commission on this point. In his
testimony to the Senate Committee, 1905, he said that the company’s
books would not show rebates, etc., “unless they wanted them to. I
will say to you frankly that if a company intended to evade the law by
giving rebates and commissions they would find some way of so covering
them up that all the experts on the face of the earth could not find
them. If you assume at the beginning that the railroad management is
deliberately going into violations of the law it is not going to make
records of those things which can ever be found out.” (Sen. Com. 1905,
p. 952.) But President Tuttle said: “There is ample opportunity to
ascertain if rebates exist. There are always opportunities. The
competitive shipper knows about it. There is always enough of the
loose end hanging out somewhere so that if the Interstate Commerce
Commission or whoever is authorized to move in those matters will take
the time to proceed upon the lines of information that they can always
get they will be easily ferreted out and punished. I do not think
there is any evidence that the Interstate Commerce Commission has
tried to enforce the Elkins Law.” (Same, p. 951.) Shippers have,
however, often stated that they felt sure some concession was being
made to their rivals, but they could not tell what, and in many cases
there is simply a vague suspicion; no one knows whether others are
paying the tariff rates or not. And railroad men have admitted, as in
the B. & A. case, that no shipper knew what rates others were getting.

Footnote 400:

Sen. Com. 1905, p. 3644.

Footnote 401:

Out of 37 passenger cases (20 rate cases and 17 miscellaneous) the
decision was favorable to the complainant in 9; and in 316 freight
cases the decision was for the complainant in 185 cases. In 70 of the
freight cases the complaint was of excessive charges (half of them
charging discrimination also, or relative excess as well as absolute
excess); 119 related to charges relatively unreasonable; 52 concerned
long and short haul abuses; 20 unreasonable classification, 8 unfair
distribution of cars, 41 miscellaneous. Ninety-six of the 316 freight
cases were dismissed, 13 settled while pending, 4 left without a
general statement and no order, and 17 held for further action. Nearly
90 percent of all the cases, passenger and freight, related directly
to some form of discrimination, and indirectly discrimination of some
sort was an element in practically every case.

Footnote 402:

The 8 cases are the New York and Northern Case (3 I. C. C. 542) the
Social Circle Case (4 I. C. C. 744) the Minneapolis Case (5 I. C. C.
571) the Colorado Fuel and Iron Case (6 I. C. C. 488) the St. Cloud
Case (89 I. C. C. 346) the Savannah Case (8 I. C. C. 377) the Tifton
Case (9 I. C. C. 160) and the California Orange Routing Case (9 I. C.
C. 182). Mr. Willcox thinks the Minneapolis Case and the Colorado Case
should be crossed off because the carriers complied with the orders
while suit was pending, so that there was no decision on the merits.
He says the decision was not on the merits in the New York Case, the
St. Cloud Case, or the Tifton Case. In the Social Circle Case the
Supreme Court sustained the order in respect to discrimination, but
reversed it so far as it attempted to fix a maximum rate. In the
Orange Case the Circuit Court sustained the Commission, but an appeal
was taken at once to the Supreme Court. In the Savannah Naval Stores
Case the Circuit Court sustained the Commission and no appeal was
taken. Two cases in favor of the Commission in the Court of Appeals
and one-half a case in the Supreme Court, and one of the circuit
decisions is on appeal—one and one-half final affirmatives on the
merits out of 34. One would think that Mr. Willcox might allow the
Commission the three cases that were decided in their favor although
the court did not find it necessary to go into the merits of the
matter, and he seems to be less generous about the Colorado Case than
Mr. Newcomb, who says the Commission was sustained by the court.

Footnote 403:

Work of the Interstate Commission, p. 14, 1905. (See Appendix A.)

Footnote 404:

As the average time required to reach a final decision in a case that
goes from the Commission through the Federal courts up to the United
States Supreme Court is 7½ years, it is clear that there is plenty of
time for the accumulation of a congregation of cases, birds of a
feather, waiting for judgment, on the same point.

Footnote 405:

Sen. Com. 1905, p. 2888.

Footnote 406:

The railroads would prefer a court to a Commission if any public body
is to have power over rates. They know that proceedings in court are
likely to be troubled with long delays, and great expense, and that
courts are very delicate about determining what is a reasonable rate.
In the Reagan case (154 U. S. 362) the Supreme Court says: “It has
always been recognized that if the carrier attempted to charge a
shipper an unreasonable sum the courts had jurisdiction to inquire
into that matter and award to the shipper any amount exacted from him
in excess of a reasonable rate; and, also, in a reverse case, to
render judgment in favor of the carrier for the amount found to be a
reasonable rate.”

In any case of suit by a shipper to recover damages for unreasonable
charges the court would have to determine what was a reasonable rate
in order to fix the measure of damages, but Chairman Knapp of the I.
C. C. says he does not know of a case in which suit was ever brought
(Sen. Com. 1905, p. 3301). The fact that very many complaints have
been made of unreasonable rates and no suits brought in the courts
indicates that court procedure is regarded as inadequate. Courts are
by nature judicial, not legislative or executive. And the remedy which
can be administered by them in these railroad cases is uncertain,
limited, and indirect. (Sen. Com. p. 3362.)

Footnote 407:

Sen. Com. 1905, pp. 3297, 3298.

Footnote 408:

Sen. Com. 1905, p. 975.

Footnote 409:

9 I. C. C. Decis. 318, Nov. 17, 1902.

Footnote 410:

10 I. C. C. Decis. 590; Rep. 1905, p. 31.

Footnote 411:

Essex Milk Producers’ Association _v._ Railroads, 7 I. C. C. Decis.
92, March 13, 1897. See also Howell _v._ New York, Lake Erie, and
Western, 2 I. C. C. Decis. 272, equal milk rates from all distances
unlawful.

Footnote 412:

11 I. C. C. Decis. 31.

Footnote 413:

Sen. Com. 1905, p. 1339.

Footnote 414:

Sen. Com. 1905, p. 1165. The fact is that neither the Elkins Bill nor
the Esch-Townsend Bill reaches the private car abuses or terminal
railroads, or flying tariffs, or other evasive forms of
discrimination, and neither adds much to the power of the Commission
to deal with the subject. (See Sen. Com. pp. 2889, 2905, 2911).

Footnote 415:

Sen. Com. 1905, pp. 1675, 1676.

Footnote 416:

See Chamber of Commerce _v._ C. M. & St. P. Rd., 7 I. C. C. Decis.
1898, p. 510 and I. C. C. Rep. 1898, p. 24.

Footnote 417:

The reasons for and against public ownership of railroads are dealt
with in the testimony of the writer before the Industrial Commission,
vol. ix., pp. 123–193, 883–890. President Roosevelt had the
possibility of public ownership in mind when he said in his message
that we must choose between an increase of existing evils, or
increased Government supervision, or a “still more radical policy.”

Footnote 418:

The railways of Italy were operated by private companies when I was
there; since then, in 1905, the Government has undertaken the
operation of them.

Footnote 419:

A few illustrations of the vigorous manner in which this law works out
in practice may be of advantage here:

The Hungarian Government at a single stroke, in 1889, reduced State
railway fares 40 to 80 percent. Austria and Prussia have also made
great reductions in railway charges. Belgium started in the thirties
with the very low rate of ⅘ of a cent on her public railways. In New
Zealand and Australia also the Government managements have adopted the
settled policy of reducing railroad rates as fast as possible.

When England made the telegraph public in 1870, rates were lowered 30
to 50 percent at once, and still further reductions were afterwards
made.

When France took over the telephone in 1889, rates were reduced from
$116 to $78 per year in Paris, and from $78 to $39 elsewhere, except
in Lyons, where the charge was made $58.50.

Private turnpikes, bridges and canals levy sufficient tolls to get
what profit may be possible; but when the same highways, bridges and
canals become public the tolls are often abolished entirely, rendering
such facilities of transportation free, and when charges are made they
are lower than the rates of private monopolies under similar
conditions, and generally reach the vanishing point as soon as the
capital is paid off or before.

When Glasgow took the management of her street railways in 1894, fares
were reduced at once about 33 percent, the average fare dropped to
about 2 cents, and 35 percent of the fares were 1 cent each. Since
then further reductions have been made, and the average fare now is
little more than a cent and a half; over 50 percent reduction in 6
years, while we pay the 5 cent fare to the private companies in Boston
and other cities of the United States the same as we did 6 years ago,
instead of the 2½ cent fare we would pay if the same percentage of
reduction had occurred here as in Glasgow.

According to Baker’s Manual of American Waterworks, the charges of
private water companies in the United States average 43 percent excess
above the charges of public waterworks for similar service. In some
states investigation shows that private water rates are double the
public rates.

For commercial electric lighting Prof. John R. Commons says that
private companies charge 50 to 100 percent more than public plants.

We could offer many other illustrations of the law that public
ownership tends to lower rates than private monopoly, but this
discussion may be sufficient to indicate the complexion of the facts.

Footnote 420:

The sixteenth annual report of the Commission, dated 1905, and
covering the year 1904, has come just in time for a note before the
galleys are made up into pages. Of the 103 suits entered before the
Commission in 1904, about a quarter (25) relate to undue preference,
rebates, refusal or neglect to afford such reasonable facilities as
were accorded to others under similar circumstances; and most of the
other cases, charging unreasonable rates, etc., were really based on
some element of unjust discrimination in one form or another. (See
Appendix B.)

Footnote 421:

While this book is on the press, the eighth report, covering 1902 and
1903, has come to hand. More than half the 180 new complaints filed in
the 2 years directly relate to questions of discrimination—undue
preference, rebates, denial of facilities accorded to others,
excessive charges as compared with other rates, etc., and nearly all
the 180 cases involve discrimination directly or indirectly. (See
Appendix B.)

Footnote 422:

From the _Progressive Review_, vol. II, no. 11, pp. 441, 442, where a
number of facts relating to import rates are condensed from the
testimony before Parliamentary committees.

Footnote 423:

See “The Railway Act” 1903.

Footnote 424:

This and other phases of the problem relating to the comparison of
private management, government control, and government ownership, are
more fully dealt with in “The Railways, the Trusts and the People” by
the same author. Oct. 1905, Equity Series, 1520 Chestnut St.,
Philadelphia.

------------------------------------------------------------------------

THE RAILWAYS, THE TRUSTS AND THE PEOPLE.

BY PROF. FRANK PARSONS, PH.D.

_Edited and Published by C. F. TAYLOR, M.D., Editor and Publisher of
Equity Series, 1520 Chestnut Street, Philadelphia._

THE CONTENTS ARE AS FOLLOWS: