Chapter X: Railroad Literature--Continued (1)

Railroad questions have become of such general interest that their discussion has become a prominent factor of magazine literature. It is a significant fact that these contributors are usually railroad men, and under these circumstances an unbiased discussion of the questions at issue is indeed a rare occurrence. It is but too frequently the sole object of the contributor, and not unfrequently even of the publisher, to create a public sentiment in favor of the unjust demands of railroad managers.

During the last few years systematic efforts have been made by the railroad interests to influence public opinion against the Interstate Commerce Law and restrictive State legislation through the leading magazines of the country. Mr. Sidney Dillon, president of the Union Pacific Railroad, in an article which appeared in the April (1891) number of the _North American Review_, under the title "The West and the Railroads," endeavors to show that the West is indebted to the railroad managers for nearly all of the blessings which its people enjoy, and that therefore railroad legislation in the West is a symptom of rank ingratitude. He prefaces his argument with the remark that the elder portions of our commonwealth have already forgotten, and the younger portions do not comprehend or appreciate, that but for the railroads what we now style the Great West would be, except in the valley of the Mississippi, an unknown and unproductive wilderness. He then argues that, inasmuch as the railroads carry the wheat of Dakota and Minnesota to the sea-coast, and bring those sections of our community into direct relation with hungry and opulent Liverpool, the world should "thank the railway for the opportunity to buy wheat, but none the less should the West thank the railway for the opportunity to sell wheat." It does not seem to occur to Mr. Dillon that the railway might, with equal propriety, thank the world in general, and the Great West in particular, for its opportunity to carry wheat.

We are also told that the railway has reclaimed from nature immense tracts of land that were worthless except as to their possibilities, which once seemed too vague and remote to be considered and are to-day valuable; that it has changed the character of the soil as well as the climate of the West, and we are almost given to understand that in many respects it has assumed the functions of Providence. Mr. Dillon generously admits, however, that railways have not been built from philanthropic motives and that we find among railroad promoters and contractors men of large fortunes. He then proceeds to reprimand the States west of the Mississippi for their "ungrateful" legislation, which, he says, interferes with the business of the railway, even to the minutest detail, and always to its detriment. Such legislation exasperates Mr. Dillon the more because it originated in States "which happened to be the communities that owe their birth, existence and prosperity to these very railways." Mr. Dillon then gives vent to his wrath by the use of such terms as impertinence, ignorance and demagogism. He holds that legislative enactments as to the rights and liabilities of railway corporations are useless, "because the common law has long since established these as pertaining to common carriers, and the courts are open to redress all real grievances of the citizen." Upon this theory we might as well dispense with the legislative department of the Government, for there is no relation in the community to which the principles of the common law can not be applied. Besides this, Mr. Dillon entirely ignores the fact that the railway company is not only a common carrier, but the keeper of the highway, and as such is subject to Government control as much as the turnpike tollgate keeper or the collector of customs. "Then as to prices." Mr. Dillon continues: "These will always be taken care of by the great law of competition, which obtains wherever any human service is to be performed for a pecuniary consideration. That any railway, anywhere in a republic, should be a monopoly, is not a supposable case."

Like the rest of railway men, Mr. Dillon excels in painting dark pictures of railroad catastrophes. A sample production of his art is here presented:

"One of the greatest dangers to the community in a republic
is this: that it is in the power of reckless, misguided or
designing men to procure the passage of statutes that are
ostensibly for the public interest and that may lead to
enormous injuries. Let us imagine for a moment that all
railways in the United States were at once annihilated. Such
a catastrophe is not, in itself, inconceivable; the
imagination can grasp it, but no imagination can picture the
infinite sufferings that would at once result to every man,
woman and child in the entire country. Now, every step taken
to impede or cripple the business and progress of our
railways is a step towards just such a catastrophe, and
therefore a destructive tendency."

Mr. Dillon, losing sight of all other interests, did not think that his nonsensical mode of reasoning would apply equally well to them. Let us, for instance, imagine for a moment that all of the farms of the United States were at once annihilated. Can the imagination picture the infinite sufferings that would at once result to every man, woman and child in the whole country? Now, is not any step taken to impede or cripple the business of farming a step towards just such a catastrophe, and therefore of a destructive tendency? Mr. Dillon then avails himself of an opportunity to give the people of the United States some gratuitous advice when he says:

"We do not arrogate superior wisdom or intelligence to
ourselves when we suggest to the people of the United
States, and especially that portion of the country where
railroads have been the subject of what we consider to be
excessive legislation, that the rational mode of treating
any form of human industry that has for its object the
performance of desired and lawful service is to let it
alone, and that the railway is no exception to this
principle."

This is the very plea that Jefferson Davis made when he kindled the flame of treason.

* * * * *

In the March, 1891, number of the _Forum_, Mr. W. M. Acworth discusses, under the title "Railways under Government Control," the working of the railway systems of the different nations. He holds that the management of railroads which are the property of the State is, as a rule, greatly inferior to the management of those roads which are the property of private trading corporations; he assigns to the railway experts of England and America the first places among the railway experts of the world, and appears to attribute all the good in the railroad management of these countries to the absence of State interference, and all the evil in the management of the railroads of other countries to the fact that such interference exists. He says of the railroads of England and the United States:

"In speed and accommodation, in the energy which pushes
railways into remote districts, and in the skill which
creates a traffic where no traffic existed before, they
stand to-day in the front rank, as they have stood for the
last half century. To say that they are very far from
perfect is nothing; it is only to say that they are worked
by human agency. Their worst enemies will scarcely deny that
they are at least alive; so long as there is life there may
be growth, and we may hope to see them outgrow the faults of
their youth. The charge made against State railway systems
is that they are incapable of vigorous life. The old adage
which proclaimed that 'necessity is the mother of invention'
has been re-stated of late years as the law of the survival
of the fittest in the struggle for existence. If the
doctrine is true, the State railway system, relieved from
the necessity of struggle, must cease to be fit and will
fail to survive."

While it is not intended to enter here into a defense of a State railway system, it may justly be questioned whether "the State railway system, relieved from the necessity of struggle, must cease to be fit and will fail to survive." The growth of the State system in Europe is in itself a sufficient refutation of Mr. Acworth's theory. The mail service has for several hundred years been a monopoly of the government; but, while it is far from being perfect, it remains to be demonstrated that private enterprise could give to the public a better service in the long run.

Mr. Acworth is an Englishman who in former years wrote many bitter things concerning the abuses which he then thought he saw in the management of the railroads of his native country, which, according to his own statement, are, besides those of the United States, the only roads in the world for whose regulation competition has been relied upon in the past. Mr. Acworth has become a convert to the _laissez faire_ theory of dealing with railroads and now evinces an unusual, but perhaps pardonable, zeal in the defense of his new position. In the preface to his book, "The Railways of England," he says upon the subject:

"I have published before now not a few criticisms (which
were meant to be scathing) on English railways anonymously.
I find myself using, under my own name, the language of
almost unvarying panegyric. This is partly to be explained
by the plan of the book, which professes to set before the
reader those points on each line which best merit
description--its excellencies, therefore, rather than its
defects. Much more, however, is it due to a change of
opinion in the writer.... I have found in so many cases that
a satisfactory reply existed to my former criticisms, that I
have perhaps assumed that such an answer would be
forthcoming in all; and if I have taken up too much the
position of an apologist, where I should have been content
to be merely an observer, let me plead as my excuse that I
am only displaying the traditional zeal of the new-made
convert."

Prof. Hadley, of whose work, "Railroad Transportation, its History and its Law," mention has been made above, contributed an article to the April, 1891, number of the _Forum_, under the title "Railway Passenger Rates." He endeavors to show that the high passenger rates of American railroads are due solely to superior service. He says:

"Continental Europe pays two-thirds as much as America or
England and gets an inferior article. India pays still less
and gets still less. The difference is seen both in quality
and quantity of service. In India express trains rarely run
at a greater speed than 25 miles an hour. In Germany and
France their speed ranges from 25 to 35 miles an hour, and
only in exceptional instances is more than 40 miles an hour.
In the United States and in England the maximum speed rises
as high as 50, or, in exceptional instances, 60 miles an
hour. With regard to the comfort of the cars in different
countries, there is more room for difference of opinion;
but there can be no doubt that the average traveler in the
United States, or even in the English third-class car, fares
better than he would in the corresponding class on
continental railroads, and infinitely better than the bulk
of travelers in British India."

It may be admitted that upon the whole the speed of American and English railroads is greater than that of continental roads, yet the difference is much less than Mr. Hadley would make us believe. The fast trains of the Berlin and Hamburg Railroad, according to Röll's "Railroad Encyclopedia," make the distance of 179 miles in three hours and forty-four minutes. The average speed is therefore 48 miles an hour. There are but few lines in the United States whose regular express trains run at a greater speed. The express trains of the Berlin and Brunswick line make 45-1/2 miles an hour. Trains are run on the Vienna and Buda-Pesth Railway at the rate of 42 miles an hour and on the Paris and Calais Railway at a rate of over 40 miles an hour. Official reports give the average speed of express trains in Northern Germany as 32.2 miles per hour, which is considerably more than the average speed of our Western trains, upon which the rates charged are twice as high as those charged by German roads. The average speed of the express trains in England was 35.7 miles per hour in 1890, in the Netherlands 30.7 miles, in France 30 miles, in Denmark and Southern Germany 28.8 miles and in Austria 27.8 miles per hour. Accurate statistics showing the average speed in America are not in existence, but it may well be questioned whether the difference between the speed of American and European trains is sufficient to justify upon that score any essential difference in the rates. Mr. Hadley's statement that the average traveler in the United States, or even in the English third class, fares better than he would in the corresponding class on continental railroads, is far too sweeping to be true. It is certain that the Belgian, German, Austrian or French second-class coupes are much to be preferred to the smoking and emigrant cars which in America are made to take their places.

To prove that much more work is demanded of American railroads than of European railroads, Mr. Hadley presents the following table:

Annual Train
Miles run Service per
by Trains head of
Countries. Population. annually. Population.

United States (1889) 61,000,000 724,000.000 12
Great Britain (1889) 38,000,000 303,000,000 8
Germany (1889) 48,000,000 181,000,000 3-3/4
France (1888) 38,000,000 145,000,000 3-3/4
Austria-Hungary (1887) 40,000,000 66,000,000 1-2/3
India (1889) 200,000,000 51,000,000 0-1/4

And he adds: "These figures are for passenger trains and freight trains together, as some countries do not give statistics of the two separately; but the general results would be nearly the same if passenger trains alone could be considered. The figures show that, for every man, woman and child, a train is run twelve miles annually in the United States, in Great Britain eight miles, in Germany or France a little less than four miles, in Austria not much more than a mile and a half, and in British India less than a quarter of a mile."

This statement, even if correct, is certainly misleading. No allowance is made for the greater distances and the greater average haul in America, and none for our bulky raw products, which require more car room than the manufactured goods predominating as freight in Europe.

If Mr. Hadley's statement of miles run by trains annually is used in connection with Mr. Poor's statement showing the length, for 1889, of the railroads of the countries given in the above table, it can be shown that the average number of trains run annually per mile is considerably less here than in Europe:

Length of Average Number
Railroad Miles run of Trains
in miles by Trains per mile per
Countries. (1889). annually. annum.

United States 161,396 724,000,000 4,485
Great Britain 19,930 303,000,000 15,203
Germany 25,360 181,000,000 7,137
France 21,910 145,000,000 6,618
Austria-Hungary 15,990 66,000,000 4,127

It is seen that while the average number of trains run per mile per annum is only 4,485 in the United States, it is 6,618 in France, 7,137 in Germany, and 15,203 in Great Britain. In Austria-Hungary it is somewhat less than here. It is not claimed that this is in every respect a fair argument; but it is at least as fair as Mr. Hadley's. As has been stated before, the average earnings per train mile are larger in the United States than in most nations, and, excepting Sweden, railway capital has the highest gross earnings of any nation in the world; and when Mr. Hadley bases his argument in favor of higher rates for American railroads than for those of Europe upon the claim that the latter secure larger train loads, he simply reasons from false premises.

Mr. Hadley then continues:

"But why cannot our railroad men, with our present train
service, secure larger loads by making lower rates, and give
us cheap service as well as plenty of it? Why cannot we
secure two good things instead of one? For two reasons:
First, because it is not certain that low rates will be
followed by greatly increased travel; second, because such
increased travel would not be so economical to handle in
America as it is in Europe. It is wrong to assume that,
because reductions of charges in Europe have increased travel
enormously, they would have a proportionate effect in America
and a corresponding advantage in American railroad economy.
It is a somewhat significant fact that second-class trains at
reduced rates have been extremely successful in Europe and
not at all so in America. Other things being equal, the
American public would be glad to have its travel at lower
fares; but it cares more for comfort and speed, and for being
able to travel at its own times, than for a slight difference
in charge. The assumption so frequently made, that a
reduction in fares would cause an enormous increase in travel
in this country, is for the most part a pure assumption, not
borne out by the facts."

The great increase in business which has everywhere followed reductions in postage rates, telegraph rates and street-car fares, as well as railroad rates, sufficiently refutes the assertion that it is not certain that low rates would be followed by greatly increased travel. If the second class has not been as successful here as in Europe this is solely due to the fact that the American railroad companies have systematically discouraged second-class travel by forcing passengers into filthy and over-crowded cars. The statement that increased travel would not be so economical to handle in America as in Europe scarcely needs a reply. If, as Prof. Hadley says, the American public demand more frequent trains than the people of Europe, and if these frequent trains are not at present profitable to our railroad companies, it would seem to be plainly to their interest to hold out every inducement to the public to increase travel and thus fill their trains.

Mr. Hadley does not aid his argument when, referring to the Hungarian zone system, he says: "The importance of the zone system in Austria and in Hungary lies in the fact that its adoption was accompanied by a great reduction in rates. The unit rate for slow, third-class trains, which had previously been nearly a cent and a half a mile, was reduced to less than one cent.... The use of railroads under the new system, though vastly greater than it was before, is vastly less than that of a well-managed American road at American rates." Mr. Hadley inadvertently presents here one of the very best reasons why our passenger rates should be reduced.

The fact is, railroad men are opposed, and always have been opposed, to reduction of rates, and to all progressive movements that require increased expenditures or threaten to temporarily reduce their revenues. When the introduction of the zone system was first advocated in Hungary it was opposed by just such men and just such arguments.

No one can contradict the following facts, viz.: That the average cost of European roads is much greater than that of American roads; that the number of railroad employes per mile is much greater there than here; that much larger sums are expended for repairing and improving the roads, and that therefore the lives of passengers are much safer in Europe than in America; and that the average speed and corresponding accommodations of European trains, and especially those of England, Germany, France and Austria-Hungary, compare quite favorably with the average speed and corresponding accommodations of our roads. It is, under these circumstances, absurd to claim that the higher prices charged by American roads are due to the greater cost of service.

Mr. Hadley's labors as a railroad author have, it seems, greatly increased his corporation bias. In an address which he delivered before the American Bankers' Association at New Orleans in November, 1891, upon the subject of "Recent Railroad Legislation and its Effects upon the Finances of the Country," he made a number of assertions which ill comport with the fairness of a public statistician or the wisdom of a Yale professor. After a few introductory remarks, Prof. Hadley made the following statement:

"Every one knows that railroad property has fallen in value since the passage of the Interstate Commerce Act four years and a half ago; few have made any accurate estimate of the amount of that fall. Let us take the stock of the leading railroad systems centering in Chicago as a type. Here we find an aggregate shrinkage of over $60,000,000, or more than one-quarter of the par value of the stocks.

Par Value. Price. Shrinkage.
Apr. 4, Nov. 4,
1887. 1891.
C., M. & St. P. $30,904,261 93 75 $5,560,000
" " Preferred 21,555,900 122 119 647,000
C. & N. W. 31,365,900 121 116 1,568,000
" " Preferred 22,325,454 148 139 2,009,000
C., R. I. & P. 41,960,000 126 82 18,462,000
C., B. & Q. 77,540,500 140 98 32,567,000
----------- ----------
Total. $225,651,000 $60,815,000"

The table shows that fifty-one million of these sixty million dollars are the shrinkage of the Chicago, Rock Island and Pacific and the Chicago, Burlington and Quincy stocks. It is surprising that Prof. Hadley should be ignorant of the real causes of this depreciation, which are known to nearly every Granger in the West. In 1887 the Chicago, Rock Island and Pacific Railroad Company owned 1,121 miles of road, only 172 of which were outside of the States of Illinois and Iowa. In 1891 the same company owned 2,725 miles of road, with 1,776 miles outside of Illinois and Iowa and scattered through Missouri, Kansas, Nebraska, Colorado, Indian Territory and Oklahoma. In Kansas alone the Rock Island system grew from two miles in 1887 to 1,059 miles in 1891. In other words, to a little over a thousand miles of _good_ road the company's managers added nearly 2,000 miles of poor road and a proportionate amount of new stock, and the depreciation in the company's stock which followed was no greater than one should have expected under such circumstances. The managers of the Rock Island and the promoters of these new lines found the transactions to their advantage, while the original stockholders of the company had to bear the imposition, as hundreds of thousands of railroad stockholders had done before them. But neither the law of Congress nor that of any State was to blame for this depreciation of the Rock Island stock.

Since 1891, railroad stocks have advanced on an average at least twenty per cent., and during the last sixty days have declined about twenty-five per cent., although there has been no essential change in interstate or State legislation. It is certainly as fair to call the advance the ultimate result of restrictive railroad legislation as to attribute to that legislation the shrinkage above referred to. Extensive speculations similar to those just mentioned were, during the same period, indulged in by the managers of the C., B. & Q. Railroad Company and its protegé, the C., B. & N., who, in addition to this, greatly injured their road in 1888 by the unjust provocation of the engineers' strike. So destructive were this strike and its consequences to the company's business that it is difficult to account for the motives of those who provoked and stubbornly prolonged it except upon the theory that it played an important role in their stock manipulations.

But the recent legislation of a considerable number of States has, in Prof. Hadley's opinion, been still more detrimental to railroad interests than that of Congress. He says;

"In the second place, the legislatures of several States,
stimulated by the example of Congress, hastened to pass in
imitation, of the Interstate Commerce Act, laws which, in
many instances, went far beyond their model in point of
stringency. Examples are furnished by the statutes of Iowa,
Maryland, Minnesota and South Carolina in 1887-88; of
Florida in 1888-89, and of no less than thirteen States in
1889-90, viz.: Georgia, Iowa, Kentucky, Massachusetts,
Mississippi, New Hampshire, New Jersey, North Dakota, Ohio,
Rhode Island, South Dakota, Virginia, Wyoming; as well as by
the recently adopted Constitution of Kentucky. The
legislation of 1890-91 shows a slight reaction against the
movement of the three years previous.

"In two respects the State legislatures went quite beyond
the scope of the Interstate Commerce Act. They tried to
prescribe safety appliances to the operating department, and
rates to the traffic department. Of the first of these
groups little need be said, except that as a rule they have
failed to accomplish any great progress toward the result in
view, and have in some instances actually hindered such
progress. The attempt at prescribing rates was more serious.
It involved a return to the methods of the Granger
legislation, fifteen years earlier, which had operated so
disastrously upon the railroads and the public alike. The
system of commissioners with powers to make schedules which
should be at least _prima facie_ evidence of reasonable
rates had, during the intervening period, never been wholly
abandoned; but the powers thus conferred had been sparingly
exercised. It was either left unused, as was generally the
case in the North from 1877 to 1887, or the schedule rates
were put so high as not to interfere with good railroad
economy, of which examples are seen in Georgia and other
parts of the South. But from the year 1887 onward there was
a pressure upon the Commissioners to make schedules, and to
make them low; and lest these boards should not be able to
reflect the popular feeling directly enough, they were, in
some instances, no longer to be appointed by the Governor,
but elected by popular vote. The law which was most severely
applied and attracted most public attention was that of
Iowa.... The agitation against the railroads has many points
in common with the land agitation in Ireland. Absentee
ownership is at the bottom of the trouble in either case.
Property is owned in one place and used in another, and the
users, not satisfied with the conditions of use, insist on
taking the business direction into their own hands. They
claim the right to fix rates in Iowa for the same general
reasons by which they claim the right to fix rents in
Ireland."

It must be presumed that Mr. Hadley is ignorant of the fact that under the Iowa Commissioners' tariff the gross earnings of the Iowa railroads increased $7,000,000, or more than 17 per cent., in about three years, and their net revenue increased in proportion. Never have the railroads or the people of Iowa enjoyed a healthier prosperity than they do at present. It is true that the State of Iowa denies to the railroad companies the right to charge what they please; but this claim does not prevent them from doing justice to the absentee owner of railroad property. That absentee owners of property are disposed to take undue advantage of those who use it is illustrated in the very case which Mr. Hadley cites. So flagrant was the injustice done by the English landlord to the Irish tenant that the English Parliament was constrained to interfere and correct it.

Mr. Hadley says further:

"It is seen in Iowa to-day, where, as a result of radical
legislation with regard to rates, railroad construction has
almost entirely ceased, the average for the years 1888-90
being less than fifty miles."

Now Professor Hadley hails from the State of Connecticut, where railroads are permitted to make their own tariffs and where legislators are supposed not to be hostile to them. According to Poor's Manual, that State had 1,004.02 miles of railroad in 1888, and just 2.52 miles more in 1891, while Iowa had 8,364 miles in 1888, 8,436 in 1891, and 8,505 miles on January 1, 1893. Will Mr. Hadley please explain why railroad construction has ceased in Connecticut? Iowa has one mile of railroad for every 227 inhabitants, and Connecticut has one for every 741 inhabitants, although the per capita valuation is $473 in the latter, and only $273 in the former State. Nor have other Eastern States done much better than Connecticut. During the three years 1888-1891 there were built 74 miles of railroad in New Hampshire, 50 in Vermont, 23 in Massachusetts and 9 in Rhode Island. Iowa has an area of 56,000 square miles and a population of 1,911,896, an assessed valuation of $520,000,000; New England has an area of 66,400 square miles, a population of 4,700,745, and an assessed valuation of $3,500,000,000. Yet Iowa has 1,576 miles of railroad more than all the New England States together. She has a railroad net as close as that of the Empire State, having one mile of road to about 6-1/2 miles of territory, although the population of that State is three times as dense as hers. Nevertheless, railroad construction is at present active in Iowa, several lines of road are in the process of construction at the present writing, and there is every indication of still greater activity in the near future. The _Railway Age_ of March 17, 1893, in a detailed list of new lines projected or under construction in the United States, gives for Connecticut only 32 miles, while it gives for Iowa 930 miles.

Mr. Hadley continues:

"It is seen to some extent in the Northwest as a whole. At
the close of the year 1887 the States included by Henry V.
Poor in the Central, Northern and Northwestern groups had
25,040 miles of road, while those of the South Atlantic,
Gulf and Mississippi Valley had but 24,567. To-day this
relation is reversed: the Northwest has but 27,294 miles,
while the South has 30,696."

Had Mr. Hadley taken the pains to look up the population of these groups he would have found that the "South" is fully three times as populous as the "Northwest," and that therefore his figures prove nothing beyond the fact that at the present rate of gain the railroad facilities of the South will in a quarter of a century be equal to those of the Northwest to-day.

But the argument is weak in another respect. The State in the Southern group that made by far the greatest gain in railroad mileage during the period mentioned by Mr. Hadley is Georgia, which gained about 1,000 miles in three years, yet that State prescribed rates for railroad companies six years before Iowa did, and has for many years exerted a more thorough control over her railroads than perhaps any other State in the Union. The smallest increase is in West Virginia, which during the period given gained an average of only 69 miles per annum; and yet in West Virginia railroads charge their own rates and usually have their own way.

Finally Prof. Hadley says:

"Where are we to find the limit to such unwise action? The
United States Supreme Court can do something and has shown a
disposition to do something. In the Minnesota cases it
repudiated the doctrine of uncontrolled rights on the part
of the legislature to make rates, as emphatically as it
repudiated the doctrine of uncontrolled rights on the part
of agents of the corporation in the Granger cases, twelve
years before."

It is evident that Mr. Hadley is as much mistaken in his interpretation of the decision of the court as he has been in his other assertions, as will be seen from the following extract from Judge Blatchford's opinion in Budd vs. New York, in which he says, "The main question involved is whether this court will adhere to its decision in Munn vs. Illinois."

The court first quoted from the opinion of Judge Andrew of the Court of Appeals of New York, as follows: "The opinion further said that the criticism to which the case of Munn vs. Illinois had been subjected proceeded mainly upon a limited and strict construction and definition of the police power; that there was little reason, under our system of government, for placing a close and narrow interpretation on the police power, or restricting its scope so as to hamper the legislative power in dealing with the varying necessities of society and the new circumstances as they arise calling for legislative intervention in the public interest; and that no serious invasion of constitutional guarantees by the legislature could withstand for a long time the searching influence of public opinion, which was sure to come sooner or later to the side of law, order and justice, however it might have been swayed for a time by passion or prejudice or whatever aberrations might have marked its course."

Judge Blatchford then said: "We regard these views, which we have referred to as announced by the Court of Appeals of New York, so far as they support the validity of the statute in question, as sound and just.... We must regard the principle maintained in Munn vs. Illinois as firmly established."

General Horace Porter has made a contribution to the railway rate literature by an article which appeared in the December, 1891, number of the _North American Review_. Unfortunately many of the General's statements are either false or misleading. Thus, in a table which he presents for the purpose of comparing the passenger rates of Europe with those of the United States, he gives the regular first-class schedule rates for the United Kingdom, France and Germany and the average earnings per passenger per mile for this country. That this is an unfair comparison needs no further argument, especially when it is remembered that in Europe from 85 to 90 per cent, of all passengers are carried in the third class at a regular rate averaging about 1-1/2 cents per mile, and that considerable reductions are made for excursion, commutation and return tickets.

But General Porter says concerning American rates:

"When we take into consideration the excursion and the
commutation rates, we find first-class passengers carried as
low as half a cent a mile."

Now the question arises whether American railway companies carry passengers at such rates with or without loss to themselves. If they are carried at a loss, an injustice is done to the regular passengers, whose fare must not only make up the loss, but yield a larger profit than would otherwise be necessary. If, on the other hand, a rate of half a cent a mile can be made remunerative, there is certainly no justice in maintaining rates five and six times as large on well-patronized lines. General Porter places stress upon our superior accommodations in the way of lighting, ventilation, ice-water, lavatories, and free carriage of baggage, etc., and then adds:

"In this connection we must also recollect that the cost of
fuel, wages and all construction materials is considerably
higher here than in Europe, while the population from which
the railways derive their support is much more sparse; the
United States having 166,000 miles of railway with a
population of 63,000,000, while Europe has only 135,000
miles with a population of 335,000,000."

We grant the point which the General makes on ventilation, ice-water, etc.; but, to make the comparison a fair one, he should also have referred to the much greater cost of European roads, to their much greater number of employes per mile, to the much shorter haul, to the higher price of their fuel, to the superiority of their roadbed and the greater security of their passengers. Moreover, whether the railroads of a country are profitable or not cannot be ascertained by merely comparing miles of road with square miles of territory and number of inhabitants. British India has a population of 275,000,000 and only about 16,000 miles of railroad, and yet her roads are scarcely as profitable as our own. China has 3,000,000 and Asia has about 4,000,000 people to every mile of railroad, but so far their railroads have proved no bonanza. The question is not how many people there are to each mile of railroad, but rather to what extent the railroad is used by the people. The amount of freight carried annually by the railways of the United States is about 680,000,000 tons, or 85,000,000,000 ton miles, and the number of passengers carried is about 535,000,000, representing an aggregate of travel of nearly 13,000,000,000 miles. This shows an average of 1,300 tons of freight carried one mile, and 200 miles traveled annually for each inhabitant of the nation, and a greater use of railway facilities than that of any other country in the world. The income of the railroads per capita is $17 in the United States, $11 in the United Kingdom, $5 in Germany, $4 in France, and still less in Italy, Austria and Russia. The average freight haul is 63 miles in Europe and 120 miles in the United States; the average passenger haul 15 miles in Europe and 24 miles in the United States. It has already been shown that the average earnings per train mile are also larger here than there. Röll's Encyclopedia of Railroads for 1892 shows that in France the average rate for all traffic for the year 1888 was for passengers 1.45 cents per mile, and for freight 1.14 cents per ton per kilometer, and that the nation had also received by way of free or reduced rates on Government business during that year benefits to the amount of $59,000,000. Large reductions have been made during the past year in passenger rates.

The General indulges in making the stereotyped railroad charge that "the legislatures of several of the States have enacted laws to effect a reduction of rates, the literal obedience to some of which would amount to the practical confiscation of railway property."

The General or any of his friends cannot name a road that was ever confiscated by legislation, or even seriously injured. It is a fact that the very legislation of which railroad managers so bitterly complain has had a beneficial influence on railroad earnings. Thus, in Iowa, where, according to the testimony of railroad men, Grangerism has reigned supreme during the past few years, railroad earnings increased between 1889 and 1892 from $37,000,000 to $44,000,000, or more than 18 per cent. Still better results could have been secured if the railroad managers had been in sympathy with the law. There is no doubt that they would gladly suffer, or rather have their companies suffer, a loss of revenue, if this would lead to a repeal of the laws and restore to them the power to manipulate rates for their own purposes.

But the General comes to the main point of his article when he complains against "the unreasonable requirements and restrictions of the Interstate Commerce Law." He says:

"Principal among these are what is known as the 'long and
short haul clause,' which prohibits railway companies from
receiving any greater compensation in the aggregate for a
shorter than for a longer haul over the same line in the
same direction, the shorter being included within the longer
distance; and the anti-pooling clause, which prevents
railway companies from entering into any agreement with each
other for an apportionment of joint earnings."

If we carefully examine the railroad literature of the last four years, we find that it has concentrated its efforts toward the creation of public sentiment in favor of the repeal of these two clauses of the Interstate Commerce Law. Railroad men are well aware of the fact that, with these two clauses stricken out, the Interstate Commerce Law would be practically valueless, and in clamoring for their repeal they evince a persistency worthy of a better cause. The practices which these clauses aim to prohibit cannot be defended upon any consideration of justice and equity, and it is folly to expect the American people to sacrifice their convictions of right to the selfish interest of a comparatively small number of persons interested in the manipulation of railroad stocks.

The July, 1891, number of the _Forum_ contains an article on the operation of the Interstate Commerce Law from the pen of Aldace F. Walker, formerly a member of the Interstate Commerce Commission, and now commissioner of the Western Traffic Association. Mr. Walker evidently belongs to the old school of railroad men, who have not yet accepted the Granger decision. Referring to it, he says:

"This decision was not unanimous, and the reasoning
presented was not so convincing as to command universal
acceptance. It was at once challenged by the corporations,
and has been from time to time attacked in the same
tribunal; it has not yet been withdrawn, but it has been
materially modified, notably in a case from Minnesota,
decided in 1890, when it was established that there is a
limit beyond which the State cannot go in reducing railway
rates, which limit would be passed in case a State should
attempt to deprive a corporation of its property, without
due process of law, by fixing rates too low to permit of a
fair remuneration for its use. A large debatable ground yet
remains open, with a possibility that the position of the
railway in Federal jurisprudence may eventually be radically
modified."

The passage quoted clearly indicates that railroad men expect better things of the court in the future, but Mr. Walker is much mistaken in supposing the court materially modified the Granger decision, as will be seen by referring to the case of Budd vs. the State of New York, decided in February, 1892, by the same court.

Mr. Walker, unlike Mr. Depew, candidly admits the former universality of the evil of discrimination. He says:

"In order to secure traffic, a railway official felt called
upon to underbid his rival. He gave the shipper a private
rate, a rebate, a free pass--anything in the shape of a
concession or a favor. The land was honeycombed with special
arrangements of innumerable forms, all secret, because
otherwise they would have been useless, and all forced upon
the carriers by the exigencies of unbridled competition.
Many shippers became wealthy from such gains. Others were
envious of like success. At last the public sense of justice
demanded a reform."

And Mr. Walker's candor rises to a still higher pitch when he admits that the ingenuity of railroad managers has found ways to evade the Interstate Commerce Law. The following passage from the Commissioner's article will, no doubt, be a great surprise to such law-abiding and confiding managers as Mr. Depew:

"There was nothing in the law specifically forbidding the
payment of 'commissions,' and it was found that the routing
of business might be secured by a slight expenditure of that
nature to a shipper's friend. Other kindred devices were
suggested, some new, some old; the payment of rent, clerk
hire, dock charges, elevator fees, drayage, the allowance of
exaggerated claims, free transportation within some single
State--a hundred ingenious forms of evading the plain
requirements of the law were said to be in use. The
demoralization was not by any means confined to the minor
roads. Shippers were ready to give information to other
lines concerning concessions which were offered them, and to
state the sum required to control their patronage. A freight
agent, thus appealed to, at first perhaps might let the
business go, but when the matter became more serious and he
saw one large shipper after another seeking a less desirable
route, he was very apt to throw up his hands and fall in
with the procession."

Mr. Walker is very severe on the Interstate Commerce Act, which, he says, might in its present form "well be entitled, 'An act to promote railway bankruptcies and consolidations by driving weak roads out of competitive business.'" To remedy the evil which, in his opinion, the act causes, he favors the granting of differentials by the stronger to the weaker roads. Such a device is simply a species of pool under a less offensive name. Its manifest object is to maintain rates through a conspiracy of rival railroads. Mr. Walker admits this when he says:

"It operates in practice to affect a distribution of the
traffic somewhat roughly, giving rise to frequent
dissensions and bickerings over the 'differentials' which
are allowed; but after all it has enabled the trunk lines
usually to secure a better maintenance of tariff rates and a
better observance of the provisions of the law against
private rebates and discriminations than has been
attainable in other sections of the country where different
conditions make such an arrangement impracticable. It
vividly illustrates, however, the necessity of some plan by
which common business may be divided."

This problem, which apparently causes so much perplexity to railroad managers, would soon be solved if railroad abuses were done away with. So long as these abuses exist and rates are maintained by artificial means there will be bickering and strife for business which legitimately belongs to others. Mr. Walker then bewails the proscription of the pool, saying:

"It may be stated without fear of contradiction that if the
carriers had been left free to make arrangements among
themselves upon which each line might rely for eventually
receiving in some form a fair share of competitive traffic,
the temptation for secret rate-cutting would have been in
great measure removed and the country would have been spared
most of the traffic disturbances and illegitimate
contrivances for buying business which have since been
periodically rife."

This argument amounts to this, that, rather than place a law upon our statute books which reckless railroad managers might be strongly tempted to violate, they should be permitted to combine and control the highways and levy _ad libitum_ upon the commerce of the country. It is a most preposterous proposition.

The article especially condemns the long and short haul clause of the law. That this clause is injurious to the commerce of the country is, however, not obvious from his reasoning. Mr. Walker makes the statement that this clause of the law "has removed from many jobbing centers important advantages which they previously had, and has enabled interior communities, formerly of little apparent consequence, to deal directly with distant markets." If he means by this that this feature of the law has equalized shipping throughout the country, he is doubtless right. If he wishes us to infer, however, that it prevents the railroad companies from doing substantial justice to all, he presumes altogether too much upon the credulity of his readers.

Another article from the same author appeared under the title "Unregulated Competition Self-destructive," in the December, 1891, number of the same periodical. He commences his article with an inquiry into the pedigree and merit of the time-honored proverb, "Competition is the life of trade," and arrives at the conclusion that the phrase is fatherless and insignificant. He says:

"'Competition is the life of trade;' 'Competition is the
death of trade;' one phrase is as true as the other. For all
that appears, it was a toss-up which of the two should
become current as the expression of the general thought."

It is its general recognition that gives a truth a proverb's currency. Mr. Walker sneers at a disagreeable proverb because, like the majority of his colleagues, he holds the masses in contempt. He gives his estimate of popular intelligence in the following words:

"Unfortunately most men do not think worthily, or do not
think at all; they are ruled by phrases, and they catch the
crude ideas of others as they fly."

Mr. Walker's whole argument is one in favor of the legalization of the pool, though he carefully avoids the word which grates so harshly on the American ear. He makes the broad statement, without offering the least proof in support of it, that measures have been everywhere adopted "to subdue and ameliorate the evil results of inordinate and excessive competitive strife," and then he asks:

"Has not the time come for a reversal of the legislative
attitude? Would it not be well for Congress, State
legislatures and the judiciary to cease their futile
attempts to maintain unqualified freedom of competition, and
substitute therefore a recognition of the right of every
industry to combine under proper supervision, and to make
agreements for the maintenance of just and reasonable
prices, the prevention of the enormous wastage consequent
upon warlike conditions, and the preservation of existing
institutions through the years to come?"

Mr. Walker then proceeds to make the bold prediction that revolution and anarchy will follow if the demands of the railroad corporations are not complied with, saying:

"Unless this course is adopted a social convulsion may
fairly be apprehended, forced by the universal and necessary
repudiation of existing laws and rules of decision, and by
the general formation of combinations without their pale."

This is a strange threat indeed, and unworthy of a man who has held as great a public trust as Mr. Walker has. The article also contains the statement that combinations do not extinguish competition. "They regulate it," says Mr. Walker, "with more or less efficiency, and they often go so far as to suspend its operation in respect to one or more important features of the strife; for example, the price paid or the time consumed. But as long as the employer or the purchaser has a choice, so long there is competition." Here is a sample of Mr. Walker's irony, for the choice which the shipper has under the pool is simply Hobson's choice.

Mr. Walker has also an article in the August, 1892, number of the _Forum_, the substance of which is to show that organizations among railroad companies, like the Western Traffic Association, are necessary for the purpose of restraining competition among them. He holds that such competition as exists in almost all other lines of business "is radically vicious to all interests, however pleasant and desirable it may seem to self-styled anti-monopolists," and that "it is a calamity not only to the owners of the roads, but to the public also."

According to his statement, the Traffic Association is simply a little innocent and inoffensive organization whose duty it is only to maintain rates, and he sees nothing wrong in allowing a few representatives of corporations to meet in secret and discuss, scheme and levy such a tax upon the commerce of this country as may suit their convenience; and he regrets that their attempts are "hampered by legislation which forbids the formation of pools." In other words, he proposes to have the case in court decided by a jury made up entirely of the parties at interest in the case. This piece of effrontery is about on a par with the average argument of this class of pleaders.

Suppose we apply the same rule to other classes. Take the farmers, for instance. Let them have an organization for the purpose of maintaining rates, with their representatives meeting in secret and fixing the price of their produce and asking the Government to enforce their orders, pools and edicts, so as to afford them relief from selling corn at ten cents per bushel, beef and pork at a dollar and a half per hundred, and hay at two dollars per ton, and their other produce at proportionate rates. Who would condemn such an organization more severely than the advocates of the Traffic Association? They never find terms sufficiently expressive with which to condemn the Farmers' Alliance and other kindred associations, which are organized solely for the purpose of lawfully correcting existing abuses and of forming a wholesome public sentiment.

It is evident that some progress is being made upon this question, as Mr. Walker admits that "the fortunes which have been made are seen to have been the result of dealings in stocks and in titles, the consequences of which, if involving wrong, are rightly charged against the lax legislation which has made such operations possible." "Every person seeking for the services of a common carrier is entitled to know that he is charged no more than his neighbor who obtains the same service under the same conditions." "The theory that any unjust discrimination or unjust preference or advantage in respect to individuals, communities or descriptions of traffic must be suppressed by the State, has become firmly lodged in legislation." This improvement in the sentiment of railroad men is gratifying.

This gentleman, as has already been stated, was for several years a member of the Interstate Commerce Commission, a board created by Congress for the special purpose of enforcing the law which he so unreservedly condemns. No doubt Mr. Walker performed the duties of his office as he understood them; but if he held then the views which he holds now, his work must have been a hindrance rather than a help to the commission.

Among financial journals, so many of which are devoted to the support of vicious and demoralizing methods, and are ever ready to defend whatever is bad in corporation management, it is refreshing to find occasionally one that exposes abuses and favors the earning of legitimate dividends, and it is a pleasure to quote the following from the June number, 1892, of the _Banker's Magazine_: