Popular Science Monthly/Volume 31/June 1887/Are Railroads Public Enemies? II
|←Notes||Popular Science Monthly Volume 31 June 1887 (1887)
Are Railroads Public Enemies? II
By Appleton Morgan
|Some Human Instincts I→|
End of series
By APPLETON MORGAN.
SINCE a paper printed in the March "Popular Science Monthly" was in type, the Interstate Commerce bill has become law. This law establishes a Commission, to whose decision is now committed the regulation of the railways as to their relations with the individual shipper. Since the law permits the railway to apply to the Commission for leave to discriminate as to hauls and shippers, or otherwise to pursue the tenor of which experience has taught the expediency, it need not prevent a final ventilation of the remainder contents of Mr. Hudson's scrap-book against railroads, nor impose upon us the technical discussion hereafter reserved for the Commission itself. Our last paper left over for consideration:
I. Discriminations by long haul and short haul.
II. Stock-watering (which Mr. Hudson, however, prefers to nominate "the fictitious element in railway policy" ); and—
III. "Eminent domain" (that is to say, a modicum of the power of the State, by acceptance of a grant of which a railroad company is understood to accept the burden of certain public obligations).
It should be premised, perhaps, even at the risk of becoming elementary, that one railroad company is not all railroads. Such syllogisms as: 1. A railway corporation which charges more for a long haul than a short haul is a public enemy. 2. The A B and C D Railroad charges more for a long haul than a short haul; ergo, all railroads are public enemies—or, 1. A corporation which "waters" its capital stock is a public enemy. 2. The E F and G H Railroad once "watered" its stock; ergo, all railroads are public enemies—and the like, are mere replica of the schoolboy fallacy : Food is necessary to life : Corn is food ; ergo, corn is necessary to life (in which the undistributed middle is supposed to elude the urchin logician), and are altogether beside adult discussion of economical questions. But let Mr. Hudson's processes be waived while we address ourselves to the material of the charges he pastes and I assume that he pastes them correctly in his scrap-book:
I. The Long and Short Haul. There certainly never arose in practical railway operation a situation wherein a railway company was solicitous to charge less money for doing more work and to pay its own expenses meanwhile. But in practical railway policy a difference between the cost and the value of certain business to the company might, and sometimes does, arise which appeals to the company's instinct of self-preservation too despotically to be disregarded. A railway company, which has for long years acceptably served its local and through patrons, finds itself suddenly paralleled by a rival company, serving all or some of the same localities not only, but prepared as a part of its (the second comer's) investment to undergo the expense of "cutting" rates, and so to supplant the first comer by offering to take business for less than the actual expense of doing it, even though some of the competing points are farther distant from the common terminals of the paralleled line than the actual length of the roads. Under such circumstances, the value of all of its original business it could retain would be clearly of more value to the first company than the then present cost of doing it : and the result would, of course, by every law of human economy or of human nature, be that the first company would either anticipate or respond to the "cut." The effect in either case would be to cheapen tariffs to the shipper to the people. But Mr. Hudson, at this moment, does not care for the people. Later on he will take up the cudgels for them, but just now he kindly holds a brief for the railroads. He thinks it shameful that deserving and hard-working railroads should be obliged to take long hauls for actually less than they are legally entitled to charge for short hauls for much smaller distances. Mr. Hudson has no objection, of course, to one of his fellow-countrymen riding from New York to Chicago for five dollars, or shipping livestock from Toledo to Buffalo at one dollar a car-load during a railway war. (Or, if he should still remember the poor public, it will be not the poor public who ride a thousand miles for five dollars, or at the rate of half a cent a mile, but the poor public who commonly ride one hundred and sixty-seven miles for five dollars, thereby being compelled to either walk or pay the legal mileage of three cents which the company is allowed by law to charge.) But should the railway companies find that carrying passengers from New York to Chicago for five dollars, or cattle from Toledo to Buffalo at one dollar a car-load does not pay that by making such rates they are robbing not the public at large, perhaps, but their own stock holders, and depreciating their own securities; and should, since no other offers, the railway companies themselves propose becoming their own reformers, and so evolve the idea of pool commissions whereby each company might yet live and enjoy the franchises the people had given it — when this new aspect presents itself, we say — Mr. Hudson shifts back to his original brief, and finds the railways once again the rampant enemies of his corraled clients — the people. But on taking up his brief our unfortunate Mr. Hudson finds himself once more out of court, confronted with the terrible truth that under the pool the rates have not only been raised but have actually fallen below a legalized minimum, and his occupation and standpoint again departed. A comparison of tariffs before and after the local pool systems existing at the passage of the Interstate Commerce bill of course can not be attempted here. But it will be found to correspond everywhere throughout the country to the following figures taken at random. (Of course the tariffs need not be compared with figures existing at the inception of railroads, or at intervals of ten years since, because everybody knows — who knows anything, or who reflects upon the subject at all that the history of the railway has been the history of the tariff reductions upon every commodity, every product of human manufacture or yield of Nature):
|HAUL.||Rates before estab-
lishment of pool
(per 100 lbs.).
|Rates after estab-
lishment of pool
(per 100 lbs.).
|Omaha to Kansas City or Denver, first class.||$2.40||$2.10|
|Omaha to Kansas City or Denver, fourth class.||1.40||1.15|
|Omaha to Salt Lake City, first class.||3.30||3.00|
|Omaha to Salt Lake City, fourth class.||3.00||1.55|
|New York to Pittsburg, fourth class.||.30||.20|
|New York to Altoona, fourth class.||.28||.17|
All the above being non-competitive or "short-haul" points (since Kansas City, Denver, and Salt Lake can only be reached from Omaha — or the points Pittsburg or Altoona can only be reached from New York — by land transportation), there was no legal, certainly no natural, reason (according to Mr. Hudson) why the mere technical fact of a pool should have lowered rates. If, as Mr. Hudson asserts, railways are selfish, grasping, lawless monopolies, enemies of the republic and devourers of the people, there was, on the contrary, every reason why, when three or four railways pooled their issues and monopolized all the possible rail connections to that point, rates should be as high as,, if not higher than before. Certainly there is no reason, legal or natural, why, to a point like Altoona, among the mountains, to which but a single through line has had the courage or the charter to climb (and that one, according to Mr. Hudson, one of the most grasping of all his category of grasping monopolies), freights should be lower after the organization of a pool than they were before. The explanation appears, however, as the demonstration proceeds and the technical meaning of the terms " long haul " and " short haul " becomes self-evident. Clearly the points we have named become " short hauls " as against (for example) San Francisco, the haul to which is therefore called a "long haul." Now, in establishing rates to San Francisco, certainly it is very apparent that the railroads which have pooled to Salt Lake City or Denver must take a new factor into the account, for San Francisco has a most excel- lent water communication with the entire world, and is perfectly inde- pendent of railways, monopolies or otherwise. In other words, it is Nature and not railroad corporations that have discriminated against Denver and Salt Lake City, and in favor of San Francisco, by making it a commercial fact that (since water is cheaper than land transporta- tion) San Francisco is actually nearer New York than Denver or Salt Lake City. The fact is that so long as railway rates are regulated by geography however distorted they may appear to the non-expert, the substitution of arbitrary for geographical rules in framing a tariff would result in rendering them still more distorted and uneven. And if the railways, pooled or unpooled, charge proportionately less rates to San Francisco than to Denver or Altoona or Salt Lake City, the higher power that has ordered it is the irresistible power of Nature. To what lengths of invective and diatribe Mr. Hudson and his kind would proceed, did Nature and geography "pool" with the railways, it is amusing to speculate; but the fact which oppresses the railway company at present, and imposes upon it the necessity of accommo- dating its rates to Nature (since Nature will not accommodate herself to the railways) is that no pool can be made with the ocean, which charges nothing to the sons of men who plow its bosom with their ships, and which is at no expense to keep itself in repair. For, let it be always remembered, in discussing these and like questions, a railroad is not, per se, a means of transportation. Such a definition is very far from being definitive by exclusion, as a definition ought to be. A rail- road is a prepared and exclusive highway for traffic by means of the motive power of the locomotive engine, and is available only where locomotives can be used. There are still the foot-path, the bridle-path, the wagon-rOad, the ocean, the river, the canal, with which it must compete. There is still the inclined plane, with which (for the down- grade, certainly) no locomotive even can compete. And so, even were railway companies the terrible affairs, the grasping monopolies, the enemies of the human race, which Mr. Hudson asserts them, they are only so because the human race uses them, if it uses them at all, in preference to other means of transportation. Should Mr. Hudson in- duce his clientele to discontinue their preference, the fact might be dif- ferent; but in order to accept Mr. Hudson's conclusion (which, be it remarked again, is not the rule of the Interstate Commerce Law) that railways are public enemies because their tariffs sometimes are greater for the long than the short haul, we must primarily assume the two propositions: first, that the public are not at liberty to use any other means of transportation than the railways; and, second, that there is no such thing as competition. Does Mr. Hudson desire us to accept these propositions, or think that he has established them? What else does he mean by such a paragraph as this (page 40): "While the force of competition causes the railways to accept moderate or even narrow profits on the Western grain-traffic, the absence of that force allows them to collect what, by comparison, are shown to be exorbitant profits on the grain shipped by the farmers of the Eastern or Middle States." As a matter of fact, the figures actually show that it is combination, not competition, which has reduced the rates charged by the enemies of the republic and forced them to "accept moderate or even narrow profits." Surely, Mr. Hudson does not wish us to believe him guilty of catering to the general public by misstatements of fact in cases with which, from the least apparent foothold for grievance, he assumes such fluent familiarity. And yet, what else can we conclude from his retort to Mr. Fink's calm statement before the Senate Committee on Railroads in 1883, to the general effect above stated (viz., that geographical and not arbitrary conditions controlled pool-rates) in which he happens to mention Winona (using that town, as we have used Denver or Salt Lake City above, as an instance of a " short-haul" point)? "Why," says Mr. Hudson (page 161), "the road, if built for Winona, should have stopped at that place and given its exclusive attention to the transportation interests of that town." And, if this could be exceeded in artless incapacity, he meets Mr. Alexander's statement (page 162) that "no railway has ever raised its local charges to meet the loss caused by lowering its through rates," by the fol- lowing: "When railway rates have been reduced fifty per cent on through traffic within the last ten years, and local rates have virtually remained unchanged, the burden of the local shippers has been prac- tically doubled, no matter what sophistry is used to conceal the fact." Surely, it needs no expert in railway affairs to detect that the " soph- istry " just here is not Mr. Alexander's. Lawyers of a certain grade sometimes talk to juries in this vein, but they are shrewd enough to know their jury pretty well before attempting it. An industry that employs seven or eight thousand millions of capital in these United States ought, one would say, to be reasonably suspected of employing brains here and there certainly ought not rashly to be assumed to neglect the entire remainder of its continental field (to say nothing of the keeping of its own books), in order to concentrate its entire energies upon the commercial destruction of a single village! There has yet to be discovered, I suppose, a human institution in whose workings there was not hardship or inequality somewhere. But Mr. Hudson has only, it seems to him, to select his hardship to demolish the entire railway system his principle being, not the greatest good to the greatest number, but tbe least good to the greatest number (or, possibly, the greatest good to the least number), so that the selected village is favored. But what else would this be, again, but a mo- nopoly of commercial privileges; and how soon did the railway or the railways adopt Mr. Hudson's suggestion and discriminate exclusively in favor of his village before Mr. Hudson would be on his feet again with an entirely new compilation of grievances, demanding to know why this particular village was selected out of the entire continent to be so pre-eminently favored? Does not even Mr. Hudson begin to catch a glimpse of just how vast, how complicated, and inexhaustible this railway problem really is? But possibly he does not, for he says, You charge this village of B too much. No, we charge everybody according to geographical position; it saves us labor to do so, says Mr. Alexander. Well, anyhow, says Mr. Hudson, you lowered the rate to A, and did not lower the rate to B, and that's the act of a public enemy; and he straightway sits down and inflicts us with a book of 500 pages, of which the argument is (or ought to be, to be consistent) that A is not the public or even the republic, whereas B is both the one and the other. If Mr. Hudson will kindly turn to one of his own pages (in which possibly the mass of excerpta has bewildered him), he will be doubtless surprised to find (page 159) an admission that, astound- ing as it may seem, on a single trunk-line in a single year, as between the anti-pool rates of 1865 and the pool rates of 1882, a saving to the public, in freights alone, of $318,947,486,261 has been effected. But, having made the admission, he is ready to meet it after his kind. "This is an astonishing instance," he continues, "of giving away what the giver never owned or possessed; the fact is kept out of sight that the business of 1882 is the result of the progressive reduction of rates for many years, and could never have existed but for the reductions." Sure- ly, the readers of " The Popular Science Monthly " have never witnessed quite such a wiping out of the laws of supply and demand as this! Mr. Hudson will have us believe that the people of the United States on the line of the given railroad would not have eaten and drunk, or purchased supplies, worn clothes or slept on beds, and that population itself for seventeen years would have suspended its rules perhaps the laws of gravitation themselves have ceased had not this railroad re- duced its rates. But let us overlook any possible increase of popula- tion or of the wants or luxuries of a given territory in the space of twenty-two years, and consider this particular railway company as all railways. The argument will then remain as follows: Railways are public enemies because they are exorbitant in their charges. But fig- tires show that their charges are constantlv decreasing. Never mind that, says Mr. Hudson, if railways reduce their rates they only do so from the selfish motive of getting still more business. Most shippers over a railway would be contented if the railway would only charge them low rates. But Mr. Hudson (who, possibly, is not a shipper over any line) will have none of their reduced rates unless they reduce them from the proper motive. After all, the act is nothing. It is the motive which must govern. And doubtless we could nowhere elicit a more virtuous, certainly nowhere a better specimen than this of Mr. Hudson's public-spirited argument against railroads, from this most exhaustive and most entertaining of scrap-books. "No matter what you do, if your 'eart is only true," says the old song. And so says Mr. Hudson to the railroads of this republic. But let it at least be remembered in their behalf that, even if they did it with selfish mo- tives, the railways were themselves the first to attempt their own reformation. Railroads are and must remain built for the private emolument of their owners, and not for charitable purposes. They were not proof against the temptation of charging more money for a short haul to non-competitive points than for a long haul to com- petitive points in the struggle to live alongside of paralleling lines which the people themselves have chartered. But, when the pool removed this temptation by making all points non-competitive although no law, human or divine, compelled them; they did volun- tarily resist the temptation to pool at maximum rates the rates not only fell, but became proportionate to cost of hauling, the competition remaining only as to those " long-haul " points in whose favor Nature has discriminated by establishing water communications. Mr. Hud- son has, perhaps, read a great many books. He should not have omitted from among them the late Dr. Lieber's " Civil Liberty and Self-Government" (especially the chapter wherein is treated the prin- ciple of the " Freedom of Rivers "). Then, remembering that the United States has not only two ocean coast-lines, but great lakes and a system of navigable rivers more magnificent and more benign than that of any other country, he might possibly have perceived how in his railway problem so slight a consideration as our national geogra- phy might be at least as important a factor as a handful of selected individual hardships. Mr. Hudson does not relish the rates charged by our railway companies. He suggests no others, but is entirely clear, none the less, that they should be changed somehow. If rates are at present airanged upon a system, let us drop the system and make them arbitrary according to Mr. Hudson's selection, if he would only agree to abide by it. If your present rates are robbing the people, low as they are very well, lower them still more, and rob your stockholders. It is evident that Mr. Hudson, for one, is no stock- holder. But are not our stockholders parcel of the people? And so the old impossibility of finding standpoint or rather, the necessity of shifting his point of view with each newspaper-clipping he pastes in his scrap-book renders Mr. Hudson everywhere specious, incon- sistent and absurd; which leads us up to our second head.
II. Stock -Watering. But, says Mr. Hudson, you can not really rob your stockholders, you know, because your stock is "water," and your capitalization "fictitious." Let us see about this. Many a good cause and many a good man have been 6lain by an epigram. It was a coup d'esprit of Wall Street to call the increased capitalization by a corporation a "watering" of its stock; and the phrase has doubt- less often done yeoman service in the transactions by which Wall Street lives and thrives. But the old syllogism must be accepted very peremptorily here if we are to admit because corporations some- times do increase their capital on paper that all railway companies are public enemies. Nobody can defend, and nobody ought to attempt to defend, the pouring of pure water into the capital stock of a corpo- ration. But there are some four hundred railroad companies in these United States; and Mr. Hudson, to sustain the charge of universal watering against railway companies, instances two capital cases. One of these was one of the most flagrant cases on record (it would be diffi- cult, indeed, to find one more flagrant). It dates back some twelve years; was first held up to public criticism by a gentleman who, more than any other one man, is in receipt of Mr. Hudson's constant and most unqualified strictures everywhere else in Mr. Hudson's pages for his own career as a railroad president; moreover, this very case be- came the moving cause of legislation which forever prevented a repe- tition of the particular process by which this particular stock was "watered." As to the other case cited by Mr. Hudson, the "water- ing," according to his own figures, amounted to one third of its in- creased capital. But I doubt if any shipper of the line of that partic- ular railroad, or any patron of the line who remembers its previous condition, will agree with Mr. Hudson that a betterment of one third at least did not accrue at about the time of the "watering." Suppose a zigzag line of railways operated by half a dozen petty corporations, requiring endless delays, a change of cars for passengers and a break- ing of freight bulks between two of the most important terminals in the country metamorphosed into a system of four through tracks to conserve the safety of life and property by separating freight and pas- senger service. Suppose the improvement marked by increased pros- perity, not only of the line but of the territory it traversed would there have been no betterment to capitalize, or would the capitalizing of this. betterment be "water"? Would stockholders, in such a case, be apt to object to the company borrowing money to make their own stock more valuable? And which is Mr. Hudson's public just now, the public along the line of this improved railway, and who pay its tariffs; or the entire continent from Sandy Hook to the Golden Gate, from Canada to the Gulf of Mexico, for whom Mr. Hudson assumes to take up his parable? Another curious fact which Mr. Hudson may not be aware of (or if aware of, which he has inadvertently omitted to clip and paste in just here) is the fact that at present, in 1887, these two selected corporations are members of the same pool, serving re- spective but almost parallel territory at rates at least thirty-three per cent lower than at the dates at which their recapitalizations occurred. Mr. Hudson's platitudes against "stock-watering," so long as he con- fines himself to platitudes and truisms merely, are perfectly safe. But when, in 1887, he prints the newspaper-clippings of 1872-74, and moralizes therefrom, he can hardly complain if his public demur, not only to his antique instances, but to his general safety as a guide in the complicated questions with which he assumes to deal. I mention these two examples (which are now ancient history) not to suggest an excuse for them, but as showing how entirely superfluous Mr. Hudson's employment of them is; and how as a matter of fact the wrong, so far as the public is concerned, has been entirely neutralized by application of the pooling system. Other things being equal, there is no reason why a railroad should not capitalize its earnings by employing them for betterments, any more than that an individual should capitalize his by putting back his earnings into his business. Nor is it quite ap- parent that any moral dishonesty enters into the act of even capitalizing those betterments which Nature and the march of civilization bring, which I understand are called (just now) "the unearned increment." I do not remember that any company has so far been guilty of this particular sort of watering; but, had the early Dutch settlers of Man- hattan Island built the present elevated railway, it is interesting to speculate what sin would have been committed against natural or moral law had their assigns in 1887 capitalized that structure, not at an approximate to its earning power at the date of its construction (in, say, 1666), but at a sum representative of its actual earning power in the later year. Neither am I aware by what mental processes one can insist on " unearned " increments at all^ if by that popular term we mean the increase to one's property by the efforts or investments of one's neighbors. It is fashionable, I am aware, to say that if A's corner lot increases fifty per cent by reason of the purchase and im- provement of adjoining lots by B, C, D, E, and F, that fifty percentage is A's unearned increment; but is A's foresight and shrewdness in in- vesting in the corner lot aforesaid, when he might have placed his money elsewhere, to count for nothing? Are not brains a part of one's capital, and may not A's foresight and shrewdness have been and continued a considerable part of his capital or stock in trade or earning power? Assuming that Mr. Hudson does not contemplate the removal of cerebral inequality between man and man by due process of law, it might occur that whereas the rest of the alphabet had no confi- dence in the future of let us say, a certain B and C Railroad A might foresee a Pacific Railway, or a commercial development, or the bank- ruptcy of a competing line which would make it valuable, and so might without sin buy up its stock at five cents on a dollar and in due time reap substantial rewards. And supposing even that A, by the transaction (or even by recapitalizing this same B and C Railroad), was ultimately enabled to accumulate one of those enormous fortunes in which Mr. Hudson sees such peril to his republic, would even such a public calamity go to prove railways public enemies, or that any and all increase of capitalization was "stock-watering"? Doubtless im- proper practices will obtain with evil-minded men until the end of time. But if the enormous fortunes aforesaid have been accumulated by watering railway-stocks, then it instantly follows that they have not been accumulated by the management and operation of railways; and thus another of Mr. Hudson's charges falls to the ground. And the facts are within this statement. As a matter of fact these accu- mulators of mammoth fortunes were operators in Wall Street, who by accident became loaded with a favorite security, or with the debent- ures or stock of a single corporation, which necessitated (or at least suggested) their identification or assumption of the management, di- rectorship, or presidency of this, that, or the other railway corpora- tion. In not a single case have these fortunes arisen from the earning power of the road itself. If a certain railway corporation increases its stock without proportionately increasing its earning power, then the transaction is properly characterized as "stock-watering." But it does not make all railways enemies of the republic, nor in any way cause them to " dominate "the people who have granted them fran- chises for transportation purposes. It is from a prevalence of the very spirit which Mr. Hudson's volume,"The Railways and the Re- public," labors vigorously and constantly to cultivate in this people, that railway-wrecking and stock-watering ever become possible. If Mr. Hudson honestly desires to make stock-watering impossible, let him advise his constituency to yield the railways such tariffs as they are obliged to demand, thus enabling them to meet their fixed charges and so keep out of the hands of "speculative directors," who will, from private greed, proceed to "water" their stocks. Here is a field wherein Mr. Hudson could write books to his heart's content, from a consistent, public spirited, and even contemporary standpoint, and with the best results. The mere collecting of antique newspaper- clippings is, beyond the passing amusement of the hour, of very small utility, of trifling exemplary value, and certainly of not the slightest assistance whatever in solving the problem of the American railway.
III. Eminent Domain. Mr. Hudson's definition of this facility of railroad companies is as follows: " To take away the property of A and give it to B for the latter's private use and behoof, provided al- ways that B is a railway corporation " (page 114). Now, actually and practically, the above is a remarkably comprehensive and exact defini- tion, not of eminent domain but of what eminent domain is not, and of what it never can be under any circumstances. Mr. Hudson himself has inadvertently told us what it really is: " Experience shows that no railroad twenty-five miles in length can be built without the resort to the power of the State, for there are always some proprietors who demand an exorbitant price, or altogether refuse to let the railway pass over their property. . . . No railroad of greater importance than a mere switch ever has been or ever can be built without invoking the sovereignty of the Government in its behalf" (page 111). Under such circumstances, where a man's neighbors have decided that they want a railway, the law so far from taking anything from anybody simply steps in and applies the well-known maxims that a man must use his own so as not to injure his neighbors; and that, in civilized commu- nities, every citizen yields a fraction of his rights for the general good and society of all. To enable the railway to enforce the general con- sent, it is convenient to apply these maxims against the recalcitrant citizen by the fiction that the Government endows the railroad com- pany for the emergency and for the emergency only with a portion of its own (the Government's) right to take the property of its sub- jects in cases of necessity (as for the public good in times of peace, or the public defense in time of war, etc.). This force is applied, how- ever, not at the expense of the Government, nor even at the expense of the recalcitrant and unpleasant citizen who will not accord with his neighbors, but at the sole expense of the railway company. The result is that, instead of the citizen suffering for his obduracy and obstinacy, he is actually rewarded since he ultimately receives a greater value for his land, without being mulcted in any of the ex- penses of the taking. So far as he is concerned he has lost nothing by his contumacy; whereas the railway, by his contumacy and without fault on its part, has been put to the costliest plan of acquiring the land. For the purchase of any strip of land, at almost any price, is invariably cheaper than the process of condemnation by private "view," which, both in time and money, is by all odds the very costliest known method of obtaining a railroad's right of way. These " views " are, by statutory requirement, made by persons of the vicin- age, who, in estimating their neighbor's land, estimate their own; as individuals it can be readily imagined they are not over-solicitous to save the corporation expense, nor to estimate at all without liberal compensation to themselves for their own services: and the result can be readily computed. The laws of eminent domain, as appertaining to railway companies, and their operation in cases of land condemna- tion, are too technical to be elaborated here. But it may be said, as a matter of fact, that their application ceases with the single act of the acquirement of land. Nor is the power of the Government over the citizen ever, except in this solitary instance, exercised by the rail- way company from the beginning to the fine and term of its career; and, moreover, the grant itself is not only not against public policy and interest, but is directly in favor of the public: being positively granted to the railways as against themselves rather than in their favor, so far as a possible question between the railways and the public can possibly arise.
What is known as the police power of railways, which is derived from and determined by the local police power of each separate com- munity, although sometimes granted by proclamation from the State Executive, since Mr. Hudson has not assailed it, I will not defend. In the granting of railway passes I confess my inability to discover a crime against the State. Wherein they differ from the orders that a mana- ger issues to seats in a theatre especially since his theatrical privileges come from the people by special license I am unable to perceive. "Passes" are the small currency of the railway company, payable for favors not estimated in, or convertible to, money; and are used just as the small trader bestows an apple or a toy upon the juvenile carrier between his small customer and himself. The company's rule is to issue passes only for services; but the rule is construed liberally to apply to prospective as well as actual services, and to count presumed influence, or perhaps an assumed or expected favorable mention of the particular corporation issuing them as a service. But, even if issued for no service, real or prospective, I know of no human being, institu- tion, or concern, public or private, that is not allowed to perform acts complimentary in their nature, or even entirely gratuitous. In the course of many years' experience I have seen fully as many acts of public charity as of private compliment performed by railway com- panies. A friendless and penniless woman, whose husband has been left behind or has deserted her, en route she knows not whither, can be transported to a desired destination, if not in the discretion of the conductor, at least by telegraphing for permission to the proper de- partment. And there is not a railway in the country where such gra- tuitous services are not constant, and as unchronicled and unheralded as they are constant. While I frankly say that, for one, I can not see where the granting either of charities or of "passes" militates against the public character imposed by Legislatures upon railroads, or is for- bidden by the fact that to facilitate its construction the railway com- pany once enjoyed a parcel of the State's power of eminent domain; I must admit that (except as to employes) the system has always been a nuisance to the railway companies which they have constantly labored to abolish. It is impossible to forecast what quantum of credit Mr. Hudson and his kind may take unto themselves for the Interstate Commerce Act, which has at last promised the railways a grateful relief from the pass-beggar. But if that act shall abolish both pools and passes, public sympathy w T ill be with the honest shipper who must pay increased tariffs, rather than with the local Solon who wakes to find that while screaming at "discriminations" and "long and short hauls " he has actually been emptying his own pockets of the passes with which they were lined.
The power of the Government over the citizen, then, except in this solitary instance of land condemnation, being never exercised by a corporation: being bestowed invariably and always for the benefit and in the interest of the people, and not of the railway company; taking always the shape of a duty and never the shape of a privilege granted that railroads are quasi-\>uh\'iG corporations, it would appear to follow since they are only quasi-public, that they have still some elements of a private nature; and (since it is their private and not their public character which continues) that it is by this private character they must be continually judged. Granted that they must carry freights for the public in such a way as not to injure either the public or the freight in the carrying, most emphatically (it seems to me) it does not follow that they must add to the value of the freights they carry by charging only such rates as the public, or the owners of the freight, insist on. Mr. Hudson, as a member of society, has a presumptive right to light and air; to life, liberty, and the pursuit of happiness. Supposing that society should pass one law affirmatively compelling Mr. Hudson to recognize his neighbor's rights to life, liberty, and the pursuit of happiness; and, on top of that, another restraining him from interfering with these rights; still another compelling him to positively contribute in cash or services to the life, liberty, and the pursuit of happiness of his neighbors; and add to all these a still fur- ther law taking away his (Mr. Hudson's) own life, liberty, etc., because he had not in the past so contributed? "Would not Mr. Hudson begin after a while to consider the propriety of looking up his own consti- tutional privileges; or, possibly, the charter of the particular society that was enacting all these statutes? or query, perhaps, if the mere grant of power to breathe himself were a fair consideration for the burden of seeing to it that the entire neighborhood breathed? But our laws are daily imposing upon the railway companies they have char- tered (on account of this so-called ^Mtm-public character which the once granting of this long-lapsed power of eminent domain has saddled upon them) the duty of carrying whatever of passengers or freight is offered of reasonably accommodating the public of forfeiture of their charter if, even at a loss, trains are not so run as to accommodate reasonably; of operating, whether at a profit or at a deficit (under pen- alties for refusal to perform services desired of them) under a burden of proof always to prove a negative if the refusal is alleged of them under a disadvantage always before a jury and of being obliged to accept the jury always of the locality where ideas of value and damage are the largest. Liabilities always to patrons, servants, abutters and adjoiners; to the State; compelled to pay damages for accidents caused by trespasses on their own rights of way; to maintain alert and vigi- lant counsel always to watch, lest at any moment they inadvertently overlook any of the thousands of statutes that thirty-eight Legis- latures are annually pouring from the legislative mill; black-mailed on every hand, and always under the conviction that the average citi- zen sees no dishonesty in getting the better of them by dodging fares, or getting passes under false pretenses; and, if they receive a public gift of land, having it at once consti'ued against them and carried to defend it against the grantor himself in the grantor's own courts these are the least of the burdens which this once granted and quickly- terminated privilege of eminent domain is supposed to impose, and practically does impose, upon railway companies. Admitting their public character even such a character is, perhaps, not morally a de- terrent to the rights of their stockholders to get the interest on their investment; or otherwise a displacement of the unwritten law of meum and tuum. Railroads, by the uniform decisions of half a century, are indeed public conveniences. But, so far, this character of a public convenience has been only a burden, never a blessing, or even a shield. The man who steals a ride on a railway-train and imputes it to him- self for sin would be a curiosity. The railway company has no con- science-fund; and, had it, there would be no contributors. It may submit to robbery, may carry for less than the cost of the service, and so plunder its stockholders to its heart's content, and Mr. Hud- son and his clique have no protest to put on record. But if under all this load the railway company succumbs to bankruptcy, Mr. Hud- son, from his elastic standpoint (or rather from his lack of any stand- point whatever) is enabled to cite this very bankruptcy as another in- stance of the hostility and danger of railways to the republic. He has charged them with being enemies to the public, firstly, because of their tariffs. He charges them, secondly, with being public enemies because of the bankruptcy which a failure to collect those tariffs has brought upon them; and yet again, thirdly when that bankruptcy has made the stock nominal in value and so speculative, and a shrewd operator absorbs it and so lays the foundation of a private fortune Mr. Hudson still charges the railways with being public enemies be- cause the far-seeing operator has accumulated this very private for- tune! Moreover, he lumps the whole catena of cause and effect into a series of indictments (or, more absurdly still, into a series of specifi- cations under a single indictment against railways as a class or an institution), and proposes as a relief from the whole what? Why, that the Government confiscate (or purchase by way of condemnation) these railways, and make them a public highway upon which any one may run his own rolling-stock on payment of a trackage-fee!
I know what the railways of this continent are, what services they perform. I know that, by vigilant watch for and adoption of the latest triumphs of engineering and mechanical skill, and by employment of the costliest of expert assistance, they have reduced the percentage of accident to a minimum, and the chances of loss of life to a fraction so small that it is actually a mathematical truth to assert that a man is safer in a railway-train running at full speed than in his bed, or in any other spot on this most precarious globe! What these railways could become if operated upon Mr. Hudson's plan I can not question; the details of that picture I can not, for one, fill in. I know not what terminal facilities, what time-tables, or what percentage of slaughter would be necessary did every man, woman, and child possess the in- alienable right to place upon their tracks their own locomotives, their own passenger-coaches and freight-carriages, and to run them at their own sweet will hither and thither. Nor can my fancy devise where all this rolling-stock would be stored when not in use (unless, indeed, means were devised to suspend it, by balloons or other aerial contriv- ance, over the railways themselves). Mr. Hudson does not discuss these questions at all, but leaves them, possibly, to the inventive genius of the race. And there, perhaps, we may also rest them.
But, taking leave of Mr. Hudson and his chimera, we have yet be- fore us the railways themselves. Against the inequality of their own rates and the hardship of the long and short haul (in other words, against the discriminations of Nature and of physical laws), no less than against the peril of bankruptcy and the consequent speculative tendency of their stocks (after which may come the wrecking, the watering, and the vast individual fortunes), the railways of this re- public have endeavored, by establishment of pool commissions, to de- fend both the public and themselves; and, whatever their motive may have been, their record as to that can not be disturbed. As to the effect of the Interstate Commerce Law upon the shipper and the passenger, time and trial alone can testify. But it is precisely such literature as Mr. Hudson's, and the sentiment it manufactures, which have made railway-wrecking, stock-watering, and their concomitant disasters possible; while for these disasters, down to date at least, the pool has been found the only and entirely adequate remedy. That remedy, drastic as it is, the railways (far from being public enemies) have themselves applied. The honest administration of railways for all interests, the payment of their fixed charges, the solvency of their securities, the faithful and valuable performance of their duties as carriers, can be conserved in but one way by living tariffs such as the pools have guaranteed. But we want no living tariffs, says our Mr. Hudson. Give us a governmental control, and we will pay no tariffs only a trackage-fee! Supposing this revolution accomplished, and how many years or months would, perhaps, elapse before another declamation in five hundred more pages of close type against the ex- cessive trackage-fees, the favors to public officials or private cronies, or a formulated demand that the Government provide terminals at its own expense (another planet, possibly), sumptuous rolling-stock, mo- tive power, and accident insurance policies for its passengers would arrive from the constant, sleepless, and irrepressible Mr. Hudson? Is it not, after all, Mr. Hudson and his kind and not the Wall Street operator who trades on the sham public opinion they manufacture who are the true stock-waterers, railroad-wreckers, and enemies of this republic?
- Section 4.
- I take these last two quotations from Mr. E. P. Alexander's "Railway Practice; its Principles and Suggested Reforms reviewed," New York, 1887.