Popular Science Monthly/Volume 32/January 1888/Railroads and Trade-Centers
By APPLETON MORGAN.
IF, a century or so from now, a student of the political history of the United States shall ask, How happened it that its Congress was once moved to establish a court of star-chamber aimed at an industry not ordinarily operated except by charter; a court which was to be not only an oyer and terminer, but an inquisitor of its own motion; which should dispense with due process of law or with any process at all; which should supply penalties, civil, criminal, and as for contempt with plentiful liberality; but never assume, nay, never so much as hint or suggest a probable or even possible protection or premium upon any probable or even possible good or useful thing to be by any accident done or subserved by that industry—if, we say, the political student should ask that question, in view of the fact that no public interest seemed to have required such a statute, and that its immediate effect was to raise freight rates to the people passing the law—the lawyer of that date might suggest possibly that an application of the rule of interpretation, which provides that the intention of the framers of a statute may be looked into (under certain restrictions), would be most likely to furnish some sort of a clew.
Should the inquirer then cast about for this intention, he might perhaps light upon the following (which I clip from a morning paper):
"Springfield, Ill., June 30.—At a meeting of the Illinois Grain Merchants' Association yesterday, Senator Cullom was called upon to speak on the Interstate Commerce law. He said: ' . . . The requirements of the law that all charges shall be reasonable, and that there shall be no unjust discrimination or unreasonable advantage or preference in favor of any person or place, had been shown by the character of the complaints against the enforcement of the act to be absolutely demanded.' In reference to the long and short haul clause, he said: ' For many years the railroads of the country have so absolutely controlled our interstate commerce that we have no means of knowing what are the natural channels of trade, or what would be the effect of the natural laws of trade upon many, at least, of the present commercial centers. What the critics of the law call natural centers of trade are centers created by railroad favoritism which has diverted trade from its natural channels into artificial ones at the expense of less favored localities' " [The italics here are ours.]
In reading the above, the student of political history aforesaid might be led to remark that to centralize and to submit to the espionage of a simple paternal commission of this Government, not only the entire railway interests of the United States (being its operation of 125,379 miles of railway, with a funded debt of $3,669,005,722, upon which interest is to be earned), but the minutest daily detail of such operation, is a rather costly method of gratifying a single Senator's or even a whole Congress's laudable curiosity as to "what are the natural channels of traffic, or what would be the effect of the natural laws of trade upon many, at least, of the present commercial centers"; and that it appears to be a rather cool proposition to charge the cost of gratifying the aforesaid curiosity upon the only party who had betrayed no curiosity in the premises whatever, but kept on its even tenor, operating at its own cost the franchises the people had given it, and endeavoring to pay one and one third per cent on the capital it employed.
But, to drop the student of political history, it is important, it seems to me, for the present generation to know, at last, just why the Interstate Commerce law was passed, and for just what sins of the railways they have been put under pedagogical surveillance. It is because these wicked railways have been creating trade-centers! The revelation is a particularly startling one, because among the railways themselves the maxim had always been to try and accommodate themselves to such trade-centers of the country as already existed at any possible expense and at all hazard. No terror of injunctions out of chancery were too terrible; no right of way was too costly; no rivers too broad; no mountains too solid; but the railway must supermount and penetrate, at whatever expense, to reach the trade-center which Nature had already provided. This, I say, has always been the maxim of the railway company: "Do the business of your territory, count first cost of construction as absolutely nothing. A railway is a means of supply to a trade-center, or a connection between two or more trade centers. The product of the country must have its best markets, but those best markets are at its trade-centers; at all odds we must get to them. No matter where the president of the company lives, or where the capital is subscribed. Construct our line to the best market!" Such, practically, have been the directors' and the promoters' instructions. And, indeed, it has always seemed to be supposed, even outside of the magic circle of the railway companies, that the capital to build railroads was subscribed on the understanding that they were to do the public business, and not operate against it and in its teeth, and that it would be unnecessary demonstration of corporate idiocy to attempt to procure capital upon any other. But now comes Senator Cullom with his proposition, and we are advised that we have all been wrong; that, instead, these naughty railways have been at work not connecting but creating trade-centers!
Had anybody but one of the fathers of the Interstate Commerce Commission made this statement, not much attention might have been paid to it. Every railroad man—certainly every shipper over a railway—knows that the establishment of a trade-center is a matter entirely out of the power and beyond the control of railway companies not only, but of any known human power; a matter regulated by the unwritten laws of trade, laws not only unwritten but, except in their operation, entirely unknown; a result and not a process. Let Senator Cullom, for example, try and establish a trade-center, and he will speedily recognize the impossibility of it. And did Senator Cullom try, it would not be the first attempt. There are plenty of platted cities and towns to-day in the United States which have been laid out to make grass grow in the streets of actual cities in whose favor Nature and geography long ago decreed that they should be, in deed and in truth, trade-centers; and the platters, their successors and assigns, yet feel the hiatus made in their bank-accounts by payment for the costly honor of making valuable suggestions to the attraction of gravitation.
I need not, I suppose, refer, for example, to the plethora of "cities" and "city sites," whose prospects the vast dockage and trade territory of Chicago has superseded. But the force, the unwritten law, that has twice built the city of Chicago within the memory of men just entering middle age, was not devised by human brains. Perhaps a better answer to Senator Cullom's remarkable proposition about "trade-centers" could not be devised than a brief tracing of the operations of this law in this very building and rebuilding of a geographical trade center of this continent. And if it shall be said "even if human laws did not build Chicago, a lack of exact knowledge of this operation and an interstate jealousy of their inevitable result contributed to the building," yet that ignorance and jealousy, it may be replied, were a part of the result of the working of the law, rather than of the process by which it worked.
No human foresight placed Lake Michigan where it is. But human foresight did perceive that somewhere near its foot a great commercial center must some day arise. Various points were selected by shrewd pioneers; and if the reader will take down his map he will find them still indicated upon it—Milwaukee, Racine, Kenosha, Waukegan, and Michigan City were perhaps the most promising of these (the latter especially, since here was the very foot of the great trunk or tongue of navigable water which penetrated from the north into the rich central ridge of the nation, along which its integral artery of inland communication must run, and from whose head great navigable wings were spreading east and west). Yet, while all these points were selected, somehow the swamp where Chicago now lies was carefully avoided. But it seems those natural causes which we call laws of trade were in operation; the heavy settlement of the Ohio Valley sought its outlet on the lakes, and somehow the first practical expression of that search—a railroad—capped, not Milwaukee, Racine, or Kenosha, but the swamp where rose Chicago. And now occurred a wonderful thing. The jealousy of those lake-ports, which the laws of trade had passed aside in favor of Chicago, began to operate. Each of these lake-ports saw the increasing prosperity of Chicago, and each and every one of them fell into the very error which Senator Cullom cherishes to-day. In almost his exact language each one said to itself—You people who are rushing to Chicago to build your docks and elevators are poor deluded creatures, who "have no means of knowing what are the natural channels of traffic." Those railroads are fooling you. Don't go to Chicago. Here at Racine, at Kenosha, at Milwaukee, is the place for your capital. Here is where the great development is to be. (There was no Interstate Commerce law then, but here was its spirit, and its root was, as perhaps a generation later, jealousy pure and simple). But somehow the capital still poured into Chicago; its docks and elevators multiplied. What was the next step of the jilted towns? Each went to work; each for itself built a railroad of its own, mortgaging the property of its citizens, issuing its bonds, pledging its credit, and multiplying its taxes to pay for it. What was the result? Simply that the wheat and corn and produce which had come to each of these ports to be loaded into ships—thereby making the trade on which the town lived and fattened in moderate prosperity—now having a cheaper transit to a larger and therefore better market, went where?—went to Chicago! In other words, these cities had destroyed themselves—impoverished not only their citizens, but loaded their successors with debt—not to increase their own prosperity, but that of hated Chicago! They had tried to fight the inexorable laws of trade and of trade-centers, and had been ruined in the attempt. The West is not free to-day from the effects of this lake-side effort to guide and assist the natural laws of trade. Money is yet being paid annually into New York trust companies in the vicinity of Wall Street by these same small lake cities (many of which by the prevailing of better counsels have become manufacturing towns of wealth and importance), as their yet uncompleted penance for believing in their own wisdom as against the unwritten statutes of the universe; and if Senator Cullom sincerely believes that trade-centers can be created by human foresight, he can—by following up the map in the direction I have indicated—find many students in the hard school of experience willing to enlighten him.
It has been the bulk of criticism against the Interstate Commerce law, not that it was unconstitutional, but that it was an attempt to equalize by statute what Nature and cosmic forces has rendered unequal; that it was Geography and not the railways which had established sea-ports and lake-ports and river-ports; and that—since the sea, the lakes, and rivers did not as a rule charge more for a short than for a long haul—it was putting the statute-book of the United States into the position of a bull warning off comets, to give a railroad a franchise to live with one hand, and with the other to brandish a sword over it if—in operating its franchise—it compete with its competitors! But the bottom objection on the part of the people to the railway companies which has produced the Interstate Commerce law, lies unconsciously far deeper than that. It lies in the fact that the laws of trade invariably select the same points for trade-centers that Nature herself has first selected. New York, Boston, Baltimore, New Orleans, San Francisco were trade-centers before railroads were devised. When a trade-center was wanted on Lake Michigan, Chicago was selected, not by men, but by the force of natural laws. What the capitalists called a "swamp," and so avoided, was really a business plain. Sand drifted in, and built a bar before Michigan City; at certain other lake points the bluff, crumbling constantly into the lake, imperiled the harbors; other natural causes worked away at others. The cosmic forces were at work in favor of Chicago, and Chicago was elected trade-center of the majestic West. In other words, it is simply because it can not dispense with the discriminations of Nature that the people are disappointed with the railway as an institution, and so propose to vent their disappointment by enacting laws bristling with penalties, but nowhere promising them protection; putting their affairs into the hands of non-experts, and calling them to penal and paternal account for every breath they draw. If Senator Cullom seriously believes that the railroads have created the trade-centers of this continent arbitrarily, let him tell us why every railroad company in the country is willing to spend millions of dollars in order to get into such cities as New York and Chicago? Could a railroad create a trade-center as easily as Senator Cullom imagines, it would certainly come cheaper to that company to make a trade-center of their own than to buy their way—against every known legal, commercial, political, and geographical obstacle—into one already established.
The Pennsylvania Railroad Company was built by Philadelphia capital; certainly it did not desire to discriminate against Philadelphia. If railroads can make trade-centers where they like why did not the Pennsylvania Railroad create a trade-center for itself in its own City of Brotherly Love? The Lehigh Valley Railroad Company is a loyal Pennsylvania corporation, and its owners are natives there and to the manor born. Why did not the Lehigh Valley Railroad Company make for itself trade-centers on its own line, where land was cheap, instead of crowding into New York City at one end and into Buffalo at the other, at enormous cost? The Grand Trunk Railway is a British institution built to foster the interests of Great Britain's greatest colony, at the direct expense of its greatest commercial rival in the world's family of nations—the United States; why does not the Grand Trunk road make for itself commercial centers at Montreal or Toronto or Hamilton or Ottawa or Windsor? Why has it spent millions of good honest British gold in buying its way into Chicago at one end and Boston at the other? If, the moment railways were organized, they set the laws of Nature and of man alike at defiance, and began "to divert trade from its natural channels into artificial ones at the expense of less favored localities," as Senator Cullom boldly charges, why is the Baltimore and Ohio Railroad, owned in Baltimore, and. largely by that city itself—a corporate pet of the State whose securities are a legal investment for trust funds—expending its earnings, and surplus like water to parallel the Pennsylvania in a territory requiring massive construction, and fighting not only that corporation, but the State of New Jersey, in order to get into the city of New York at one end, as it has succeeded in getting into Chicago at the other? Why not save your millions, gentlemen managers of the Baltimore and Ohio Railroad Company, and build a few trade-centers for yourselves at small expense? Senator Cullom says it is simplicity itself to make an artificial trade-center; that railways have not only had no difficulty in doing it, but have actually and tortuously thereby diverted trade from natural trade-centers to the artificial ones created by themselves. Why not, then, scatter as many trade-centers as your business requires along the line of your railroad, and grow opulent beyond the dreams of avarice by doing business between them, with no possible competition to intrude and make you afraid? Seriously, is it not common information on the subject that the laws of trade are as inexorable as those of gravitation, and that it is simply impossible for human ingenuity to create a trade-center or to destroy one already made by Nature? Yea, and, moreover, that not only are human beings unable to shift the trade-center, but they can not even alter the local commercial centers of a trade-center. When Chicago was wiped out by conflagration it occurred at once to certain clever owners of real estate in the neighborhood of the heart of the city—within the city lines, and of easy communication therewith—that their opportunity had arisen. Instead of buying land in the old business centers at ten thousand dollars a foot, and spending a reasonable fortune in carting away débris before beginning to erect new walls let us go to work at once and build on our own lands, they said; the trade of this vast metropolis can not wait, it will come and transact itself on our premises as soon as completed. What was the fact? The clever ones built well and richly, and sat within and wooed the commerce of Chicago to change its seat. But they wooed in vain. The commerce of Chicago transacted itself knee-deep in its own ashes, and in tents and hemlock shanties, until it could re-rear its own palaces over its own head on the very spot where it had thrived before, and refused to hear the voice of the real-estate charmers, who disappeared in bankruptcy and disappointment as the result of trying even to move the sites of the local habitations in which the commerce of a city dwelt. And their successors have not yet forgotten the experiments of their principals. And so it is throughout the continent. The honest farmer in Vermont or in Central Illinois does not perhaps grumble because a few superficial feet of land on the East River, in New York City, or on the Chicago River, in Chicago, are worth more for trade purposes than the aforesaid honest farmer's acres in his interior precincts. But he does complain, and, what is more, makes his complaint a political engine for passing Interstate Commerce and "Granger" laws, when he finds that his produce can not be marketed anywhere except upon these very few square feet, and that the railway will persist in charging him more money to haul his product from Vermont to New York, or from Central Illinois to Chicago, than it does to carry it to the heart of the great American desert, if he shipped it so. Is it not true that it must cost more to go where everybody wants to go, than to go where nobody wants to go? Is there, in other words, a mundane condition in which the laws of demand do not regulate the laws of supply; and, interchangeably, the laws of supply the laws of demand? Surely, it seems a kindergarten sort of business to even ask the question; and yet, honestly, is not this the very bottom of the non-railroad public's objection to railroads (their unconscious objection, no doubt, but still their objection and their grievance), viz.: that, after all these years of railroads, the business centers are just where they always were—New York, Boston, Chicago; that the railroads have not diverted the business of the continent from the trade-centers and planted them elsewhere, and so given other merchants than those of the first commercial center a chance to grow rich? Is it not, in other words, not because they have, but because they have not made arbitrary centers and "diverted trade from its natural channels," that they are put under the centralized dictatorship and power of an Interstate Commission? The Almighty set the bounds within which the Atlantic Ocean and Lake Michigan roll and fret. If Senator Cullom states facts when he says that railways built by human hands can divert trade from its natural channels and create by favoritism natural centers of trade, then it is unjust and monstrous that these railroads should still operate themselves on the Scriptural principle, "that to them that hath shall be given, while from them that hath not shall be taken away even that they hath"; and still wickedly cater to the Atlantic Ocean and Lake Michigan ports (which were there before the railways were built), instead of equalizing matters and making trade centers for the interior where there are no Atlantic Oceans and Lakes Michigan. Why should the railroads cruelly carry trade to and from those ports which are already trade-centers by reason of their waterways? Let the railroad companies be just and fair. To be sure, railways in Europe still despotically carry to Liverpool, Antwerp, Marseilles, but this is a land of equal rights. Let all its citizens have equal privileges, and equal opportunities of getting rich. The New York merchant and the Chicago merchant have grown rich because they have the Atlantic Ocean and Lake Michigan over which to do business. Now let the railways (who have only, according to Senator Cullom, to turn their hands over to oblige us) build some trade-centers for the honest farmer, or the interior merchant. Let us have as many trade-centers as we have watering-places, for example, until this nation, where the people make the laws and own themselves, becomes the land of trade-centers! And if the coarse and brutal railway company—owned by the grasping and bloated capitalist, the heartless Gould, or Vanderbilt, or Huntington, or Garrett—will not give us any trade-centers, let us petition the Interstate Commerce Commission, that these men and their soulless companies cease to dominate and despotize over this republic, and build us trade-centers wherever we want them; and, if they then refuse, let the Commission itself designate the points where our trade-centers shall hereafter erect themselves, and to which our railways shall build their track.
The simple, honest truth is that railways, like natural persons, must live by doing what is set before them; that however their tariffs are regulated, whether discriminations by rebates and drawbacks are allowed or disallowed, whether they are ordered to charge more for the long haul or the short, whether passes are given to shippers or refused—the railway must do the business the people bring to it, or go into bankruptcy and wind up. If grain seeks Chicago, if beef seeks New York, if cotton seeks New Orleans—to Chicago, New York, and New Orleans must the railway haul these products. It can not carry them to Milwaukee, to Albany, to Mobile. And, moreover, to pay its fixed charges, the railway company, like any natural person, must take the business it pays it to do, and reject that which will not pay it. Neither a railway company, nor all the railways on this continent, nor yet the Interstate Commerce Commission, nor any merely human agency, can make a trade-center. It is a disappointment, no doubt, that this is so; that toward points already favored with ample water communication, and to those only, will railroads extend their tracks, and ultimate their systems. But, even though that disappointment be crystallized in penal and prohibitory legislation, such indeed has always been the vital principle of self-preservation in the railway, as in the human system: and such, indeed, I fear (especially since Judge Deady has held judicially that railways have a right to live), will always be the rule, whether or no this people's antidote for their disappointment be to place the railroads in charge of changing Administrations at Washington, or whether tariffs will be more reasonable when left to politicians than to railway experts.
An English writer maintains that international arbitration must take the place of war, because war costs so much more than it used to do. The expense of war in the middle ages was limited to the men it killed, the property it actually destroyed, and the value of the industrial occupations the soldiers were withdrawn from. Now the burden of even a local war of relative insignificance is felt in every quarter of the world; and important business enterprises at the antipodes may be ruined by conflicts which in the old days would hardly have been heard of outside of their immediate scenes.