I.UU II UI I U II I I I I I II '•• "" ■ """".■.i |,| j,-r- - Frier) dorn^ll Slam Btl^aal ffiibrara CORNELL UNIVERSITY LIBRARY 398 DATE DUE '^VfTTw^f^ ^ . 'j -1 '1 PRINTCOINU.S.A. Cornell University Library The original of tliis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924062071398 The Railroad Question. THE RAILROAD QUESTION A HISTORICAL AND PRACTICAL TREATISE ON RAILROADS, AND REMEDIES FOR THEIR ABUSES WILLIAM LARRABEE, LL. D. LATE GOVERNOR OF IOWA. Salus populi auprema lex. ELEVENTH EDITION. CHICAGO: F. J. SCHULTE & COMPANY, Publishers. 1906, Copyright, 1893, '' BY WILLIAM LARRABEB. %pt^ ^ >f jfc, J^^ ^ ^^-^^ ^ PUBLISHERS' PREFACE. THE first edition of "The Railroad Question" was is- sued in 1893. Nine other editions were called for in rapid succession, the tenth appearing in 1898. It has been for twelve years, and is today, the standard refer- ence book for students of the transportation problem, even when they do not agree with the author's conclusions, and it has exerted probably a more powerful influence on pub- lic opinion, and even on state and national legislation, than any other one publication of the last two decades. For some time the publishers have endeavored to pre- vail on the distinguished author to prepare a revised edition, reviewing recent events and developments. We hope to announce the twelfth edition at an early date. Meanwhile, "The Railroad Question" has been some time out of print, and of late the calls for copies have been so persistent and so numerous that we are com- pelled, in order to meet immediate demands, to print this eleventh edition from the same plates from which the tenth was printed. Even in this form, we believe Gov- ernor Larrabee's work to be the best text book on its sub- ject now available. PREFACE TO THE TENTH EDITION. IN presenting the tenth edition of this work to the pub- lic, I desire to extend my thanks to thousands of readers from nearly all parts of the United States and many from foreign countries, for their approbation and warm commendation of it. I need not say that the disap- probation with which it has been received, by those opposed to the reformation of abuses so generally complained of by the public, also affords me much satisfaction. Five years more of experience and observation confirm me more strongly of the correctness of the principles laid down and opinions given in the work. There has been much growth of public opinion in favor of restrictive legislation of corperations, and in several of the states improved enactments in relation to it. The Iowa law of 1888 has proved by experience to be all that was expected of it by its friends. Notwithstanding there have been five regular sessions of the legislature since its enactment, and the Code has been completely revised, not a word has been changed in this railroad law. The results under it have been favorable in all respects ; rates have been equalized, discriminations abolished, railroad business generally increased, more employes required, and very little friction between the people and the managers of the railroads. There are but few intelligent persons in Iowa now who do not admit the wisdom of its enactment. It is to be regretted that the national government lags behind the State governments in the enactment of proper laws upon this subject. Wm. Larrabee. Clermont^ lowa^ June Jfth, 1898. PREFACE TO FIRST EDITION. THE people of the United States are engaged in the solution of the railroad problem. The main question to be determined is: Shall the railroads be owned and operated as public or as private property ? Shall these great arteries of commerce be owned and controlled by a few persons for their own private use and gain, or shall they be made highways to be kept under strict government control and to be open for the use of all for a fixed, equal and reasonable compensation? In a new and sparsely settled country which is rich in natural resources there may be no great danger in pursu- ing a laissez-faire policy in governmental affairs, but as the population of a commonwealth becomes denser, the quickened strife for property and the growing complexity of social and industrial interests make an extension of the functions of the state absolutely necessary to secure pro- tection to property and freedom to the individual. The American people have shown themselves capable of solving any political question yet presented to them, and the author has no doubt that with full information upon the subject they will find the proper solution of the railroad problem. The masses have an honest purpose and a keen sense of right and wrong. "With them a question is not settled until it is settled right. It must be conceded that of all the great inventions of modern times none has contributed as much to the pros- perity and happiness of mankind as the railroad. Our age Is under lasting obligations to Watt and Steph- enson and many other heroes of industry who have aided 8 Preface. 9 in bringing the railroad to its present state of perfection. Their genius is the product of our civilization, and their legacies should be shared by all the people to the greatest extent possible. An earnest desire to aid in attaining this end has prompted this contribution to the literature on the subject. The author is not an entire novice in railroad affairs. He has had experience as a shipper and as a railroad pro- moter, owner and stockholder, and has even had thrust upon him for a short time the responsibility of a director, pres- ident and manager of a railroad company. He has. more- over, had every opportunity to familiarize himself with the various phases of the subject during his more than twenty years' connection with active legislation. He came to the young State of Iowa before any railroad had reached the Mississippi. Engaging early in manu- facturing, he suffered all the inconveniences of pioneer transportation, and his experience instilled into him lib- eral opinions concerning railroads and their promoters. He extended to them from the beginning all the assist- ance in his power, making not only private donations to new roads, but advocating also public aid upon the ground that railroads are public roads. As a member of the Iowa Senate he introduced and fathered the bill for the act enabling townships, incorpor- ated towns and cities to vote a five per cent, tax in aid of railroad construction. He favored always such legis- lation as would most encourage the building of i-ailroads, believing that with an increase of competitive lines the common law and competition could be relied upon to correct abuses and solve the rate problem. He has since become convinced of the falsity of this doc- trine, and now realizes the truth of Stephenson's saying 10 Preface. that where combination is possible competition is impos- sible. It is the object of this work to show that as long as the railroads are permitted to be managed as private property and are used by their managers for speculative pur- poses or other personal gain, or as long even as they are used with regard only for the interest of stockholders, they are not performing their proper functions ; and that they will not serve their real purpose until they become in fact what they are in theory, highways to be controlled by the government as thoroughly and effectually as the common road, the turnpike and the ferry, or the post- ofBce and the custom-house. This book has been written at such odd hours as the author could snatch from his time, which is largely occu- pied with other business. He is under obligations to many of our ministers and consuls abroad for statistics and other valuable information concerning foreign railroads, as well as to a number of personal friends for other assist- ance, consisting chiefly in rendering the railroad litera- ture of Europe accessible to him. William Laerabbe. Clermont, Iowa, May, 189S. CONTENTS. I. History op Transportation 17 II. The History of Railroads 46 III. History of Railroads in the United States 76 IV. Monopoly in TranspoiJtation 90 V. Railroad Abuses 134 VI. Stock and Bond Inflation 163 VII. Combinations 189 VIII. Railroads in Politics 205 IX. Railroad Literature 231 X. Railroad Literature — Continued 373 XI. Railroads and Railroad Legislation in Iowa. .319 XII. The Interstate Commerce Act 349 XIII. The Rate Question 370 XIV. Remedies 389 APPENDIX — Tables and Statistics 459 List of Authors and Works Consulted and Quoted AcKWOBTH, W. M. The Railways of England Adams, C. F. , Jr. Railroads, Their Origin and Problems Adams, H. C. - • Public Debts Adams, Henry - History of the United States Atkinson, Edward The Distribution of Products Bagehot, Walter The English Constitution Baker, C. W. Monopolies and the People Beach, Charles F., Jr. On Private Corporations Blackstone, W. Commentaries on Laws of England BoiSTED, C. A. The Interference Theory of Government BoLLES, Albert S. Bankers' Magazine Bonham, John M. Railway Secrecy and Trusts Bryce, James The American Commonwealth Buckle, H. T. History of Civilization of England Carey, H. C. - Principles of Social Science " " Unity of Law Gary, M. View of System of Pennsylvania Internal Im- provements. Cloud, D. C. Monopolies and the People Clews, Henry Twenty-eight Years in Wall Street CooLEY, Thomas M. Constitutional Limitations Congressional Record. Compilation op English Laws upon Railways . Dabney, W. D. The Public Regulation of Railways Dillon, Sidney North American Revieiv Dorn, Alexander Aufgaben der Eisenbahnpolitik Draper, J. W. Intellectual Development of Europe Encyclopedia, American. Encyclopedia Beitannica. Encyclopadie (Roll's) des Eisenbahnwesens, 1893. FiNDLAY, George. Working and Management of English Railways. Fink, Albert Cost of Railroad Transportation, etc. Fisher, G. P. Outlines of Universal History 14 List of Authors and Works Consulted and Quoted. PiSK, John American Political Ideas " " Critical Period of American History PoEEi&N Commerce of Ambbican Republics and Colonies. Gkaham, Wm. Gibbon, Edward Green, John K. Gilpin, Wm. Grinnell, J. B. GuNTON, George GuizoT, M. Habour, Theodor Hadley, a. T. Socialism Old and New Decline and Fall of the Roman Empire History of English People The Cosmopolitan Railway Men and Events of Forty Years Wealth and Progress History of Civilization Geschichte des Eisenbahnwesens Railway Transportation Hall's Life op Prince Bismarck. Hudson, J. T. Jeans, J. S. Jervis, John B. Jevons, W. S. Kent, James KiKKMAN, M. M. Lbckey, W. E. H. Liebeb, Francis Lodge, H. C. Maktineau, Harriet McMasteb, J. B. Macaulay, T. B. Motley, J. L. The Railways and the Republic Railway Problems Railway Property Methods of Social Reform Commentaries on American Law Railway Rates and Government Control and other works. Eng-land in Eighteenth Century Political Ethics Civil Liberty and Self-Governmeut Miscellaneous Essays Life of General Washington History of England History of People of United States History of England The Dutch Republic The United Netherlands The Elements of Railroading Natural Resources of the United States The Farmer's Side Paine, Charles Patten, J. H. Pbpfeb, W. a. Poor's Railway Manual. Porter, Horace North American Review Rawlinson, George Seven Great Monarchies Redfield - On Law of Railways Records of Central Iowa Traffic Association, 1886-1887. Records of Association of General Freight Agents of the West. List of Authors and Works Consulted and Quoted. 15 Records op Joint Western Classification Committees. Reports of State Boards of Commissioners. Report of Hepburn Committee. Kepoets of United States Census. Report of Windom Committee. Report of Bankers' Association, 1893. Eepokt of Cullom Committee. Roembr, Jean Orig-in of Eng-lish People, etc. Reubeaux, F. Der Weltverkelir und seine Mittel Richardson, D. N. A Girdle Round the Earth Rogers, James E. Thobold. Economic Interpretation of History. RoscHBR, Wm. - - Political Economy ScHBEiBKB - - Die Preussischen Eisenbahnen ScHUBz, Carl Life of Henry Clay Smith, Adam Wealth of Nations Spelling, T. Carl - On Private Corporations Spencer, Herbert Synthetic Philosophy Stern, Simon. Constitutional History and Political Devel- opment of the United States. Stiokney, a. B. The Railroad Problem Statistiques des Chemins de Febde l' Europe, 1882. Taylor, Hannis. Origin and Groveth of the English Con- stitution. The American Railway. Published by Charles Scribner's Sons. Veeschoyle, Rev. J. History of Ancient Civilization Von Webeb, M. M. Privat-, Staats- und Reichs-Bahnen " " ■ ' > I Nationalitat und Eisenbahu Politik VoR DER Leqen, Alfred. Die Nordamerikanischen Eisen- bahnen. Walkeb, Aldace F. - - The Forum Weeden, W. B. Economic and Social History of New England. THE RAILROAD QUESTION. CHAPTER I. HISTORY OF TRANSPORTATION. WHILE the prosperity of a country depends largely upon its productiveness, the importance of proper facilities for the expeditious transportation and ready exchange of its various products can scarcely be overrated. The free circulation of commercial com- modities is as essential to the welfare of a people as is the unimpaired circulation of the blood to the human organism. The interest taken by man in the improvement of the roads over which he must travel is one of the chief indi- cations of civilization, and it might even be said that the condition of the roads of a country shows the degree of enlightenment which its people have reached. The track- less though very fertile regions of Central Africa have for thousands of years remained the seat of savages ; but no nation that established a system of public thorough- fares through its dominion ever failed to make a distin- guished figure in the theater of the world. There are some authors who go even so far as to call the high roads of commerce the pioneers of enlightenment and political eminence. It is true that as roads and canals developed the commerce of Eastern Asia and Europe, the attention of their people was turned to those objects which distin- guish cultured nations and lead to political consequence among the powers of the world. The systems of roads 17 18 The Railroad Question. and canals which we find among those ancients who achieved an advanced state of civilization might well put to shame the roads which disgraced not a few of the European states as late as the eighteenth century. Among the early nations of Asia of whose internal affairs we have any historic knowledge are the Hindoos, the Assyrians and Babylonians, the Phoenicians, the Per- sians and the Chinese. The wealth of India was proverbial long before the Christian era. She supplied Nineveh and Babylon, and later Greece and Rome, with steel, zinc, pearls, precious stones, cotton, silk, sugar-cane, ivory, indigo, pepper, cinnamon, incense and other commodities. If we accept the testimony of the Vedas, the religious books of the ancient Hindoos, a high degree of culture must have pre- vailed on the shores of the Ganges more than three thou- sand years ago. Highways were constructed by the state and connected the interior of the realm with the sea and the countries to the northeast and northwest. For this purpose forests were cleared, hills leveled, bridges built and tunnels dug. But the broad statesmanship of the Hindoo did not pause here. To administer to the conven- ience and comfort of the wayfaring public, and thus still more encourage travel and the exchange of commodities, the state proceeded to line these public roads with shade trees, to set out mile-stones, and to establish stations provided with shady seats of repose, and wells at which humane priests watered the thirsty beasts. At intervals along these routes were also tound com- modious and cleanly-kept inns to give shelter to the traveler at night. Buddha, the great religious reformer of the Hindoos, commended the roads and mountain passes of the country to the care of the pious, and the History of Transportation. 19 Greek geographers speak with high praise of the excel- lence of the public highways of Hindostan. Among the Babylonians and Assyrians agriculture, trade and commerce flourished at an almost equally remote period. The ancient inhabitants of Mesopotamia cultivated the soil with the aid of dikes and canals, and were experts in the manufacture of delicate fabrics, as linen, muslin and sUk. To them is attributed the invention, or at least the perfection, of the cart, and the first use of domestic ani- mals as beasts of burden. Their cities had well-builfc and commodious streets, and the roads which connected them with their dependencies aided to make them the busy marts of Southeastern Asia. During the Uter Babylonian Empire immense lakes were dug for retaining the water of the Euphrates, whence a net-work of canals distributed it over the plains to irri- gate the land ; and quays and breakwaters were constructed along the Persian Gulf for the encouragement ov commerce. While highways among the Babylonians served the development of agriculture and the exchange of industrial commodities, they were constructed chiefly for strategic purposes by the more war-like Assyrians, whose many wars made a system of good roads a necessity. The Greek geographer Pausanias was shown a well-kept military road upon which Memnon was said to have marched with an Assyrian army from Susa to Troy to rescue King Priam. Traces of this road, called by the natives "Itaki Atabeck," may be seen to this day. The Phoenicians, who were the first of the great historic maritime nations of antiquity, occupied the narrow strip of territory between the mountains of Northern Palestine and the Mediterranean Sea. Fi'om their situation they learned to rely upon the sea as their principal highway. 20 The Railroad Question. They transported to the islands of the Mediterranean as well as the coast of Northern Africa and Southern Europe heavy cargoep consisting of the product of their own skill and industry as well as of the manifold exports of the east. They sailed even beyond the '< Pillars of Hercules" into the Atlantic Ocean and the North Sea. Through their hands ' ' passed the gold and pearls of the east and the purple of Tyre, slaves, ivory, lion and panther skins from the interior of Africa, frankincense from Arabia, the linen of Egyjpt, the pottery and fine wares of Greece, the copper of Cyprus, the silver of Spain, tin from England, and iron " from Elba." But while the Phoenicians for their commercial inter- course with other nations relied chiefly upon the sea, the great highway of nature, they neglected by no means road- building at home. They connected their great cities, Sidon and Tyre, by a coast road, which they extended in time as far as the Isthmus of Suez. They also established great commercial routes by which their merchants penetrated the interior of Europe and Asia. Caravan roads extended south to Arabia and east to Mesopotamia and Armenia, penetrating the whole Orient as far as India, and even the frontiers of China. The Phoenicians thus became the traders of antiquity, Tyre being the link between the east and the west. The Persian Empire, which under Darius stretched from east to west for a distance of 3,000 miles and com- prised no less than two million square miles, with a pop- ulation of seventy or eighty millions, had, with the excep- tion of the Eomans, perhaps the best system of roads known to ancient history. Indeed, it is doubtful whether without it such a vast empire, more than half as large as modern Europe, could have been held together. Each History of Transportation . 21 satrap, or prefect of a province, was obliged to make regular reports to the king, who was also kept informed by spies of what was taking place in every part of the empire. To aid the administration of the government, postal communication for the exclusive use of the king and his trusted servants connected the capital with the distant provinces. This postal service was, four or five centuries later, patterned after by the Romans. From Susa to Sardes led a royal road along which were erected caravansaries at certain intervals. Over this road, 1,700 miles long, the couriers of the king rode in six or seven days. Under Darius the roads of the empire were sur- veyed and distances marked by means of mile-stones, many of which are still found on the road which led from Bcbatana to Babylon. These roads crossed the wildest regions of that great monarchy. They connected the cities of Ionia with Sardes in Lydia, with Babylon and with the royal city of Susa; they led from Syria into Mesopotamia, from Ecbatana to Persepolis, from Armenia into Southern Persia, and thence to Bactria and India. The Chinese commenced road-building long before the Christian era. They graded the roadway and then covered tlie whole with hewn blocks of stone, carefully jointed and cemented together so that the entire surface pre- sented a perfectly smooth plane. Such roads, although very costly to build, are almost indestructible by time. In China, as well as in several other countries of Asia, the executive power has alwaj's charged itself with both the construction and maintenance of roads and na'^igable canals. In the instri 3tions which are given to the gov- ernors of the various provinces these objects, it is said, are constantly commjnded to them, and the judgment which the court forms of the conduct of each is very 22 The Railroad Question, ■ --^ much regulated by the attention which he appears to have paid to this part of his instructions. This solicitude of the sovereign for the internal thoroughfares is easily accounted for when it is considered that his revenue arises almost entirely from a land-tax, or rent, which rises and falls with the increase and decrease of the annual produce of the land. The greatest interest of the sovereign, his revenue, is therefore directly connected with the cultiva- tion of the land, with the extent of its produce and its value. But in order to render that produce as great and as valuable as possible, it is necessary to procure for it as extensive a market as possible, and, consequently, to establish the freest, the easiest and the least expensive communication between all the different parts of the country, which can be done only by means of the best roads and the best navigable canals. In Africa the Egyptians and Carthaginians are the only nations of antiquity of which we have much historic knowledge. The former kept up a very active commerce not only with the south, but also with the tribes of Lydia on the west and with Palestine and the adjoining countries on the east. To facilitate commerce, they constructed and maintained a number of excellent highways leading in all directions. One of the most important among these was the old royal road on the coast of the Mediterranean Sea, or the "Road of the Philistines " of the Scriptures. This road crossed the Isthmus of Suez and led through the land of the Philistines and Samaria to Tyre and Sidon, Another road led, in a northwesterly direction, from Rameses to Pelusium. This, however, crossed marshes, lagoons and a whole system of canals, and was used only by travelers without baggage, while the Pharaohs, accompanied by their horses, chariots and troops, pre- History of Transportation. 23 ferred the former road. A third road led from Coptos, on the Nile, to Berenice, on the Red Sea. There were between these two cities ten stations, about twenty-five miles apart from each other, where travelers might rest with their camels each day, after traveling all night, to avoid the heat. Still another road led from the town of Babylon, opposite Memphis, along the east bank of the Nile, into Nubia. Much of the commerce of Egypt in ancient times, as in our day, was conducted on the Nile and its canals. The boatman and the husbandman were, in fact, the founders of the gentle manners of the people who flourished four thousand years ago in the blessed valley of the Nile. There is one canal among the many which deserves special mention. It flowed from the Bitter Lakes into the Red Sea near the city of Arsinoe. It was first cut by Sesostris before the Trojan times, or, according to other writers, by the son of Psammitichus, who only began the work and then died. Darius I. set about to complete it, but gave up the undertaking when it was nearly finished, influenced by the erroneous opinion that the level of the Red Sea was higher than Egypt, and that if the whole of the intervening isthmus were cut through, the country would be overflowed by the sea. The Ptolemaic kings, however, did cut it through and placed locks upon the canal. Carthage was a Phcenician colony. The city was remarkable for its situation. It was surrounded by a very fertile territory and had a harbor deep enough for the anchorage of the largest vessels. Two long piers reached out into the sea, forming a double harbor, the outer for merchant ships and the inner for the navy. This 'city early became the head of a North African empire, and her fleets plied in all na^^gable waters known 24 The Railroad Question. to antiquity. Her navy was the largest in the world, and in the sea-fight with Kegulus comprised three hundred and fifty vessels, carrying one hundred and fifty thousand men. Though we have but meager accounts of the internal affairs of Carthage, there can be no doubt that much attention was given, both at home and in the col- onies, to the construction of highways, which were distinguished for their solidity. It is said that the Romans learned from the Carthaginians the art of paving roads. European history began in Greece, the civilization of whose people passed to the Eomans and from them to the other Aryan nations which have played an important role in the great historical drama of modern times. The physical features of the Balkan Peninsula were an important factor in the formation of the character of its inhal>itants. The coast has a large number of well-protected bays, most of which form good harbors. Navigation and commerce were greatly stimulated in a country thus favored by Nature. Nearly all the principal cities of Hellas could be reached by ships, and the need of internal thoroughfares was but little felt. Nevertheless, public highways con- nected all of the larger towns with the national sanctuaries and oracles, as Olympia, the Isthmus, Delphi and Dodona. Athens, after the Persian wars the metropolis of Greece, was by the so-called Long Walls connected with the Piraeus, its harbor. This highway, protected by high walls built two hundred yards apart, was over four miles long, and enabled the Athenians, as long as they held the command of the sea, to bring supplies to their city, even when It was surrounded by an enemy on the land. Rome is the connecting link between antiquity and medisevalism. The great empire sprang from a single History of Transportation. 25 city, whose power and dominion grew until it comprised every civilized nation living upon the three continents then known. Under the emperors, the Roman empire extended from the Atlantic to the Euphrates, a distance of more than three thousand miles, and from the Danube and the English Channel to the cataracts of the Nile and the Desert of Sahara. Its population was from eighty to one hundred and twenty millions. The empire was covered with a net-work of excellent roads, which stimulated, together with the safety and peace which followed the civil wars, traffic and intercourse between the different regions united under the imperial government. More than 50,000 miles of solidly constructed highways connected the various provinces of this vast realm. There was one great chain of communication of 4, 080 Roman miles in length from the Wall of Antoninus in the northwest to Rome, and thence to Jerusalen, a southeastern point of the empire. There were several thousand miles of road in Italy alone. Rome's highways were constructed for the purpose of facilitating military movements, but the benefits which commerce derived from them cannot easily be overestimated. These military roads were usually laid out in straight lines from one station to another. Natural obstacles were frequently passed by means of very exten- sive works, as excavations, bridges, and, in some instan- ces, long tunnels. The resources of the Roman Empire were almost inexhaustible, and no public expenditures were lar- ger than those made on account of the construction of new roads. The fact that many of these roads have borne the traffic of almost two thousand years without material injury is abundant proof of the unsurpassed solidity of their con- struction. The Roman engineers always secured a firm bottom, which was done, when necessary, by ram- 26 The Railroad Question. ming the ground with small stones, or fragments of brick. Upon this foundation was placed a pavement of large stones, which were firmly set in cement. These stones were sometimes square, but more frequently irreg- ular. They were, however, always accurately fitted to each other. Many varieties of stone were used, but the preference was given to basalt. Where large blocks could not be conveniently obtained, small stones of hard quality were sometimes cemented together with lime, forming a kind of concrete, of which masses extending to a depth of several feet are still in existence. The strength of the pavements is illustrated by the fact that the substrata of some have been so completely washed away by water, without disturbing the surface, that a man may creep under the road from side to side while carriages pass over the pavement as over a bridge. The roads were generally raised above the ordinary surface of the ground. They frequently had two wagon-tracks, which were separated by a raised foot-path in the center, and blocks of stone at intervals, to enable travelers to ■ mount on horseback. Furthermore, each mile was marked by a numbered post, the distance being counted from the gate of the wall of Servius. The mile-post was at first a roughly hewn stone, which in time was exchanged for a monument, especially in the vicinity of Rome and other large cities. The most celebrated road of Italy, which has always excited the admiration of the student of antiquity, was the Via Appia, the remains of which are still an object of wonder. It was first built from Rome to Capua by Appius Claudius Csecus in the fourth century before Christ, and was afterwards continued as far as Brundusium. It was broad enough for two carriages to pass each other, and was built of solid stone. The stones History of Transjportation. 27 were hewn sharp and smooth, and their corners fitted into one another without the aid af any connecting mater- ial, so that, according to Procopius, the whole appeared to be one natural stone. Each side of the street had a high border for foot-passengers, on which were also placed alternately seats and mile-stones. In spite if its age and heavy traffic parts of this road are still in a good state of preservation. After the completion of the Via Appia similar roads were constructed, so that under the emperors seven great highways started from Rome, viz. : the Via Appia and Latina to the south ; two, Valeria and Salaria, to the Adriatic; two. Cassia and Aurelia, to the north- west ; and the Via Emilia, serving for both banks of the Po. Nor were the provinces by any means neglected. Dur- ing the last Punic war a paved road was constructed from Spain through Gaul to the Alps, and similar roads were afterwards built in every part of Spain and Gaul, through Illyricum, Macedonia and Thrace, to Constantinople, and along the Danube to its mouths on the Black Sea. So, likewise, were the islands of Sardinia, Corsica, Sicily and Great Britain crossed by them. It has justly been said that the roads of the Roman Empire, whose strong net- work enlaced the known world, were the architectural glory of its people. These military roads caused in the various parts of the empire a wonderful social and com- mercial revolution. They made it possible for civilization to penetrate into the most remote retreats and to conquer their inhabitants more completely than could Caesar at the head of his legions. The Romans also had an efficient postal service, which was first instituted by Augustus and greatly improved by Hadrian. The former, as Gibbon states in his ' ' Decline 28 The Railroad Question. and Fall of the Roman Empire," placed upon all.roads leading away from the golden milestone of the Forum, at short distances, relays of young men to serve as couriers, and later provided vehicles to hurry information from the provinces. These posts facilitated communication through all parts of the empire, and while they were originally established in the interest of the government, they proved serviceable to individuals as well, for there is no doubt that, together with the official dispatches, every courier carried private letters also. The expenses of the post were largely defrayed by the cities through which it passed, these cities being obliged to provide the stations established within their territories with the necessary stores. At the principal stations were found inns, where the proprietors were held responsible for injuries suffered by travelers while in their houses. The communication of the Roman Empire was scarcely less free and open by sea than it was by land. Italy has by nature few safe harbors, but the energy and industry of the Romans corrected the deficiencies of nature by the construction of several artificial ports. After the downfall of the Roman Empire its roads were either destroyed by the people through whose terri- tories they led or by the conquerors, to render more diffi- cult the approach of an enemy. Civilization and commerce greatly suffered through the downfall of Rome, and did not again revive until after the struggles of the Northern Christian races with the Southern and Eastern nations, which had become Mohammedan. The sixth and seventh centuries were the darkest in the history of Europe. Charlemagne, toward the close of the eighth century, caused many of the old Roman roads to be repaired and new ones to be constructed. He, History of Transportation. 29 as .well as several of his immediate successors, made use of mounted messengers to send imperial man- dates from one part of the realm to the other. The rulers of the succeeding centuries did not profit, how- ever, by this example, and the roads of the empire again fell into decay. Moreover, the public safety was greatly impaired by robbers and feudal knights, whose depredations were so heavy a tax upon commerce as to greatly discourage it. Trade under these circumstances would have been entirely destroyed, had it not been for the merchants' unions which were formed by the larger cities for the protection of their interests. These organi- zations maintained the most important thoroughfares, and even furnished armed escorts to wayfaring merchants. Commerce thus flourished in, and commercial relations were kept up among, the cities immediate between Venice and Genoa, as well as the cities on the Ehine and Danube. Florence, Verona, Milan, Strasburg, Mayence, Augsburg, Ulm, Ratisbon, Vienna and Nuremberg were flourishing marts, and through them flowed the currents of trade between the north and the south. Out of these commercial unions grew in time the Hanseatic League, which from the thirteenth to the fifteenth century controlled the com- merce of the northern part of Europe on both the water and the land. The object of this league, which at the height of its power included eighty-five cities, was to pro- tect its members against the feudal lords on the land and against pirates on the sea. Its power extended from Norway to Belgium and from England to Russia. In all the princi- pal towns on the highways of commerce the flag of the Hansa floated over its counting houses. Wherever its influcncs reached, its members controlled roads, mines, agriculture and manufactures. It often dictated terms to kings, and 30 The Railroad Question. almost succeeded in monopolizing the trade of Europe north of Italy. It is characteristic of the social and political condition of this time that the postal service was not carried on by the state, but was in the hands of the various municipal- ities, convents and universities. During the fifteenth and sixteenth centuries national power and national life made themselves felt, and with a change in the political system the system of communication and transportation changed also. Louis XI. of France took the first step toward making a nation of the French when he transferred the postal service from the cities and other feudal authorities to the state. Two or three centuries later, France obtained a national system of roads and canals. The idea was largely due to Colbert, the minister of Louis XIV. It was, however, not executed in detail until the middle of the last cen- tury. Many abuses grew up in connection with it, but on the whole it was probably the soundest and most efllcient part of the French administration. A system of lines of communication, radiating from Paris, was constructed by skilled engineers, and placed under the supervision of men of talent, especially trained for the purpose at the Ecole des Fonts et Chaussees. The whole system was further improved by Napoleon, and has served as a basis for the present system of railroad supervision. The first artificial waterway constructed in France was the Languedoc Canal, connecting the Bay of Biscay with the Mediterranean. This gigantic work, designed by Kiquet, was commenced in 1G66, and completed in 1681. The canal is 148 miles long and its summit level is 600 feet above the sea, the works along its line embracing over one hundred locks and fifty aqueducts. A large number of canals have since been constructed, and France History of Transportation. 31 has at present over 4,000 miles of artificial waterways, or more than any other country of Europe. Nowhere else was the same completeness of organiza- tion possible. The regular mail service of Germany dates back to the year of 1516, when Emperor Maximilian established a postal route between Brussels and Vienna and made Francis Count of Taxis Imperial Postmaster- General. The postal service of the empire greatly improved up to the time of the Thirty Years' War, which completely demoralized it. After the war the individual states and free cities, usurping imperial prerogatives, established postal routes of their own and thereby crippled the national service. The same war also did great damage to the public thoroughfares, and the commercial and' manufacturing interests of the German empire were until the end of the eighteenth century in a deplorable condi- tion. Frederick the Great, recognizing the fact that the industrial paralysis of Germany was owing chiefly to its defective means of communication, commenced to con- struct turnpikes and canals in Prussia, and the minor German princes one by one imitated his example, until the Napoleonic wars again put an end to internal improve- ments. The good work was resumed, however, after the downfall of Napoleon, and in 1830 Germany was inter- crossed by from three to four thousand miles of turn- pike. In the Netherlands canals were constructed as early as the twelfth century. Being particularly well adapted to the flat country of Holland, they were rapidly extended until they connected all the cities, towns and \illages of the country, and to a large extent took the place of roads. The largest canal of Holland is the one which connects the city of Amsterdam with the North Sea. It 32 The Railroad Question. was constructed between the years of 1819 and 1825 at an expense of more than four million dollars. The city of Amsterdam owes to this canal its present commercial prosperity. Public roads and the state postal service are of com- paratively recent origin in Great Britain. The first pub- lic postal route was established in 1635, during the reign of Charles I. In 1678 a public stage-coach route was established between Edinburgh and Glasgow. The dis- tance is only forty-four miles, but the roads were so bad that, though the coach was drawn by six able horses, the journey took three days. It was considered a great improvement when in 1750 it could be completed in half the time originally required. In 1763 a mail-coach made only monthly trips between London and Edinburgh, eight long days being required for the journey, which to-day is made in less than twelve hours. The number of stage passengers between these two capitals averaged about twenty-five a month, and rose to fifty on extraordinary occasions. In those days coaches were very heavy and without springs, and travelers not unfrequently cut short their journeys for want of conveniences. Turnpikes in Great Britain do not even date as far back as stage-coaches. It is true the first turnpike act was passed as early as 1653, but the system was not extensively adopted until a century later. Previous to that time the roads of England, such as they were, were maintained by parish and statute labor. In the lat- ter half of the last century, under improved methods of construction, turnpike roads multiplied rapidly. Both roads and vehicles attained, previous to the advent of the railroads, such a degree of perfection that the stage-coach made the journey between London and Manchester, 178 nistory of Transportation. 33 miles, in 19 hours; between London and Liverpool, 203 miles, in less than 21 hours; and between London and Holyhead, 261 miles, in less than 27 hours. In spite of these improved facilities, the transportation of merchandise continued to be very expensive. Goods had to be conveyed from town to town by heavy wagons, and the cost of land-carriage between Manchester and Liverpool, a distance of thirty miles, was at times as high as forty shillings per ton. The various disadvantages of land transportation direct- ed, toward the middle of the last century, the attention of the British people to the importance of a system of canals. They realized that these water highways would open an easier and cheaper communication between distant parts of the country, thus enabling manufacturers to collect their materials and fuel from remote districts with less labor and expense, and to convey their goods to a more distant and more profitable market. It would also facili- tate the conveyance of farm produce to a greater distance and would thereby benefit both the producer and consumer. The canal era was formally inaugurated in 1761, when the Duke of Bridgewater presented to Parliament a petition for a bill to construct the canal which has since borne his name. The canal was commenced in 1767 and was completed in 1772. The next forty j'ears were a period of great activity in canal building, but it was left to private enter- prise, with very little aid from the government. Over a hundred canal acts were passed by Parliament before the year 1800. The largest canal of the British Isles is the Caledonian, extending from Inverness to Fort "William, a distance of sixty-three miles. It was commenced in 1803 and completed in 1847, and cost£l, 256, 000. Othercanalsof importance are the Great Canal, which connects the North 34 The Railroad Question . Sea with the Atlantic Ocean, and the Grand Function Canal, which is over one hundred miles long and connects most of the water-ways of central England with the Thames Kiver. It is estimated that there were over 2, 200 miles of navigable canals in Great Britain before the intro- duction of railroads. Canal-building in Spain dates back to the beginning of the sixteenth century, when Charles V. built the Imperial Canal of Aragon, which is over sixty miles long. The political and commercial decline of the country during the seventeenth and eighteenth centuries, however, brought the development of her highways to a standstill, and, with the exception of Turkey, probably no European country has at the present time more deficient transpor- tation facilities than Spain. The comparatively high state of civilization which existed in the Italian cities during the middle ages, their commercial and industrial thrift and the importance of Eome as the metropolis of the Catholic Church com- bined to maintain many of the excellent ancient highways of Italy. A number of canals were built in Northern Italy as early as the fifteenth century, and it is claimed by some writers that locks were first used on the Milanese canals in 1497. But while public thoroughfares have always been well maintained in Northern Italy and even as far south as Naples, they were during the past two or three centuries permitted to greatly deteriorate in the southern part of the peninsula, to the great detriment of both agriculture and commerce. The condition of the large Italian islands is still more lamentable, Sicily and Sardinia being almost entirely devoid of roads. She that was the granary of ancient Rome to-day scarcely produces enough grain to supply her own people. History of Transportation. 35 Denmark and the Scandinavian peninsula had a good system of highways long before the railroad era. Among the many excellent canals of Sweden may be mentioned the Gota Canal, which was commenced by Charles XII. in the early part of the last century, but was not entirely completed until 1832. It is, inclusive of the lakes, 118 miles long, and its construction cost $3,750,000, three- fifths of which was contributed by the state. This canal connects the Baltic Sea with Lake Wener, as well as, through the Gsta-Elf, with the North Sea. Next to Turkey and Spain, no country of Europe has been as slow to appreciate the advantages of a system of highways as Russia. At the beginning of the nineteenth century the vast empire of the Czar had but a few roads connecting its principal cities, and these were almost impassable in the spring and fall. Much progress has, however, been made since then, and at present Russia has over 75, 000 miles of wagon-road and artificial water- way, and 19,000 miles, of railroad. A road has been built through Siberia, extending from the Ural Mountains to the city of Jakutsk on the Lena and sending out many branch roads north and south. The development of Russia's resources has kept pace with that of her system of highways, and the agricultural and mineral products of that country are in the markets of the world constantly gaining ground in their competition with the products of Western Europe and America. Passing now to the Western Hemisphere, we find that in ancient Peru the Incas built great roads, the remains of which still attest their magnificence. Probably the most remarkable were the two which extended from Quito to Cuzco, and thence on toward Chile, one passing over the great Plateau, the other following the coast. 36 The Railroad Question. Humboldt, in his "Aspects of Nature," says of this mountain road : " But what above all things relieves the severe aspect of the deserts of the Cordilleras are the remains, as marvelous as unexpected, of a gigantic road, the work of the Incas. In the pass of the Andes between Mausi and Loja we found on the plain of Puttal much difficulty in making a way for the mules over a marshy piece of ground, while for more than a German mile our sight continually rested on the superb remains of a paved road of the Incas, twenty feet wide, which we marked resting on its deep foundations, and paved with well-cut, dark porphyritic stone. This road was wonderful and does not fall behind the most imposing Iloman ways which I have seen in France, Spain and Italy. By baro- metrical observation I found that this colossal work was at an elevation of 12,440 feet." The length of this road, of which only parts remain, is variously estimated at from 1,500 to 2,000 miles. It was built of stone and was, in some parts at least, covered with a bituminous cement, which time had made harder than the stone itself. All the difficulties which a mountainous country presents to the construction of roads were here overcome. Suspen- sion bridges led over mountain torrents, stairways cut in the rock made possible the climbing of steep precipices, and mounds of solid masonry facilitated the crossing of ravines. Under the rule of the Spaniards the roads of the Incas went to ruin. In fact, throughout South America but little, if anything, was done by the mother country to aid transportation. North America, or at least that part of it which was settled by the Anglo-Saxon race, fared much better in this respect. The great utility of good roads was univer- sally recognized even in the colonial times, but the History of Transportation. 37 - » scarcity of capital, the great extent of territory as com- pared with the population, and the want of harmonious action among the various colonies, delayed extensive road and canal building until after the establishment of the Union. Mistaken local interests but too often wrecked well-advanced plans, and what road-building was done dur- ing the colonial times was almost entirely left to individ- ual exertion, without any direct aid from the government. The first American turnpike was built in Pennsylvania in 1790. From there the system extended into New York and Southern New England. Up to 1822 more than six million dollars had been expended in Pennsylvania for turnpikes, one-third of which sum, or over 11,000 a mile, had been contributed by the commonwealth. In 1800 three wagon-roads connected the Atlantic coast with the country west of the Alleghanies, one leading from Philadelphia to Pittsburg, one from the Potomac to the Monongahela, and a third passed through Virginia to Knoxville, in Tennessee. Much as was done during this period for the improvement of the roads, stage-coach travel remained for years comparatively slow. In 1792 Mr. Jefferson, then Secretary of State, wrote to the Postmaster-General to know if the post, which was then carried at the rate of fifty miles a day, could not be expedited to one hundred. Even this latter rate was considered slow on the great post-roads forty years later. In the year 1800 one general mail-route was extended from Maine to Georgia, the trip being made in twenty days. Froan Philadelphia a line went to Lexington in sixteen and to Na^shville in twenty-two days. The gov- ernment of the United States, appreciating the importance, for military purposes, of good roads leading to the fron- tiers, commenced the construction of national, or military. 38 The Railroad Question. • . roads. A road was thus built from Baltimore through Cincinnati to St. Louis, and another from Bangor to Houlton, in Maine. In 1807 Albert Gallatin, Secretary of the Treasurj', advocated the extensive construction of public roads and canals by the general government. Mr. Gallatin took the ground that the inconveniences, com- plaints, and perhaps dangers, resulting from a vast extent of territory cannot otherwise be radically removed than by opening speedy and easy communications through all its parts ; that good roads and canals would shorten distances, facilitate commercial and personal intercourse, and unite by a still more intimate community of interests the most remote quarters of the United States, and that no other single operation within the power of the govern- ment could more effectually tend to strengthen and perpetuate that union which secured external indepen- dence, domestic peace and internal liberty. The principal improvements recommended by Mr. Gallatin were the following: 1. Canals opening an inland navigation from Massa- chusetts to North Carolina. 2. Improvement of the navigation of the four great Atlantic rivers, including canals parallel to them. 3. Great inland navigation by canals from the North River to Lake Ontario. 4. Inland navigation from the North Eiver to Lake Champlain. 5. Canal around the Falls and Rapids of Niagara. 6. A great turnpike road from Maine to Georgia, along the whole extent of the Atlantic sea-coast. 7. Four turnpike roads from the four great Atlantic rivers across the mountains to the four corresponding Western rivers. History of Transportation . 39 8. Improvement of the roads to Detroit, St. Louis and New Orleans. Mr. Gallatin also recommended that a suflBcient number of local improvements, consisting either of roads or canals, be undertaken so as to do substantial justice to all parts of the country. The expenditure necessary for these improvements was estimated at twenty million dollars. Local jealousy and State rights prejudice practically defeated this movement, the Cumberland road, cr National Pike, being the only result of any importance. The fail- ure of the government to provide the country with ade- quate roads left the construction of turnpike roads to private enterprise, and these roads, before the general introduction of railroads, often yielded much profit to capitalists. Great as were the conveniences afforded by the turnpike, they were entirely inadequate for the development of the resources of the interior of the country. The products of a forest or a mine could not be transport- ed upon them to any great extent. The crossing of a single water-shed, owing to the necessity for largely increased motive power, would often materially decrease the value of the goods to be transported. These drawbacks of land transportation directed, toward the close of the last century, the attention of the people of the United States to the necessity of providing for a system of canals that should bind together the various parts of their extended country in the interest of com- merce. General Washington was among the first to urge upon his countrymen the introduction of this great high- way of inter-state traffic, although but little was done in this direction until after the War of 1812. The people of New York had from an early period of the settlement of their State been impressed with the importance of con- 40 The Railroad Question. necting the Hudson with the "Western lakes. In 1768 the provincial legislature discussed this subject, but the political agitations of the times and the following revolutionary struggle arrested further proceedings. After the war the project was frequently brought before the legislature, but nothing was done until 1808, when the assembly appointed a committee to investigate the subject and to solicit the cooperation of the general government, if the project should be found practicable. The report of the committee concerning the practicability of the undertaking was in every respect favorable, and in 1810 the legislature provided for a survey of the entire route from the Hudson River to Lake Erie. The survey was made, but, the expected aid from the national gov- ernment not being forthcoming, the matter rested until after the war with England. In 1816 a new board of commissioners was appointed, and the following year an act was passed providing for a system of internal improvements in the State. On the 4th day of July next the excavation of the Erie Canal was commenced, and on the 26th of October, 1825, the first boat passed from Lake Erie to the Hudson. The canal was 378 miles long and four feet deep. It had a width of 40 feet at the surface and 28 feet on the bottom, and carried boats of 76 tons burden. Owing to the rapid increase of trade, the capacity of the canal was found inadequate within ten years after its opening, and in 1835 measures were taken to enlarge it to a width of 70 and 56 feet by a depth of seven feet, thus allowing the passage of boats of 240 tons. The total length of the canal was, however, subsequently shortened 12| miles, making its present length 365^ miles. This enlargement was completed in 1862, and cost the State over $7,000,000, making the total cost History of Transportation. 41 of the canal about $50,000,000. New York has, inclu- sive of branches, some ten other canals in operation, among them the Champlain Canal, extending from the head of Lake Champlain to its junction with the Erie Canal at Waterford; the Oswego C^nal, from Lake Ontario at the city of Oswego to the Erie Canal at Syracuse ; the Black River Canal, from Rome to Lyon Falls ; the Cayuga and Seneca canals, extending from the Erie Canal to the Seneea and Cayuga lakes. The State has expended for the construction of canals not less than $70,000,000. Canal-building in the State of Pennsylvania commenced about the time that the original Erie Canal was completed in New York. In 1824 the legislature authorized the appointment of commissioners to explore canal routes from Philadelphia to Pittsburgh and the West. A year later surveys were authorized to be made from Philadel- phia to Pittsburgh, from Allegheny to Erie, from Phila- delphia to the northern boundary of the State, and also south to the Potomac River. The construction of the main lines of communication between the east and the west and the coal fields in the north was soon commenced. Large loans were repeatedly made, and the work was vigorously prosecuted. In 1834 Pennsylvania had 589 miles of State canals, among them the Central Division Canal, 172 miles long, and the "Western Division Canal, 104 miles long. Public opinion strongly favored an extended system of internal improvements, and it was believed that these water-ways would soon become a source of revenue to the State. These expectations might have been realized had the State carried on enterprises on a less extensive and more economical basis. In 1840 the financial condition of the State had become such that canal-building had to be abandoned. The amount 42 The Railroad Question. expended by the State of Pennsylvania for canals, includ- ing the Columbia Railroad, was about $40,000,000, while the difference between net earnings and interest paid by the State up to that time is estimated at $30,000,000. In 1857 and 1858 these works were sold to the Pennsylvania Railroad Company and the Sunbury and Erie Railway Com- pany for $11,375,000, or about one-sixth of their cost to the State. In Ohio the legislature authorized the survey of a canal from Lake Erie to the Ohio River. In 1825 an act was passed providing for the construction of the Ohio Cana] and a number of feeders. In 1831 the canal was in operation from Cleveland to Newark, a distance of 176 miles, and the whole system was finished in 1833. The State of Illinois completed in 1848 the Illinois and Michigan Canal, connecting Chicago with La Salle on the Illinois River. This canal is 102 miles long, 60 feet wide and six feet deep. The construction by the general government of the Hennepin Ship Canal, connecting the Mississippi with Lake Michigan, has long been agitated in the Northwest. Such a canal would be one of the most important channels of commerce in the country, and it is to be hoped that this great project will be completed at no distant day. We have besides in the United States a large number of canals that were constructed, and are still operated, by private companies, as the Delaware and Hudson in New York and Pennsylvania, the Schuylkill, Lehigh and Union' canals in Pennsylvania, the Morris Canal in New Jersey, the Chesapeake and Ohio and Maryland, etc. A large number of canals, some public and others private property, have since the construction of railroads been abandoned. Thus in New York 356 miles of canals, Histort/ of Transportation. 43 costing $10,235,000; in Pennsylvania 477 miles, costing $12,745,000; in Ohio 205 miles, c-osting $3,000,000; in Indiana 379 miles, costing $6,325,000, are no longer in use. All the canals that were ever built in New England have likewise been abandoned for commercial purposes. Nor was Canada slow in realizing the advantages which a system of canals connecting the great lakes with the Atlantic Ocean promised to give her. The construction of the Welland and St. Lawrence canals made it possible for vessels to clear from Chicago direct for Liverpool, and this has to a considerable extent diverted grain shipments to Montreal, giving the Canadian dealers a decided advan- tage in this traffic. It is a strange fact that, at least in this country, the zenith of the canal-building era is found in the decade following the invention of the steam railroad. For many years it was not believed that under ordinary circum- stances the iron horse could ever compete with the canal boat in rates. The most sagacious business men had unlimited faith in the destiny of the canal as a prime com- mercial factor and invested largely in canal stocks. To many these investments proved a disappointment. The mar- velous improvements in locomotives and other rolling stock, the unprecedented reductions in the prices of iron and steel, and above all the fact that in our climate canal carriage is unavailable during five months of the year, gave the railroads a decided advantage in their competition with canal transportation. There can be no doubt, how- ever, that the presence of this competition was one of the chief causes of the great reduction of railroad rates on through routes. In this respect alone the canals have accomplished a very important mission. In the transpor- tation of many of the raw products of the soil and the 44 The Railroad Question. mine canals still compete successfully with the railroads, and it is still an open question whether future inventions may not enable them to regain lost ground in the carriage of other goods. It would certainly be a short-sighted policy for our people to discourage the construction of new canals. For the improvement of navigable rivers, appropriations have been made by Congress ever since the establishment of our national government, and these appropriations now amount to millions of dollars annually. Since the intro- duction of railroads the usefulness of these national highways of commerce has ceased to depend upon the tonnage carried upon them, but the influence which they exert upon the cost of transportation is so great that it is not likely that the policy of making annual appropriations for the improvement of these water ways will be aban- doned by the American people for many years to come. There has recently been a strong agitation in some portions of the United States in favor of extending gov- ernment aid to the Nicaragua Ship Canal, and there seem to be indeed many arguments in favor of such a policy. President Harrison said in his annual message to Congress in December, 1891 : ' ' The annual report of the Maritime Canal Company of Nicaragua shows that much costly and necessary pre- paratory work has been done during the past year in the construction of shops, railroad tracks and harbor piers and breakwaters, and that the work of canal construction has made some progress. I deem it to be a matter of the highest concern to "the United States that this canal, con necting the waters of the Atlantic and Pacific oceans, and giving to us a short water communication between our ports upon those two great seas, should be speedily con- structed, and at the smallest practical limit of cost. The gain in freights to the people and the direct saving to the History of Transportation. 45 government of the United States in the use of its naval vessels would pay the entire cost of the work within a short series of years. The report of the Secretary of the Navy shows the saving in our naval expenditures which would result. The Senator from Alabama, Mr. Morgan, in his. argument upon this subject before the Senate of the last session, did not overestimate the importance of the work when he said that ' The canal is the most important sub- ject now connected with the commercial growth and prog- ress of the United States. ' " And in his message of 1892 that: " It is impossible to overestimate the value from every standpoint of this great enterprise, and I hope that there will be time, even in this Congress, to give it an impetus that will insure the early completion of the canal and secure to the United States its proper relation to it when com- pleted. " It is sincerely to be hoped that the people of the United States can be convinced of the advisability of extending government aid to this enterprise. It must be admitted that the experience of our government with the Pacific railroads has created a strong prejudice among the masses against such subsides as were granted to those corporations, but it is probable, with the people on the alert, that Con- gress would not again permit great impositions to be practiced against the government. When the great advantages to be derived by the people of the United States from the use of this canal and the small outlay required are considered, it would seem to be a wise policy for our government at once to take such steps as are necessary to secure the early completion and the future control of this great international highway. CHAPTER II. THE HISTORY OF RAILROADS. IN making inquiry into those inventions and improvements which were the precursors of the modern railroad, we meet early the desire to render the movement of wagons easier by a smooth roadway. Traces of this may be found even in ancient times. The Romans constructed tracks consisting of two lines of cut stones, and in the older Italian cities stone tracks may still be seen in the streets, corresponding to wagon tracks, and evidently designed for the purpose of rendering the movement of the wheels easier. The first rail tracks of which we have any knowledge were constructed at the end of the sixteenth century. These rails, which were made of wood, appear to have been an invention of miners in the Hartz Mountains. They were the result of pressing necessity, for, as mines were usually so situated that roads could only with great difficulty and expense have been built to them, some cheaper sort of communication with the high road had to be contrived. After various experiments the wooden railway was adopted, and the product of the mine was carried upon them to the place of shipment by means of small cars. Queen Elizabeth had miners brought into England, to develop the English mines, and through them the rail track was introduced into Great Britain. Later the wooden rail was covered with an iron strap to prevent the rapid wear of the wood, and about the year 1768 cast-iron rails commenced to be used. At the end of the last centurv The History <;/' Railroads. 47 wheels were constructed with flanges, to prevent derailing. More attention was also paid to the substructure, wood, iron and stone being used for this purpose. Wrought- iron rails were patented in 1820. The first authentic account of heat or steam engines is found in the " Pneumatica " of Hero of Alexandria, who lived in the second century before Christ. Hero describes a number of contrivances by which steam was utilized as a source of power. Although these contrivances were at the time of very little practical value, they are interesting as the prototypes of the modem steam engine. The attempts to move wheels by steam date back to the seven- teenth century, when a number of experiments were made, but their exact nature is not known, because they were all soon abandoned, either on account of unsuccessful results or lack of means. At the beginning of the eighteenth century Denis Papin constructed a small steamboat, upon which he saOed in 1707 on the Fulda River from Cassel to Munden, a distance of about fifteen miles. The construction of locomotives engaged the attention of ingenious minds a century and a half ago. It is claimed that Newton experimented with a steam motor in 1680. Dr. Robinson described in 1759, in his "Mechanical Phil- osophy," a steam vehicle. The Glasgow engmeer James Watt devoted himself from 1769 to 1785, with great energy, to the development of the steam engine, and succeeded in inventing the system which became the parent of the modern engine. An American, Oliver Evans, constracted at the beginning of the present century a carriage pro- pelled by steam, and exhibited it, in 1804, in the streets of Philadelphia, before twenty thousand spectators. While Evans' invention was never put to any practical use, he prophesied that the time would come when steam cars 48 The Railroad Question. would be considered the most perfect means of transpor- tation. On Christmas eve, 1801, Kichard Trevithick exhibited at Camborne, England, a steam coach, and soon afterwards he and his cousin, A. Vivian, obtained an English patent on a " steam engine" for propelling car- riages. " Seven years later a Mr. Blinkensop, of Middleton Colliery, near Leeds, constructed another locomotive engine, upon which he obtained a patent in 1811. These and a number of other inventors of steam engines vainly expended great ingenuity in attempting to overcome a purely imaginary difficulty. They believed that the ad- hesion between the face of the wheel and the surface of the road was so slight that a considerable portion of the propelling power would be lost by the slipping of the wheels. It was not until about the year 1813 that the important fact was ascertained that the friction of the wheels with the rails was sufficient to propel the locomo- tive and even drag after it a load of considerable weight. On the other hand these inventors failed to provide in their engines adequate heating-power for the production of steam. In 1814 George Stephenson commenced to apply himself to the construction of an improved locomotive. When, owing to his invention of the tubular boiler, he saw, after fifteen years of arduous toil, his labors crowned with success, the civilized world entered upon a new era of social, industrial and commercial life. The first line upon which Stephenson's invention was used was the Liverpool and Manchester Railway. In the year 1821, a number of Liverpool merchants formulated a plan for the construction of a tramway between their city and Man- chester. The question of motive power was left open as between horses and the steam engine, with which Mr. Stephenson was then experimenting. After much opposi- The History of Railroads. 49 tion on the part of Parliament and the public a charter was obtained in 1826. When the construction of the road was nearlj' completed, the directors of the company, after having determined upon the use of steam engines, offered a prize of £500 for the best locomotive engine to run at a public trial on the Liverpool and Manchester Kailway. This proposal was announced in the spring of 1829, and the trial took place at Rainhill on the 6th of October of that year. The competing engines were the Rocket, con- structed by Mr. Stephenson; the Sanspareil, by Hack- worth ; the Perseverance, by Burstall, and the Novelty, by Messrs. Braithwaite and Ericsson. Both Braithwaite and Ericsson became subsequently residents of the United States, and the latter achieved immortal fame as the inventor of the screw propeller and the builder of the Monitor. The Rocket was the only engine that performed the complete journey proposed, and obtained the prize. It is claimed by the biographers of John Ericsson that he had really built a much faster locomotive than Stephen- son, and that, although it had to be constructed very hastily and therefore broke down during the trial, the superiority of the principle involved in it was universally recognized by the engineers of that time. The Stephen- son engines became the motive power of the Liverpool and Manchester road, which was opened for public traffic on the 16 th of September, 1830. This line was, however, neither the first public railway nor even the first steam railway. The first railway or tramway act was passed in England in 1758, and in 1824 no less than thirty-three private railway or tramway companies had been chartered. In 1824 a charter was granted by Parliament authorizing the construction of the Darlington and Stockton RaUway, to be worked with "men and horses, or otherwise." By 50 The Railroad Question. a subsequent act the company was empowered to work its railway with locomotive engines. The road was opened in September, 1825, and was practically the first public carrier of goods and passengers. The Monklands Eail- way in Scotland, opened in 1826, and several other small lines soon followed the example of the Darlington and Stockton line and adopted steam traction, but the Liver- pool and Manchester Kailway was the first to convince the world that a revolution in traveling had taken place. The road was from the very first successful, its traflBc and income greatly exceeding the expectations of its managers. It should also be noted here that the cost of construction fell largely below the elaborate estimates made by several distinguished engineers. The company had expected to earn about £10,000 a year from passenger traflSc, and the very first year the receipts from that source were £101,829. The gross annual receipts from freight had been estimated at £50,000, but were £80,000 in 1833. From the first the stockholders obtained a dividend of eight per cent. , which soon rose to nine and to ten per cent. It has since been demonstrated that the revenues of new roads almost always exceed expectations. The success of this railway stimulated railway enter prise throughout Europe and America. But while rail- road projects created much enthusiasm on one side, they also met with bitter opposition on the .other. The preju- dice of the short-sighted and the avarice of those whose interests were threatened by a change in the mode of transportation used every weapon in their power against the proposed innovation. The arguments used were often most absurd. It was said that the smoke of the engine was injurious to both man and beast, and that the sparks escaping from it would set fire to the buildings along the The History of Railroads. 51 line of road, the cows would be scared and would cease to give their milk, that horses would depreciate in value, and that their race would finally become extinct. Nor did many of the European governments favor the new system of transportation. Some openly opposed it as revolutionary and productive of infinitely more evil than good. The Austrian court and statesmen especially looked upon the new contrivance with undisguised dis- trust; and from their point of view this distrust was perhaps well founded. The rapid movement of the iron horse seemed to savor of dangerous radicalism, not to say revolution. When the Emperor finally, in 1836, concluded to sign a railroad charter, he based his action upon the dubious ground that , ' ' the thing cannot maintain itself, anyhow." It may be said that the history of the railroad is a conspicuous illustration of human short-sightedness. The Prussian Postmaster-General Von Nagler opposed the construction of a railroad between Berlin and Potsdam upon the ground that the passenger business between those two cities was not suflflcient to keep even the stage-coach always full. It never occurred to the Postmaster-General, as it does not occur to many railroad men of to-day, that new and cheaper means of trans- portation increase the traflSc. Even so wise a statesman as Thiers said when railroad construction was first agitated in France : " I do not see how railroads can compete with our stage-coaches." M. Thiers also opposed for years the building of a railroad between Paris and Versailles, declaring that on account of a railroad not one passenger more would make the journey between these two places. But railroads came whether monarchical governments liked them or not. The success of the Liverpool and Manchester Railroad stimulated railroad building in Eng- 52 The Railroad Question. land to a marvelous extent. Between 1830 and 1843 no less than sevgnty-one different companies were organized, representing about 2,100 miles. During the next four years 637 more roads, with an authorized length of 9,400 miles, were chartered. The construction of each new road required a special act of Parliament. These early roads aver- aged only fifteen to thirty miles in length. The competition which ensued soon led to the consolidation of roads, which continued until now the 14,000 miles of railway in Eng- land and Wales are practically owned by only a dozen companies. The total number of miles of railroad in Great Britain and Ireland is at present over 20,000. The news of the opening of the first steam railway in England spread through Europe comparatively slowly. There were in those days but few newspapers printed on the continent, and these were read very sparingly. Rail- road discussions were confined to merchants and manu- facturers. Even after the success of the railroad was assured in England, a large number of people would not believe that, except between the largest cities, railroads on the continent could ever be profitable. But few rail- roads have ever been built which with honest, efiicient and economical management would not pay a fair rate of interest on actual cost of construction. .But in spite of this we have to this day a large number of otherwise well-informed people who question the financial success of every new railroad that is proposed. In those days it occurred only to the most sagacious minds that with increased facilities commerce would expand. The missionaries of railroad enterprise found it therefore a diflicult matter to interest capital in their projects. Railroad committees were in time formed in all cities of any importance, but, with capital cowardly, as The lilsiiiiry of Railroada. 53 usual, and governments distrustful, their task was often a thankless one. Kailroad projects matured very slowly, and, when matured, were often wrecked by jealous and short-sighted governments. After the formation of a company five and even ten years would often pass away before a charter could be secured and the work of con- struction commenced. It is true, there were some lauda- ble exceptions to this rule. Thus the governments of France and Belgium led the people in railroad construc- tion ; but upon the whole it can be said that the railroad forced itself by its intrinsic merit upon monarchical gov- ernments. It soon became evident even to the most stupid of autocratic ministries that it was a choice between the new mode of transportation and national atrophy. The first German line was built between the cities of Nuremberg and Furth in 1835. It was only about four miles long, but the success of the experiment gave an impetus to railroad building in other parts of Germany. The Leipzig and Dresden line followed in 1837, and the Berlin-Potsdam and Brunswick-Wolfenbuttel lines in 1838. At the end of 1840 Germany had 360 miles of railroad. In that j^ear Frederick William IV. succeeded to the throne of Prussia and inaugurated a new and exceedingly liberal railroad policy in his realm. In 1843 the Prussian government concluded to guarantee certain railroad companies a dividend of Z^ per cent, on the capital actually invested. The state also secured con- siderable influence in the administration of the roads as well as in the right to assume the management of the various lines under certain conditions. The governments of the states of Southern Germany now commenced to build state roads, and their example was, chiefly for 54 The Railroad Question. strategic reasons, soon imitated by Prussia. The system has since grown to over 26,000 miles, and no less than eighty-seven per cent, of the mileage is under state control. In all the states and provinces of the empire, except Bav- aria, the rates for transportation of passengers and freight on all lines are controlled absolutely by the government. In Austria, as has already been indicated, the building of railways was greatly discouraged by the government until 1836. In that year the Emperor rather reluctantly granted Baron Eothschild a charter for a railway from Vienna into the province of Galicia. Another charter was granted to a Baron Sina for a line from Vienna to Kaab and Gloggnitz. The policy then adopted in Austria guaranteed to each railroad company a monopoly in its own district during the period for which the charter was granted. Soon after the state also commenced building lines, but the growth of the Austrian system was slow until after the war of 1866. An era of railroad specu- lation was then inaugurated, which ended with the crisis of 1873. The total length of the railroads of Austria- Hungary was 10,790 miles in 1875. At present that monarchy has nearly 16,400 miles of railway, 8,600 of which are owned by private companies. It has been the policy of Austria to reduce rates, and several roads, especially those built in mountainous districts, have a certain revenue guaranteed to them by the government. The zone system recently adopted in Hungary reduced both the passenger and freight rates of the government roads at least one-third, and this reduction has, contrary to expectation, greatly increased their net revenues. In France railroad agitation commenced in 1832. A few short lines were opened, as those from Paris to St. Germain The History of Railroads. 55 and to Versailles ; but, owing to the conservatism of French capitalists, but little more was done until the state took the matter in hand. Thiers proposed a scheme by which the state was to furnish about half the cost while private companies were to build the lines and operate them. The Western Kailroad, the first line of any great extent, was opened in 1837 between Paris and Rouen, and the Eastern Railroad was opened two years later. There were in 1859 six large companies operating their lines with profit, but, to induce them to build additional lines that were needed, the state guaranteed the interest on the capital required to make their improvements. In 1884 there were about 17,000 miles of railroad in operation. To bring about the construction of another 7,000 miles of road, and to thus complete the railroad system of the country, the govern- ment now guaranteed each company a dividend equal to the average of recent years, but not to exceed seven per cent. It is doubtful whether this system of monopoly has in all respects been favorable to the encouragement of enterprise in the railroad circles of France. In granting charters the state has, however, reserved valuable rights which at a future period it will have an opportunity to assert for the public benefit. The railroad companies have generally a lease for ninety-nine years, and their lines become the property of the state after the expiration of that period. To extinguish the bonded debt and stock, a sinking fund has been created, from which a certain portion of the shares and outstanding bonds is annually paid off and canceled. The government requires of the companies the free carriage of the mails and the transportation of military and other employes at very low rates. Besides ' this the state le^^es upon the traffic of the railroads a duty of ten per cent, of their gross earnings from passengers 56 The Railroad Question. and from all goods carried by fast trains. These facts are usually overlooked by our railroad men when they indulge in making comparisons between the railroad rates ' of this country and those of France. The French Kepub- lic had 13,400 miles of road in 1875, and 22, 600 in 1890. When all of the proposed lines are completed, the total mileage of that country will be over 25,000. Belgium has the best-developed track system on the continent, the state commenced the construction of rail- roads as early as 1834, and the first line (Brussels Malines) was opened May 5th, 1835. Four great state lines were constructed in different directions, and between these lines private roads were permitted to be built. Between 1850 and 1870 the private lines increased from 200 to 1,400 miles, and competition between them and the state lines became so active as to reduce rates to the lowest possible point. In 1870 the government decided to buy a large number of competing lines. In 1874 it had acquired more than half, and at present, with a few exceptions, they are all owned and controlled by the state. The exceptions to this are a few short lines that were built in the early days of railroad construction. The total mileage is now 3,210. Kates have, however, not been increased since this con- solidation, and they are still lower than any other country in Europe. The transportation of mails is free, and troops, military materials and prison vans are carried at reduced rates. Railroads were originally built in Switzerland merely for the accommodation of tourists and the local traffic. The first line, between Zurich and Aarau, was completed in 1847, but general railroad enterprise did not develop until after 1860. The St. Gothard route was then pro- jected, which opened a direct through line between Italy The History of Railroads. 57 and Germany, The roads are all owned by private com- panies, but are under strict government control. Great publicity of their affairs is required. The total mileage of Switzerland was 2,043 in 1891. In Italy railroad enterprises have received attention since 1853. The first roads were those of Lombardy, being commenced while that province was still under Austrian rule. The treaties of Zurich in 1859 and of Vienna in 1866 delivered these roads and the Venetian lines to the kingdom of Italy. Between 1860 and 1870 the systematic construction of a railroad net was com- menced which connected the various lines with each other and with Rome. Nearly all the railroads of Italy fell into the hands of the government, but in 1885 they were leased for a term of sixty years to three conlpanies, terminable at the end of twenty or forty years by either party upon two years' notice. Under the lease the state re- ceived two per cent, of the gross receipts. The tariffs are fixed by the state, are uniform and can be reduced by the state. A Council of Tariff's, composed of delegates for the government, for agriculture, commerce and industry, and for the railroad companies, all elected by their own boards, has been instituted to study the wants and best interests of the country. The total number of miles of railroad in Italy was 8,110 in 1889. The first road in Spain was opened in 1848 between Barcelona and Mataro. The government greatly encouraged railroad construction by subsidies, and during the decade following 1855 the development of the railway system, of the country was rapid. INIore than thirty companies have been formed, which have built about twenty main lines, aggregating 6,200 miles. 58 2^he Railroad Question. • _^ In Portugal very little railroad building was done pre- vious to 1863, when a little over three hundred miles of road was constructed. The govemm,ent owns nearly half of the roads of the country, the remaining lines being the property of private companies. The total number of miles operated in the kingdom in 1889 was 1,280. The service and the financial condition of the roads of Portugal are far from being satisfactory. In Denmark the first railroad was built on the island of Seeland in 1847. Previous to 1880 the larger part of the roads of the kingdom was owned by private companies. Since then several of the most important private roads have been purchased by the state, which in 1889 owned 963 miles, while only 251 miles remained in private con- trol. Only about thirty miles more have since been con- structed. The roads are well managed, but their net earnings are less than two per cent, of the capital invested. On the Scandinavian Peninsula the railroad system has developed rather slowly. Norway built the first line from Christiana to Eidsvold in 1851, and Sweden commenced railroad building two years later. The narrow-gauge system is fully developed here. While in Norway the greater part of the lines is owned by the state, the roads of Sweden are chiefly in the hands of private companies which on an average control but little more than twenty- five miles each. The total mileage of Sweden is 5,970, and that of Norway 970. The first line of railroad in the Eussian Empire was constructed from St. Petersburg, sixteen miles, to Tsarskoji-Sielo, in 1842. The St. Petersburg and Mos- cow line was opened in 1851. Railroad building then stagnated until after the Crimean War, when a laro-e The History of Railroad a. 59 numljer of lines were constructed at once. The roads were surveyed by the government, but constructed and operated by private companies. State aid was, however, freely given. During the past ten years the Russian government has directed its atten- tion to the development of the railroad system in its Asi- atic possessions, A railway between the Black and Cas- pian seas was completed in 1883, and the Siberian rail- road is extended as fast as the financial condition of the empire permits. There are now about 20,000 miles of road in the Russian Empire operated by private compa- nies. The construction of a large number of the Russian railways was dictated by military rather than commercial considerations. Maximum rates are specified in charter, and every change of rates must be approved by the Min- ister of Finance. In the Balkan Peninsula railroad facilities are still ill provided for. A few lines have ))een built, but these are, as a rule, badly managed. Trains are slow, and rates often so high as to be prohibitory. Roumania has undoubtedly the best railroad system of any of the Bal- kan states, the government controlling 1,000 miles of road. Greece is also making some progress and has at the present time GIO miles of railway. There is reason to believe that through communication will soon be estab- lished in these countries on a larger scale. The introduction of the railway into Asia has been, except in the Russian and English possessions, a very diffi- cult task. The conservatism or ignorance of the govern- ments and the superstition of the people combined to throw numberless obstacles licforc those who proposed to pave the way for the iron horse. British India opened her first railway for public traffic between Bombaj- and 60 The Railroad Question. Tannah on November 18, 1852. In 1855 she had 841 miles of road, which increased to 6,515 miles in 1875 and to 15,828 miles in 1889, of which 8,423 miles were owned and operated by the state. The total cost of these roads was $880,000,000. In Asiatic Turkey the first line was opened between Smyrna and Trianda on the 24th day of December, 1860. This line was in 1866 extended to Aiden, and in 1882 to Sarakio. There are at present five lines with a total extent of 446 miles, all owned by English companies. New lines, covering in all 3,952 miles, have recently been projected. The first line in Persia, only seven miles long, and extending from Teheran to Schah-Abdal-Azzim, was opened on the 25th day of June, 1888. Another line, from the Caspian Sea to Amol, is now in process of construction. A line was opened last September between Joppa and Jerusalem. It is 53. miles in length. Japan may be said to be already thoroughly familiar with the European system. The first and principal line was opened on the island of Napon, between Tokio and Yokohama, on the 14th of October, 1872. Two other short lines followed in 1874 and 1876, when the total extent of the Japanese roads was about 135 miles. In 1883 the construction of the Grand Trunk Railroad, from Tokio to Kioto, was commenced, which line has been in operation for the past five years. Other lines, aggregating over 400 miles, will soon be opened for traffic. The total extent of road in operation in 1888 was 580 miles, 310 of which were controlled by the state, and the remainder by private companies. In 1890 the total number of miles exceeded 900. The total average cost per mile was $58,000. The History of Railroads. 61 No nation has probably opposed the introduction of the railway as stubbornly as the Chinese. The first railroad, scarcely seven miles long, was built by an English company near Kaiping to facilitate the transportation of coal from the mines in that vicinity. In 1886 a Chinese company purchased this line and has since extended it to Tientsin, making its present length about eighty-four miles. The Chinese government has recently authorized the further extension of this line to Yangchou, a place but a few miles distant from l^ekin. Of the Asiatic islands Java has the largest and oldest railroad system. On the 10th of August, 1867, the first line was opened Ix'tween Samarang and Tangveng. Other coast lines have since been constructed, but communication is still sadly neglected in the interior. In 1889 there were operated on the island nearly 800 miles of road, the greater part being the property of private companies. A road was opened upon the island of Ceylon between Colombo and Kandy in 1867, to which several branch lines and extensions have since been added. The total system comprises at present about 180 miles. Short lines have also been built in Burmah (1889); in the Malay Peninsula (1885), in Sumatra (1876), and in Cochin China (1885). A line from Bangkok to Bianghsen, in Siam, is being projected at the present time. In Africa, if we except its northern coast, the con- struction of railroads has only kept pace with the slow development of the resources of that continent. Its European colonies are still but thinly inhabited, and their industrial and commercial life still resembles much that of the American colonies of the seventeenth century. There can be little doubt, however, that with the increas- 62 The Railroad Question. ing immigration the growing demand for better trans- portation facilities will speedily be met by European capital. The first railroad upon African soil was built by the Egyptian government from Alexandria to Cairo, and from there through the desert to Suez. A part of this line,_ 130 miles long, was opened to traffic in 1856, and the remaining ninety miles the year following. Nothing further was done until after Ismail Pasha ascended the throne, in 1863. The railroad system of Lower Egypt, between Alexandria in the west, Cairo in the south, and Ismaila in the east, was then greatly exliended and the service materially improved. After the opening of the Suez Canal the line through the desert to Suez was abandoned. The railroad system of Egypt comprises at present about 1,250 miles, all of which belongs to the government except two short lines which are private property. The beginning of the railroad system of Algiers dates back to 1860, when the French government gave a charter to the Companie des Chemins de Per Algeriens, authoriz- ing it to build a number of lines connecting the principal cities of the province with the Mediterranean. The line from Algiers to Blidah, thirty-two miles long, was opened on September 8, 1862. Further construction was then delayed until 1863, when the charter of the original company was transferred to the Paris, L}^ons and Medit- erranean Railroad Company. The original plans were then in the main carried out, until the disturbances caused by the Franco-Prussian war again put an end to railroad enter- prises. In 1874 three new companies were chartered and railroad building was resumed. In 1888 the Algerian railroad system comprised 1,350 miles. The History of Railroads. 63 The first road in Tunis was built in 1872 from ttic city of Tunis to Bartlo and Gouletta by English capitalists. It was, in 1880, sold to an Italian company to which the Italian government for political reasons had seen fit to guarantee certain dividends. Other small lines have since been constructed, and more important ones have been prospected. The number of miles at present in opera- tion is 153. The French colony on the Senegal River has a number of short lines, of which the first was opened in July, 1883. These lines aggregate at present about 200 miles. It is now contemplated to extend this system to the upper Niger. This would necessitate the construction of 240 additional miles of road. The Cape Colony has the largest mileage of any of the European colonies in Africa, the absence of navigable rivers rendering railroads here more necessary than else- where. The first line was opened on the 13th of February, 1862. It then extended from Cape Town to Earste River, but was extended to Wellington the following year. The number of miles of road in operation in 1875 was 906, and in 1891 it had increased to 2,067. All the roads of the colony, excepting a line of 93 miles belonging to the Cape Copper Mining Company, are operated by the colo- nial government. Their net revenue in 1886 was 2.84 per cent, of the capital actually invested. Port Natal built her first railroad in 1860. It was only two miles long and extended from the city of Durban to its harbor. Since then several inland lines, ag- o-reo-ating over four hundred miles, have been constructed at a cost of twenty-two million dollars. The roads are operated by the colonial government and yielded in 1891 a net revenue of 4. 4 per cent on the capital expended. ti 64 The Railroad Question. Short lines have also been built on Mauritius and Re- union, and there is now every indication that Portuguese Africa and the Congo State will be provided with railroad facilities in the near future. The introduction of railroads into Australia dates back to the sixth decade of the present century. The total number of miles of road reported in 1889 by the several colonies was 8, 883. If we estimate the population of the continent at 3,000,000 for that year it will be seen that Australia has more miles of road per capita than any other grand division of the globe, save North America. New South Wales, the mother colony of the Australian continent, opened its first road on September 26, 1855, between Sydney and Paramalta. This road was built by a private company, but was soon after its completion purchased by the colonial government, and was in 1869 extended to Goulbourn. In 1875 the colony had only 436 miles of road in operation. The mountains, however, which separated the wide plains of the interior from the coast had been surmounted, and the government commenced to push the construction of new roads with great vigor. At the end of the year 1886 New South Wales had no less than 1,888 miles of road in operation, for which the colony had expend- ed $113,000,000. The net revenue during that year was 2.9 per cent, on the capital invested. The total number of miles of railroad in this colony was 2,247 in 1889. Victoria, the smallest of the colonies, has made by far the greatest progress in railroad building. The first road in the colony, and, in fact, the first road upon the Aus- tralian continent, was built in 1854 between the city of Melbourne and its port, a distance of two and one-half miles. Within the next five years four other lines were The Hiatoiij of Railroads. 65 'jcnstructed, connocting ^Melbourne with Williamston, St. Kikla, Brighton and Echuca, respectively. In 1870 there were in the cs political depend- encies. Parliament enacted laws compelling their people to trade with the mother country exclusively and laying restraint on their manufactures. But the American pio- neers felt that they had brought with them across the ocean the rights of Englishmen ; they objected to taxation without representation, and the men who for opinion's sake had left comfortable homes to brave upon a distant shore the dangers of frontier life were prepared, if neces- sary, to emphasize their objection by armed resistance. England, intent upon maintaining her barbaric system of discriminative duties and commercial monopolies, blindly attempted coercion, but the war which resulted wrested / Monopoly ill Transportation. ^1"^;--, from the English crown its brightest jewel, and the Waj: \'^\ of 1812 established upon American soil the principle of industrial and commercial libertj'. It must not be supposed, however, that America and '-^^ / the United States in particular have been free from montP polies growing out of the transportation business. Nothing would be farther from the truth. There is no law so stringent but that it will be violated ; there is no govern- ment so vigilant but that it will at times be imposed upon. It is true, our government sanctions no monopoly, but the very liberty of action which exists here among corpora- tions as well as individuals offers to organized wealth and power a wide field for abuses. We have seen in the foregoing that almost from time immemorial efforts have been made to monopolize trans-, portation and trade, and that these efforts were successful whenever either from ignorance or weakness the masses fell into political apathy. There is a natural tendency among men to utilize commercial advantages to the detri- ment of others. In modem times the opportunities for building up large monopolies have greatly increased and have been turned to the most profitable account by design- ing men. Great and even unbearable abuses have always followed where the greed and ambition of such men have not been checked by governmental agencies. In this respect the people of the United States have had about the same experience as the rest of mankind. Ever since the introduction of railroads into this country there has been a well-marked drift toward monopolizing the trans- portation business. As long as the dangers of monopoly remained unknown to the American people, legislation for the control of rail- roads and other public carriers was both scarce and crude, ]02 The Railroad Question. and shrewd railroad men were not slow in taking advan- tage of the situation. It is foreign to the design of this treatise to give a coiliplete history of railroad monopoly in the United States. The author will therefore confine himself to showing that transportation companies will, like the great commercial organizations of the past, when left to follow their instincts, invariably use their power to oppress the public by exacting excessive charges for their services, or to discriminate against the many by extending special privileges to the few. Hundreds of cases might be given to illustrate the above rule, but a history of two of these corporations will suffice to show to what extent corporate abuses can be carried, and to serve as a warning against the adoption of any '■'laissez faire " policy in the railroad legislation of the future. The corporations selected for this purpose are the Camden and Amboy Eailroad and the Standard Oil Companies, both typical representatives of the Rob Eoy policy which organized wealth has pursued since the dawn of civilization, when not prevented by the wisdom and strength of a good government. THE CAMDEN AND AMBOY RAILROAD COMPANY. For almost forty years the Camden and Amboy Eail- road was the only direct route between the cities of New York and Philadelphia. It is doubtful whether previous to the war a more important or a more remunerative road existed in the United States, for, besides connecting the two largest cities in the Union, it formed part of the direct land route from the East to the South. The efforts to open a direct through route between New York and Philadelphia date back to the year 1812, when the construction of a canal between the Hudson and the Monopoly in Transportation. 103 Delaware was proposed, but an ill-advised jealousy of the State of Pennsylvania delayed for many years the realiza- tion of the project. When this obstacle was finally over- come, a change of sentiment had taken place in New Jer- sey. Railroads had just made their appearance in the United States, and a large number of the people of New Jersey preferred a railroad to a canal. The matter was finally compromised in the legislature of New Jersey, which on the 4th of February, 1830, simul- taneously granted charters to the Delaware and Raritan Canal Company and the Camden and Amboy Transporta- tion Company, fixing the capital stock of each company at -$1,000, 000, with the right to increase it to $1,500,000. The charter further stipulated what taxes should be paid to the State, and also contained the provision that within five miles of the starting-point and within three miles of the terminus of each line no other railroad or canal should be built. It was believed the existence of both a water and a land route would be sufficient to maintain compe- tition on this important thoroughfare of interstate traffic. The construction of the railroad, which had been surveyed in almost a straight line between its termini, was at once commenced. A number of well-to-do and practical men took hold of the enterprise, among them one John Stevens, who together with his three sons took one-half of the capital stock. The canal project did not do so well at first. At the middle of the year 1830 only about one- twelfth of its capital stock had been sold, and there was great danger that the company might forfeit its charter, as the time allowed for the subscription of its stock was nearing its end. At this juncture Robert Field Stockton, a yoimg man of ability, enthusiasm and wealth, came to the rescue of the canal company. He not only bought 104 The ^Railroad Question. for himself a goodly share of the canal stock, but also prevailed on his rich father-in-law, Mr. John Porter, to invest $400, 000 in the enterprise. The financial difficul- ties of the company were thus removed. At the next session of the legislature Mr. Stockton secured an amend- ment to their charter which apparently only authorized the enlargement of the canal, but in reality empowered the canal company to construct a second railway. It was from the beginning Mr. Stockton's object to share with the railroad company the advantages which their line promised to give them. The enlargement of his company's franchise placed him in a position to dictate terms to the Camden and Amboy Transportation Ccftn- pany. The latter was given the choice, to prepare for competition with a rival railroad line, or to consolidate with the Delaware and Karitan Canal Company. It chose the latter alternative, and on the 15th day of February, 1831, the two companies became one. The consolida- tion still required the sanction of the legislature. This was obtained in consideration of the transfer of 2, 000 shares of the capital stock of the company to the State. It was fur- ther stipulated that the new company should pay to the State a tax of 10 cents for each passenger and of 15 cents for each ton of freight carried over its line through the State, as well as an annual tax of $30,000, and that the State in return should protect the company against any and all competition in the direct passenger and freight traffic between the cities of New York and Philadelphia. Serious doubts were at the time entertained by many, whether the State of New Jersey under the Federal Constitution possessed the right to thus create a monopoly in trans- portation facilities, and to regulate arbitrarily the com- merce between sister States. Monopoly in Transportation. 105 Five days after it had granted this charter to the Camden and Amboy Company, the legislature granted another charter authorizing the construction of a raih'oad from Jersey City to New Brunswick on the Earitan Kiver. On the 23d of February of the same year a charter had been granted by the legislature of the State of Pennsylvania to a company which had been formed for the purpose of con- structing a railroad from Philadelphia to Trenton. This company had likewise been authorized by its charter to buy the right of way for a railroad from Trenton to New York, which it proceeded at once to do. It was evident that as soon as the two new roads would meet at New Brunswick, an understanding would be reached between them, by which another through line would be created between New York and Philadelphia, which would have the advantage over the Camden and Amboy road that it touched the capital of New Jersey and could thus make itself serviceable to members of the legislature, officers of State and influential politicians. The Camden and Amboy Freight Company soon arrived at the conclusion that it could not permit such rivalry. It appealed to the legislature for protection. Resolutions were passed in its favor, but the Philadelphia and Trenton Railroad Company paid no attention to those resolutions, but quietly continued to lay its track. Mr. Stockton and his friends did not dare to invoke the aid of the courts, because a judicial investigation might have resulted in the destruction of their own charter. The situation was crit- ical, but Mr. Stockton was equal to the occasion. He bought quietly a sufficient number of shares to control the management of the Philadelphia and Trenton road, and, in April, 1836, secured the consolidation of the Philadel- phia and Trenton and the Camden and Amboy railroad companies. 106 The Railroad Question. The canal of the company -was not completed until 1838. It had consumed a sum of money largely in excess of the original estimate. To connect the two lines of the consolidated company, a branch road was constructed from Trenton to Bordentown. Later the road from Tren- ton to Brunswick was completed and an agreement entered into with the Jersey Dity company for a division of the traffic of the two roads. The large cost of these improve- ments suggested to the company the advisability of increasing its revenues and of decreasing its expenditures. Its charter provided for a payment to the State of 10 cents for each through passenger. By an artifice the company avoided the payment of this tax. It compelled its through passengers to walk over the bridge at Trenton and then continue their journey by rail via Bordentown to Jersey City. The company's charter also stipulated that the fare between New York and Philadelphia should not exceed $3 per passenger. Its oflicers interpreted this stipulation to apply oijly to the intermediate traflSc and proceeded to collect $2.50 for the trip from New York to Trenton, and $1.50 from there to Philadelphia, thus increasing the fare for the entire journey to $4.00, one dollar above the max- imum allowed by law. One Jacob Ridgway, who was the owner of a ferry-boat at Camden, saw Jiere an opportunity for starting a lucrative business. He bought a steamer and carried passengers from Philadelphia to Trenton for one-third of the ?are demanded by the railroad. After the Camden and Amboy Company had made several unsuccessful attempts to intimidate Mr. Ridgway and his force, one of which even brought Mr. Stockton in contact with the criminal courts, it purchased the boat with all terminal facilities at Philadelphia and Trenton. The Monopoly in Transportation. 107 attention of th^ legislature of New Jersey was repeatedly called to the company's failure to comply -with the pro- visions of its charter, but these appeals were on the whole of no avail. In 1842, after a long discussion, a resolu- lution was carried declaring the charge of $4 for the through journey illegal, but the companj' entirelj' ignored this legislative reminder and continued its old tariff. The company's charter also reserved for the State the right to acquire the Camden and Amboy road under cer- tain conditions upon the payment of a reasonable compen- sation. In 1844, through Mr. ' Stockton's engineering, the constitution of New Jersey was so amended as to practically deprive the State of the power to acquire the company's property. During the first few years of the existence of the Cani- den and Amboy Transportation Company its business was managed in the interest of its owners, but soon a few of its leading stockholders managed to turn its enormous profits into their own pockets. The Stevens and Stockton families, together with two other directors of the Camden and Amboy Company, had come into possession of a line of steamers that plied on the Raritan, between New Brunswick and New York. The enterprise, in spite of its largely watered capital, had been made to pay dividends ranging from 30 to 40 per cent. Its owners saw an oppor- tunity for a larger field of usefulness and larger divi- dends. In 1834 a majority of the board of directors of the Camden and Amboy Company proposed that the com- pany rid itself of the responsibility connected with the transportation business and lease its railroad and canal. Mr. Stevens, as representative of the Camden and Amboy Company, then negotiated with Jlr. Stevens, the repre- sentative of the Napoleon Steamer Companj', and the 108 Tlie Railroad Question. negotiations soon resulted in an agreement between the two companies by which the latter leased the railroad and. canal lines of the former and agreed to pay it a fixed toll of $7. 64 per ton upon all freights carried by rail, and one- quarter of all its revenues derived from the canal. Soon afterward the Napoleon Company entered into a similar contract with the Camden Ferry Company and now had a complete monopoly of the transportation business between New York and Philadelphia. It at once commenced to develop a system of organized plunder. Instead of the maximum charter tariff of 8 cents per ton per mUe, it charged 10, 12, and even 15 cents. The through rates charged were several times as high as those fixed by the charter. Canal rates were raised to such an extent as to . make them prohibitory and to compel the public to ship by rail. It is difficult even to estimate the total annual profits of the directorial syndicate. Their accounts, if any were kept, were not accessible, and surmises can only be based upon such data as occasionally found their way to the public. In 1845 the share of the canal tolls paid to the company's stockholders was $359,000. The direc- tors' share under the terms of their lease is thus found not to have been less than $1,077,000. Another item of $170,000, tolls collected for the transportation of 27,000 tons of freight, was so divided that the Camden Ferry Company, or its other self, the directorial syndicate, received $32,000 for one mile, while the Camden and Amboy Railroad Company received $63,000, or less than twice as much, for ninety-two miles. The directors under their lease were entitled to the remaining $75,000. The service of the company was as bad as it was ex- pensive; its trains were slow and irregular,, and its employes arrogant. The syndicate which controlled the Monopoly in Transportntion. 100 company defied its stockholders, the public and the courts alike. When one of the stockholders, a Trenton merchant by the name of Hagar, applied to the courts for an order to compel the directors to produce their books and render an account, the syndicate bought Mr. Hagar's shares, for which he had paid $125 a share, at the price of $1,456 a share. The suit was then withdrawn and the matter hushed up. In 1848 a number of articles appeared in a paper pub- lished at Burlington, Pa., which were signed by "A Citizen of Burlington" and contained much surprising information concerning the Camden and Amboy Trans- portation Company. It was charged that the directors had defrauded both the State and the company's stock- holders of large sums of money, that they had grossly violated their charter by charging illegal and extortionate rates, oppressive to both commerce and travel. It was shown that while the average rate per ton per mile of thirty-five neighboring roads was 2.85 cents, that of the Camden and Amboy Company was 4. 54 cents. It was also shown that neither the stockholders nor the State had received the share of the company's revenues to which they were entitled. These articles were extensively reprinted and caused a great commotion wherever they appeared. After the first storm had subsided the direc- tors issued an address to the people of New .lersey, in which they bitterly complained of the people's loss of confidence in their integrity, and declared that the charges preferred against them were founded on false- hoods. / The "Citizen of Burlington ' replied by accusing the directors of defalcation and falsifying their books. He charged that from 1840 to 1847 no account had been 110 The Railroad Question. rendered of the receipt of no less than $5,266,431, on which $493,066 was due to the State. As soon as the legislature convened, a resolution was introduced that a commission be appointed to investigate the charges pre- ferred against the Camden and Amboy Transportation Company. The resolution was adopted, but it was vir- tually left to the accused to select the members of the commission. That the directors had a guilty conscience appeared from the fact that the last annual report of the company, which had just been printed, was withdrawn and destroyed. To silence their unknown accuser, they threatened him with criminal prosecution. He now gave his name. It was Henry C. Carey, the noted writer and authority on political economy. Mr. Carey did not give up the contest. He proceeded to show how the policy of the managers of the Camden and Amboy Transportation Company depressed commerce, manufactures and agri- culture alike. He showed how the company as a public carrier discriminated in favor of industries which they carried on as private individuals. He claimed that the company had forfeited its charter, and that it was the duty of the State to authorize the construction of another road. In the meantime, early in 1849, the legislative investigation committee submitted its report. It was perhaps as shameless a document as was ever placed before a legislative assembly. It lauded the directors, to whose influence the members of the commission owed their selection, and whitewashed their past management of the company's affairs. But the people of New Jersey were far from being sat- isfied with this report and demanded the appointment of another committee. Another investigation was ordered, and this time the company, or leather its directors, found Monopoly in Transportation. Ill it impossible to control the selection of its members. Soon after their appointment the committee aslied Mr. Carey to lend them his assistance in their labors, and he readily consented. During the summer of 1 849 the mem- bers of the committee had occasion to go to Bordentown, to inspect the company's books. From that time on a wonderful change seemed to have come over the com- mittee. They found they could dispense with Mr. Carey's further services. What had previously appeared to them a ring of rapacious monopolists seemed now an association of worthy philanthropical gentlemen. In "their report to the legislature they completely exonerated the company's managers. They admitted that the State had not been paid all that was due to it, but they asserted that this difference in the company's accounts was due solely to clerical errors, for which the management were in no wise responsible. The report was accepted, although not even the annexed testimony supported it, and thus the matter was dropped. This was a great victory for Mr. Stockton and his friends. It demonstrated the success of their methods of dealing with public servants. Mr. Carey repeated his charges, but the directors failed to prosecute him for libel as they had threatened. He asked that he be per- mitted to inspect the company's books, but was met with a peremptory refusal. Public opinion was defied, and the old methods were continued. The extortionate and discriminating tariff of the only through route of New Jersey affected seriously the agri- cultural as well as the commercial interests of that State. The Camden and Amboy monopoly kept the State of New Jersey for many years far behind the New England States in railroad facilities. In 1860 New Jersey had only one 112 The Railroad Question. mile of railroad for every 17.6 square miles of territory, while the proportion of miles of railroad to square miles of territory for the same year was 1 to 7.9 in Connecticut, 1 to 7.6 in Rhode Island, and 1 to 6 in Massachusetts. At present New Jersey has one mile of railroad to every 3. 79 square miles, and therefore leads all the States in the Union in density of railroad track. The question may be asked how the Camden and Am- boy Transportation Company, or rather the syndicate which controlled it, contrived to maintain its power for so many years, to the great detriment of industry and com- merce. The only answer that can be given is that the men for whom the maintenance of the monopoly was a source of great wealth were constantly using a part of this wealth for the corruption of those who were in a posi- tion to influence public opinion or to direct the policy of the State. Prominent politicians were favored with passes, attorneys were retained by the company as local solicitors, corrupt and servile legislators were bribed by money or the promise of lucrative positions, and news- papers were given large subsidies. In addition to this public men were constantly made to realize the political power of the company, whose many employes had always been trained to do the bidding of their masters. If the opposition, in spite of this, was ever successful at legis- lative elections, the company's managers found it less expensive to gain the good will of a few members of the legislature after election than it would have been to gain the good will of their constituents before election. Dis- satisfied stockholders who threatened with judicial investi- gation were quietly bought out or impressed with the danger of inviting public discussion in regard to the val- idity of the company's charter, as it might lead to its Monopoly in Transportation. 113 annihilation. The good people of New Jersey made sev- eral attempts to rid the State of the despotism of the company by making the question a political issue, but they were each time defeated through the lavish and scandalous expenditure of the company's money. The original charter of the Camden and Amboy Eailroad Company was granted for a period of twenty years, and should have expired in 1853, but its managers succeeded in having it extended to January 1, 1859. In 1854 another extension was asked for, and after a long and bitter debate the company was again triumphant. An act was passed on the 16th of March, 1854, making it illegal to build previous to the first day of January, 1869, with- out the consent of the Camden and Amboy Transportation Company, a railroad in the State of New Jersey for the transportation of passengers and freight between New York and Philadelphia. At the end of this period even a third extension was granted, and the company, though after January 1, 1867, under a new name, maintained its monopoly until it consolidated, in 1871, with the Pennsyl- vania Railroad Company. That the spirit of the past is still at work was shown by the recent act of the legislature of New Jersey legalizing the consolidation of the coal roads. The coal barons found the legislature as servile as the managers of the Camden and Amboy Railroad Company had found them of yore, and their well-planned scheme would probably have been successful had it not been for Governor Abbot's courageous veto of the disgraceful act, and it is more than probable that they wil.l yet succeed. They have, in fact, during the last year advanced the price of coal about one dollar per ton. 114 The Railroad Question. THE STANDARD OIL MONOPOLY. The Standard Oil monopoly may be said to be the crowning monument of corporation conspiracy. It is, indeed, doubtful whether the combined brotherhoods of mediaeval knights ever were guilty of such acts of plunder and oppression as the Standard Oil Company and its rail- road allies stand convicted of before the American people. The facts that have been unearthed by official investiga- tions show a frightful prevalence of corporate lawlessness and official corruption, and there can be no doubt that, could certain high railroad dignitaries have been compelled to testify, and could the truth have been fathomed, it would have been found that not only the public, but railroad stockholders as well, were victimized by those trans- actions. The founder of the Standard Oil monopoly was some twenty years ago part owner of a petroleum reiinery at Cleveland, Ohio. His fertile brain conceived the thojiight that with the cooperation of the railroad companies a few men of means could control the petroleum business of the United States. With this end in view he approached the managers of the New York Central, the Erie and the Pennsylvania Central railroad companies, and on January 18, 1872, entered with them into a secret compact by which they agreed to cooperate with the South Improve- ment Company (an organization formed by that gentleman to aid in the accomplishment of his designs) to grant to said companies certain rebates and to secure it against loss or injury by competition. The South Improvement Company, in consideration of these favors, guaranteed to the railroad companies a fair division of its freights. The existence of this contract soon became known and caused a violent protest among the oil-producers. An indigna- Monopoly in Transportation. 115 tion meeting was held and a committee was appointed to wait on the railroad managers and demand fair treatment for all. The railroad companies yielded and promised to give equal rates to all shippers and to grant to no person either rebates or any other advantage whatever. New rates were fixed for the transportation of both crude and refined oil, and it was agreed on the part of the railroad companies that at least ninety days' notice should be given of any change that might be made in the rates. Steps were also taken to have the charter of the South Improve- ment Company canceled because it had been found that it was neither the owner of a refinery nor of an oil well, and cov^d therefore not comply with the legal requirements concerning the organization of stock companies. While the South Improvement Company thus came to a sudden and rather inglorious end, its founders soon contrived other means to carry out their ingenious plans. They bought a refinery, reorganized by taking the prepossessing title of Standard Oil Company, and were now prepared to resume their operations under the guise of legal authority. The railroad companies seemed to have relished their novel business connections, for. without paying the least attention to the agreement into which they had entered with the other producers and refiners of oil, thej' extended the privileges of the defunct South Improvement Com- pany to its successors. The new company received secret rebates ranging from 50 cents to $1.32 per barrel. The agreement also contained the stipulation that if lower rates should ever be granted to their competitors, an additional rebate should be given to the Standard Oil Company. Endowed with these privileges, the favored company proceeded to unite under its banner, by consoli- 116 The Railroad Question. dation, purchase or lease, the leading refineries of Cleve- land. The effect of the discriminations practiced against inde- pendent refineries soon became apparent. In less than two years there were closed in Pittsburgh twenty-one refineries, that represented an aggregate capital of $2,000,000 and had given employment to over 3,000 people. A large number of the remaining refineries were forced to consolidate with the Standard Oil Company. The next step toward the entire suppression of compe- tition was an attack planned against the independent pipe lines. The Standard had early secured control of the United Pipe Line. To exterminate competing lines, they again appealed to the railroad companies, and on the 9th day of September, 1874, J. H. Butter, general freight agent of the New York Central, issued a new oil tariff which discriminated greatly in favor of the oil brought by the United Pipe Line to the refineries. Up to that time this company had done from 25 to 30 per cent, of the total business of the various pipe lines. Within one year after the adoption of the new tariff it did fully 80 per cent, of the entire business. This forced the independent lines either to sell out to the Standard or to suspend busi- ness, for the latter's rebate was larger than their toll. The oil tariff of the Pennsylvania Central compelled the independent Pittsburgh refiners to ship their refined oil over that company's line, if they would avail themselves of the rebate which it granted on the rates for the trans- portation of crude oil to Pittsburgh. The evident pur- pose and the effect of such a tariff was to prohibit oil shipments over the Baltimore and Ohio. Had this road made ever so reasonable a tariff, the combined charges for the transportatiou of the crude petroleum from the oil Monopoly in Transportation. 117 regions to Pittsburgh Ijy the Pennsylvania Central, and for that of the refined oil to the sea coast by the Balti- more and Ohio, would still have been prohibitive in com- petition with the special transit rates granted to the Standard Oil Company. As a remedy it was proposed to organize a new pipe line, it being believed that the crude oil could be brought to Pittsburgh by that line, refined there, shipped to the seaboard' by the Baltimore and Ohio, and sold there at as good or even a better profit than the product of the Standard, notwithstanding the favors received by the latter from the allied trunk lines. This movement resulted in the creation of the Columbia Conduit Company, which at once proceeded to lay its pipes from the oil wells to Pittsburgh. Under the laws of the State of Pennsylvania it became necessary for this company to obtain the permission of property-holders to lay the pipes through their lands. Consent was every- where readily given, and the pipes were laid without hindrance until the track of the Pennsylvania Kailroad was reached, within a few miles of the Pittsburgh refin- eries. This company peremptorily refused to let the pipes be laid under its track. The pipe line company after some delay contrived a way to obviate the difficulty. It laid its pipes on each side of the road as close to the track as it could without trespassing against the legal rights of the Pennsylvania Central, and then conveyed the oil from one side of the track to the other by means of large oil tanks on wheels, which could not be prevented from passing over the railroad track at the public crossing. After several months the railroad company allowed the pipes to be laid under its track, but it soon appeared that another combination had been effected to destroy the value of this concession. A railroad war had given the three 118 The Railroad Question. trunk lines an opportunity to force the Baltimore and Ohio into the pool. A uniform rate of $1.15 was established for shipments of refined petroleum from any point to the seaboard. While this was in itself an unjust discrimina- tion against, Pittsburgh, which is 250 miles nearer tide- water than Cleveland, the railroads in addition granted the Standard secret rebates which enabled it to sell its oil on the coast for less than the sum of its first cost at the refineries and the open rate of transportation to the points of export. The independent refiners of Pittsburgh found themselves again cut off from the market, but necessity soon made them discover another outlet. Ship- ping their oil down the Ohio Eiver to Huntington, W. Va. , they had it taken bj'' the Chesapeake and Ohio Railroad to Richmond. In spite of the fact that this route was more than twice as long as the direct line from Pittsburgh to the seaboard, and in spite of the further fact that it necessitated an expensive transfer, a rate equal to about two-thirds of the trunk line rate for the direct shipment proved remunerative to the Chesapeake and Ohio. The independent refiners kept up their competition for some time, but the great disadvantage of river travel and the insufficient export facilities of Richmond find-lly forced them to give up the contest. Until the year 1877 the Standard Oil Company had worked hand in hand with the railroads. It had obtained all its privileges by asking for them and by holding out inducements to railroad managers to grant them. It now commenced to dictate terms to refractory railroad com- panies. The Pennsylvania road ventured to carry oil not the property of the Standard on terms which that company did not approve. The latter ordered the road to refuse to Monopoly in Transportation. 119 carry the product of their competitors. This the railroad company declined to do, and the Standard at once with- drew its custom. The Pennsylvania retaliated by carrying the oil of the independent refineries at merely nominal rates and even went so far as to make its rates dependent upon the profits realized by the shippers. A fierce freight war was thus precipitated, in which the Erie and New York Central supported the Standard Company. The Pennsylvania road was soon forced to surrender and sign an ignominious treaty. The Baltimore and Ohio, which had again commenced to carry the product of those Pittsburgh refineries which received their crude oil through the Columbia Conduit Company, was in a similar manner forced to reject their freights. The pipe line, whose value was thus almost entirely destroyed, was soon after sold to the Standard Oil Company. This company had now an almost com- plete monopoly of the oil business of the United States, and still it was not satisfied. It appears that some of the producers of crude oil had been in the habit of shipping a part of their product in spite of the advantages which the Standard had througla its rebates. To prevent even these shipments, or rather to exact another tribute from rail- road stockholders, the American Transfer Company, one of the auxiliaries of the Standard Oil Trust, in 1878, demanded and received from the Pennsylvania road a "commission" of 20 cents a barrel on all shipments of petroleum made hy any shipper. It had been shown to the satisfaction of the Pennsylvania Eailroad Company that similar commissions, ranging from 20 to 35 cents a barrel, were being paid by the New York Central and Erie roads. When, in 1879, an effort was made to establish a. pipe 120 The Railroad Question. . t line from the oil regions to the seaboard, nothing was left undone by the trunk lines to thwart the enterprise. The new company finally succeeded in making connection with a railway which had no part in the pool, and there was some hope that under this arrangement competition might at least be maintained at some points. The Stan- dard Company again appealed to the trunk lines to pro- tect it against injury by competition and obtained from them a special rate of 20 cents per barrel, which rate was even reduced to 15 cents per barrel two months later. Against such a rate it was impossible to compete, and after a short struggle the new line found itself compelled to sell its works to the Standard. To crown its monopoly, the Standard Oil Company finally bought of the New York Central and Erie roads their terminal facilities for the transportation of oil, and thereby made it virtually impossible for them to transport oil for any of its few remaining competitors. Mr. Josiah Lombard, part owner of the New York refinery, stated in 1879 before the investigating committee of the legislature of New York that in 1878 he had requested the Erie Company to transport for him 100 cars of crude oil from Carroll ton to New York; that he had called upon Mr. •Vilas, the general freight agent of the company, in person, but had never been able to obtain the cars, though the oil had been held in Carrollton three or four months ready to be loaded. This gentleman also testified that he had found it impossible to obtain cars from the New York Central, and that the company's general freight agent had informed him that the road did not own and could not furnish any oil cars. After the Standard Oil Company had secured control of the various pipe lines of the oil regions, it frequently Monopoly ill Transportation. 121 lowered the price of crude oil to such an extent as to make its production unprofitable. It even refused to buy oil, basing its refusal upon the ground that the railroad companies failed to furnish cars for its transportation. When the well-owners had their tanks filled, they had the choice to let the oil run away or to be at the expense of closing up their wells. In one instance, however, when their ruse threatened to cause a riot, several hundred cars were brought to the wells within a few hours. The Standard Oil Trust, not satisfied with the monopoly of the wholesale trade, even tried in places to control the retail trade by peddling oil at private houses. This method of destroying competition was chieflj- resorted to where independent dealers obtained their supply bj' a water route. That many of the deeds of the Standard are dark is evident from the fact that its members, when summoned liy the Hepburn committee, declined to testify, lest their testimony be used to convict them of crime. Officials of the trust have bribed or attempted to bribe employes' of rival firms, for the purpose of ruining their business. By its peculiar methods the company has been successful in courts of justice and legislative halls, and has enjoyed an impunity for its conspiracy against the public that is without precedent in ^Vmeriea. It has accumulated a cap- ital of more than $100, 000, 000, and it is even claimed that for years its annual dividends have exceeded in amount the capital actually invested. This is not at all strange when it is considered that tliej' havt^ levied upon the pro- ducers; consumers and transporters alike. Mr. Cassat testified before the New York investigating committee that in eighteen months the railroads had paid the Standard in rebates no less than $10,000,000. And the 122 The Railroad Question. very payment of these enormous rebates enabled the Standard to decrease the price of oil to the producer and to increase it to the consumer. It is claimed by the defenders of the Standard monop- oly that under the trust the price of petroleum has been constantly decreased to the consumer. That the price of kerosene is lower now than it was fifteen years ago is undoubtedly true, nut the reductions were brought about not by the trust, but in spite of the trust. The price now maintained is an unnatural one. The Standard Oil Com- pany never lowered the price of its oil except when com- pelled to do so by competition. The largely increased output of crude oil, the improved methods of refining, the greatly lowered cost of transportation would have lowered the price of coal oil without the philanthropy of the Standard Oil Company. Iron, steel, calico, woolen goods and a thousand other commodities have within almost the same period sufl'ered much larger reductions than coal oil. But even if the Standard monopoly had voluntarily lowered the price of its products, the American people could never approve of its methods. They can never be made to believe ' that the end sanctifies the means, especially when those means are railroad favors, secret combinations, bribery, intimidation and lawless- arrogance. Many other interesting cases might be given. The Southern Pacific Eailway Company, for instance, owns nearly all of the railways of California, and enjoys at the present time almost a complete monopoly of the transpor- tation business of that State and much more of the Pacific Coast. Perhaps no set of managers would be more con- siderate of the people's rights in the absence of legal restraint than those in charge of this company, yet there is not a business man on thv Pacific Coast who comes in Monopoly in Transportation. 123. contact with this company who does not realize and feel the power of its iron hand, unless it be those who for various reasons are recipients of its special favors. It has become notorious that the legislature, Board of Railroad Commissioners and some of the judges of the courts of that State are as servile to the demands of this railway company as are its own employes. The railway company is a closely organized body of shrewd, active men, while those who furnish business for it are not organized, and they will never be able to prop- erly protect their own interests until they control the machinery of their State government. CHAPTEE V. RAILROAD ABUSES. AS has already been shown, railroad enterprise met with comparatively little opposition in the United States, for, as compared with the interests certain to be benefited by the introduction of the new mode of trans- portation, those likely to be injured by it were insignifi- cant. It is true, the innate conservatism of man even here recorded its objections to the innovation. It viewed with distrvist the new power which threatened to revolu- tionize well-established systems of transportation and time-honored customs and to force upon the people eco- nomic factors the exact nature and value of which could only be ascertained by practical tests. But the progres- sive portion of the community was so decidedly predomi- nant that these protests were soon drowned in the general demand for improved facilities of transportation. The farmer who had to haul his produce a great distance to reach a niarket appreciated the advantages to be derived from the location of a railroad station nearer home. The manufacturer who heretofore had, had a very limited terri- tory for the sale of his products well realized that he could with the aid of a railroad enlarge his territory and increase his output, and with it his profits. The pioneer merchant found that he could no longer compete with former rivals in adjoining towns, since the iron horse had reached them and lowered their freights,, and he also became a convert to the new order of things and clamored loud for railroad facilities. Railroads seemed the panacea for industrial 134 Railroad Abuses. 125 and commercial ills, and every inducement was held out ancj every sacrifice made by communities to become parti- cipants of tiieir blessings. So great was the estimate of the conveniences afforded by them and so strongly was public opinion prejudiced in their favor that it is no exag- geration to say that railroad companies as a rule were permitted to prepare their own charters, and that these charters almost invariably received legislative sanction. To such an extent was the public mind prepossessed in favor of railroads that any legislator who would have been instrumental in delaying the granting of a railroad charter for the purpose of perfecting it, to protect the people against possible abuses, would have been denounced as a short-sighted stickler and obstructor of public improve- ments. Anxious for railroad facilities, the people were deaf to the warnings of history. Their liberality knew no bounds. National, State and county aid was freely extended to new railroad enterprises. Communities taxed themselves heavily for their benefit, and municipalities and individuals vied with each other in donating money, rights of way and station buildings. This was especially true of the West, whose undeveloped resources had most to gain by railroad extension. So large were the public and private donations in several of the Western States that their value was equal to one-fifth of the total cost of all the roads constructed. To still more encourage pro- moters of railroad enterprises, general incorporation laws were passed which permitted companies to be formed and roads to be built practicallj' without State super^ision. In their admiration for the bright side of the picture, the people entirely overlooked the shady side. Besides this, there was virtually an absence of all law regulating the operation of railroads. It wa.s, under these 126 The Railroad Question. circumstances, not strange that abuses early crept into railroad management which, long tolerated by the people and unchecked and even encouraged by public ofHcers, iinally assumed such proportions as to threaten the very foundation of free government. Great discoveries that add rapidly to the wealth of a country tend to overthrow a settled condition of things, and organized capital and power, if not restrained by wholesome laws and public watchfulness, will eirer take advantage of the unorganized masses. The people of those regions which the railroad stimulus had caused to be settled thrived for years so well upon a virgin soil that they gladly divided their sur- plus with the railroad companies. -They looked upon the railroads as the source of their prosperity and upon rail- road managers as high-minded philanthropists and public benefactors, with whom to quarrel would be an act of sordid ingratitude, and they paid but little attention to the means employed by them to exact an undue share of their earnings. Railroad men did whatever they could to foster through their emissaries this misplaced adoration. They posed before the public as the rightful heirs of the laurels of Watt and Stephenson, insisting that their genius, capital and enterprise had built up vast cities and opened for settlement and civilization the boundless prairies of the West. These claims have been persistently repeated by railroad men, though they are so preposterous that they scarcely deserve refutation. The railroad, grad- ually developed by active minds of the past, and greatly improved by the inventions of hundreds of men in the humbler walks of life, is the common inheritance of all mankind, though no class of people have derived greater benefits from it than railroad constructors, managers and manipulators. Railroad managers are no more entitled to Railroad Abuses. 127 the special gratitude of the public for dispensing railroad transportation at much more than remunerative rates than is the Western Union monopoly for maintaining among us an expensive and inefficient telegraph service. No one believes that the disbanding of the W-°stern Union would leave us long without telegraphic communication. In like manner railroads will be built whenever and wherever they promise to be profitable. If one company does not take advantage of the opportufiities ofl'ered, another will. That large cities have been built up by the railroads is true, but it is equally true that these cities by their commerce and manufactures administer to the prosperity of the railroads as much as the railroads administer to theirs. Commer- cial centers in days gone by existed without railroads, but railroads could not long exist without the stimulating influence of these busy marts of trade. The same argu- ment applies with still greater force to the agricultural sections of our country, especially the great Northwest. The dry-goods merchant might as well boast of having clad the public as the railroad manager of having built up farming communities by selling to them transportation. And yet the American people have never ceased to be mindful of the conveniences afi'orded to them by this modern mode of transportation. On the contrary, they have been but too prone to credit railroad men with being benefactors, when they were but beneficiaries, and this liberality of spirit made them overlook, or at least tolerate, the abuses which grew proportionately with the wealth and power of the companies. The first railroad acts of England had contemplated to make the roads highways, like turnpikes and canals. Those roads were established by the power of eminent domain. Companies were empowered to build and main- 128 The Railroad Question. tain them and to reimburse themselves by the collection of fixed tolls. Had the owners of the roads from the beginning been deprived of the privilege of becoming car- riers over their own lines, the system might have so adjusted itself as to become entirely practicable ; but as they were allowed to compete with other carriers in the transportation of passengers and merchandise, they were soon able to demonstrate, at least to the satisfaction of Parliament, that the use of the track by different carriers was impracticable and unsafe. A number of circum- stances combined to aid the railroad companies in their efforts to monopolize the trade on their lines. In the first place, when the early railroad charters were granted, but few persons had any conception of the enormous growth of commerce which was destined to follow everywhere the introduction of railways. The tolls as fixed in the charters soon yielded an income out of proportion to the cost of the construction and maintenance of the roads. Their large margins of profit enabled the owners of the roads to transport goods at lower rates than other carriers and to thus compel the latter to abandon their business. Another defect of the original charters worked greatly to the dis- advantage of independent carriers. They contained no provision as to the use of terminal facilities. The railroad companies claimed that these facilities were not affected by the public franchise and were therefore their personal property. This placed independent carriers at a great disadvantage and made in itself competition on a large scale impossible. These carriers were thus at the mercy of the railroad companies for the transportation of their cars, and the companies never permitted their business to become lucrative enough to induce many to engage in it. It soon became apparent that under the charters granted Railroad Abuses. 129 to the railroad companies such competition as existed on turnpikes and canals was out of the question on their roads. In England the great abundance of water-ways exercised for many years, a wholesome control over the rates of railway companies, until these companies, greatly annoyed by such restraint, absorbed many of the larger canals by purchase and made them tributary to their systems. These companies have also acquired complete control over many important harbors. In the United States the people depended from the beginning of the railroad era on free competition for the regulation of railroad charges. This desire to maintain free competition led to the adoption of general incorpora- tion acts, it being quite generally believed that such com- petition as obtains between merchants, manufacturers and mechanics was possible among railroads and would, when allowed to be operative, regulate prices and prevent abuses. The remedy was applied freely throughout the country, but for once it did not prove successful. Stephenson's saying, that where combination was possible competition was impossible, was here fully verified. The great ingenuity of the class of men usually engaged in railroad enterprises succeeded in thwarting this policy of commer- cial freedom. The opportunities for those in control of railroads to operate them in their own interest, regardless of the interests of their patrons or stockholders, were so great that men of a speculative turn of mind were attracted to this business, which indeed soon proved a most productive field for them. One road after another fell into the control of men who had learned rapidly the methods employed to make large fortunes in a short time. As the roads multiplied, transportation abuses increased. A considerable number of people early favored State con- 130 The Railroad Question. trol of railroads as the best means of regulating transpor- tation, but a majority looked upon the existing abuses as being merely incidental to the formative period, and hoped that ■with a greater expansion of the railroad system they would correct themselves. And this doctrine was . industriously disseminated by railroad managers and their allies. They lost no opportunity to impress upon the people that State regulation was an, undue interference with private business and that such a policy would soon react against those who hoped to profit by it, inasmuch as it would prevent the building of new roads and would thus hinder, rather than aid, in bringing about the right solution of the railway question, viz. , regulation by com- petition. They contended, in short, that State regulation would be destructive to railroads as well as to every other class of property. Railroad sophistry for many years succeeded in pre- venting the masses from realizing that an increased sup- ply of transportation does not necessarily lower its price, or, in other words, that railroad abuses do not necessarily correct themselves through the influence of competition. A large capital is required to build and maintain a rail- road, which must necessarily be managed by a few per- sons. Besides this, the construction of a railroad practi- cally banishes at once from its field all other means of land transportation. The railroad has thus a practical monopoly within its territory, and its managers, if left to follow their instinct, will despotically control all the busi- ness tributary to it, with unlimited power to build up and tear down, to punish its enemies and to reward Its friends. It is not true that State control checks railroad building. While it may prevent the construction of useless lines and discourage speculation, it will encourage the building of Railroad Abuses. 131 roads for which there is a legitimate demand. Stock- holders as a whole do not participate in the management of the roads and do not profit by railroad abuses, the origin of which may almost invariably be traced to selfish designs on the part of a few entrusted with the manage- ment of the property. Where through wise legislation these abuses are prevented, the roads are managed in the interest of all the stockholders, develop business and enjoy lasting prosperity. It may be laid down as a general rule that the policy which best subserves the interests of the patrons of a road is always the best policy for its owners. Injustice to a railroad will interfere with its usefulness; injustice to shippers depresses production and consumption; and in either case both the road and its patrons will suffer. State control is therefore as much needed in the interest of the owners of railroads as in the interest of their patrons, What should be the nature of such control will be discussed hereafter. A full understanding of the question at issue, however, makes necessary an inquiry into the various abuses which unrestrained railroad man- agement of the past has developed. Perhaps no better presentation of the evils and abuses of railroads and their consequences can be found than that contained in the report of the Senate Committee on Interstate Commerce, submitted by Senator Cullom, in 1886. This report charges : 1 . That local rates are unreasonably high, as compared with through rates. 2. That local and through rates are unreasonably high at non-competing points, either from the absence of com- petition or in consequence of pooling agreements that restrict its operation. 132 The Railroad Question. 3. That rates are established without apparent regard to the actual cost of the service performed, and are based largely on ' ' what the trafHc will bear. " 4. That unjustifiable discriminations are constantly made between individuals in the rates charged for like service under similar circumstances. 5. That improper discriminations are constantly made between articles of freight and branches of business of a like character, and between different quantities of the same class of freight. 6. That unreasonable discriminations are made between localities similarly situated. 7. That the effect of the prevailing policy of railroad management is, by an elaborate system of secret special rates, rebates, drawbacks and concessions, to foster mon- opoly, to enrich favored shippers, and to prevent free competition in many lines of trade in which the item of transportation is an important factor. 8. That such favoritism and secrecy introduce an ele- ment of uncertainty into legitimate business that greatly retards the development of our industries and commerce. 9. That the secret cutting of rates and the sudden fluctuations that constantly take place are demoralizing to all business except that of a purely speculative character, and frequently occasion great injustice and heavy losses. 10. That, in the absence of national and uniform legis- lation, the railroads are able by various devices to avoid their responsibility as carriers, especially on shipments over more than one road, or from one State to another, and that shippers find great difficulty in recovering dam- ages for the loss of property or for injury therefor. 11. That railroads refuse to be bound by their own contracts, and arbitrarily collect large sums in the shape Railroad Abuses. 133 of overcharges in addition to the rates agreed upon at the time of shipment. 12. That railroads often refuse to recognize or to be responsible for the acts of dishonest agents acting under their authority. 13. That the common law fails to afford a remedy for such grievances, and that in cases of dispute the shipper is compelled to submit to the decision of the railroad manager or pool commissioner, or run the risk of incur- ring further losses by greater discriminations. 14. That the differences, in the classifications in use in vai'ious parts of the country, and sometimes for shipments over the same roads in different directions, are a fruitful source of misunderstandings, and are often made a means of extortion, 15. That a privileged class is created by the granting of passes, and that the cost of the passenger service is largely increased by the extent of this abuse. 16. That the capitalization and bonded indebtedness of the roads largely exceed the actual cost of their con- struction or their present value, and that unreasonable rates are charged in the effort to pay dividends on watered stock and interest on bonds improperly issued. 17. That railroad corporations have improperly engaged in lines of business entirelj' distinct from that of trans- portation, and that undue advantages have been afforded to business enterprises where railroad officials were inter- ested. 18. That the management of the railroad business is extravagant and wasteful, and that a needless tax is im- posed upon the shipping and traveling public by the neces- sary expenditure of large sums in the maintenance of a costly force of agents engaged in a reckless strife for competitive business. 134 The Railroad Question. Under the operation of the Interstate Commerce Law some of these evils have, so far at least as interstate com- merce is concerned, disappeared, and others have been considerably mitigated. It cannot be expected, however, ' that a bad system of railroad management, to the devel- opment of which the ingenuity of railroad managers has contributed for two generations, could be entirely reformed in a few years. It is a comparatively easy task for shrewd and unscrupulous men, assisted by able counsel and unlimited wealth, to evade the spirit of the law and to obey its letter, or to violate even both its letter and spirit, and escape punishment by making it impossible for the State to obtain proof of their guilt. It is a humiliating spectacle to see the self -debased railroad ofHcials confessing their own guilt by refusing to testify before the Interstate Commerce Commission on the ground that thej' would thereby criminate themselves. Congress should have sufficient respect for this commis- sion and for itself to provide a way to punish such recusant witnesses who are willing to degrade themselves in so base a manner. Whether.the law will eventually be respected by all depends upon the vigilance and courage of the people. That our railroad legislation is not j'et perfect even its friends will admit; and as under a free government the demand of an enlightened public opinion is the first step toward the enactment of a law, it behooves the intelligent citizen to study the various railroad problems and to then exert his influence toward bringing about such a solution of them as justice and wisdom demand. In discussing the various evils of railroad management, the author will commence with and dwell more particularly upon those abuses which maybe said to be the cardinal ones, Railroad Abuses. 135 viz. , discrimination, extortion, combinations and stock and bond inflation. When these are once effectually eradi- cated, other abuses of railroad management which have been the subject of public complaint will not long survive them. One of the strongest arguments that could be adduced by the founders of the American Constitution in favor of the establishment of a more perfect union was that the inequality of taxes placed upon commerce by the various States was a serious obstacle to its free development. Much as the individual States dislike to give up a part of their sovereignty to a central or national power, the demand for a common and uniform system of commercial taxation was so great that they were forced to yield and ratify the new Constitution. Our forefathers thus con- sidered it a dangerous policy to permit a single State to lay any imposts upon the commercial commodities which passed over its borders. They were rightly of the opin- ion that industrial and commercial liberty was as essential to the welfare of the nation as political freedom and that therefore interstate commerce should not be hemmed in or controlled within State lines, but that the power to regulate it should be lodged in the supreme legislative authority of the nation, the Congress of the United States. For over half a century Congress alone exercised the power thus conferred upon it by the people. After the introduction of railroads, however, their managers grad- ually assumed the right to regulate the commerce of the country in their own interest through the adoption of arbitrary freight tariffs. Freight fharges are practically a tax which follows the commoditj' from the producer to the consumer. An arbitrary and unjust charge is there- fore an arbitrary and unjust tax imposed upon the public 136 The Railroad Question. without its consent. It is a -well-established rule of society that laws should be equitable and just to all citizens. Congress never assumed the role of Providence by attempting to equalize those differences among individ- uals which superior intellect, greater industry and a thousand other uncontrollable forces have ever created and will ever create. It has been reserved to railroad managers to demonstrate to the public that a power has been allowed to grow up which has assumed the right to counteract the dispensations of Providence, to enrich the slothful, to impoverish the industrious, to curtail the profits of remunerative industries and revive by bounties those languishing for want of vitality, to humble proud and self-reliant marts of trade and to build up cities in the desert. It will scarcely be claimed even by railroad man- agers that their policy of thus arbitrarily regulating com- merce originated in philanthropic motives. They are forced to admit that it gre-w out of an attempt to increase the income of railroads by the extension of favors to naturally weak enterprises and to recoup by overtaxing stronger ones. The practical operation of this system soon showed to railroad managers their power and to the patrons of rail- roads their dependence upon those who dispensed railroad favors. The former soon discovered that their power might be used to further their private interests as well as those of the roads, and unscrupulous patrons were not slow to offer considerations for favors which they coveted. When such favors were once granted by the officials of one road, rival roads would grant similar ones in self- protection. Thus this vicious system grew until the pay- ment of a regular tariff rate was rather the exception than the rule, and special rates became an indispensable con- dition of success in business. RailraaiJ Abuses. 137 We may distinguish three classes of railroad discrimi- nations, viz. . 1. Those which aflfect certain individuals. 2. Those which affect certain localities. 3. Those which affect certain branches of business. Discrimination between individuals is the most objec- tionable, because it is the most demoralizing of all. Where such discrimination obtains, every shipper is in the power of the railroad corporation. It makes of independent citizens of a free country fawning parasites and obsequious sycophants who accept favors from railroad managers and in return do their bidding, however humiliating this may be. The shipper, realizing that the manager's dis. pleasure or good will toward him finds practical expression in his daily freight bills, finally loses, like the serf, all self-esteem in his efforts to propitiate an overbearing master. He is intimidated to such an extent that he never speaks openly of existing abuses, lest he lose the special rates which have been given him, or, if he is not a participant of such privileges, lest additional favors be given to his rivals and they be thus enabled to crush him. Intimidation of shippers prevailed to such an extent pre- vious to the enactment of the Interstate Commerce Law that when, in 1879, the special committee on railroads appointed hy the legislature of New York invited all per- sons having grievances against railroads to come before them to testify, not one shipper testified voluntarily. On the contrary, they all insisted upon being subpcenaed, hoping that the railroad managers would not hold them responsible for any statement which they might he com- pelled to make under such circumstances. The report of that committee stated that the number of special contracts in force within the period of one year on the New York 138 The Railroad Question. Central and Hudson Kiver Railroad alone was estimated by the railroad people at 6,000. Mr. Depew, when he made the statement: "In territories comparatively new, and with little responsibility on the part of the managers to distant owners, they became in many cases very arbitrary and exercised favoritism and discriminations, which led to popular indignation and legislation," had probably not heard of this. The committee's report further stated that these special rates conformed to no system and varied without rule, that every application for a special rate was judged by itself and with reference to its own peculiar circumstances, and that it depended upon the judgment, or rather caprice, of the officer to whom the application was made, whether and to what extent a special rate should be granted. The reductions made to privileged merchants often amounted to more than what would be a fair profit to the dealer on the commodities shipped. The privileged dealer was thus efiabled to undersell his rivals and event- ually force them out of business or into bankruptcy. It was not at all uncommon for railroad companies to allow discounts amounting to 50, 60, 70 and even 80 per cent, of the regular rates. The New York Central gave a Utica dry-goods merchant a special rate of 9 cents while the regular rate was 33 cents on first-class freights. The low- est special rate granted at Syracuse was as low as 20 per cent, of the regular tariff rate on first-class goods. David Dows & Company and Jesse Hoyt & Company, by means of a grain rate from 2\ to 5 cents lower than those given to other firms, were enabled to control in the winter of 1877 the grain trade of New York. The railroad even extended its fostering aid to A. T. Stewart & Co., giv- ing them a special rate ' ' to build up and develop their business." The testimony given by Mr. Goodman, assist- Railroad Abuses. 139 ant general freight agent of the New York Central, in reference to the principle by which he was gnided in grant- ing special rates, is of sufficient interest to be given a place here: Question. You made the rate for A. T. Stewart & Company? Answer. Yes, sir. Q. Was that to build up and develop their business? A. Yes, sir. Q. That was the object? A. That was one of the objects. Q. January 11th, 1879? A. Yes, sir. Q. You thought that business was not yet sufficiently built up and developed? A. No, sir; not the manufact- uring part of it. Q. How long had the factories of A. T. Stewart & Com- pany been in existence? A. The one at Duchess Junc- tion about three years, I think; it isn't completed yet. Q. And they were languishing and suffering? A. To a great extent; yes, sir. Q. And you acted as a fostering mother to A. T. Stew- art & Company to build it up? A. Yes, sir; I added my mite to develop their traffic ; we wanted to carry the freight; boats might have carried it in the summer. Q. Do j'ou know anything of G. C. Buell & Company? A. Yes, sir. Q. You wanted to develop their business? A. Yes, sir; they are at Rochester — wholesale dealers. Q. Do you know H. S. Ballou, of Rochester? A. I do not. Q. He seems to be a grocer there? A. A small con- cern, perhaps. Q. Small concerns are not worth developing, according to your opinion? A. Our tariff rates are low enough for them at Rochester. Q. That is to say, a small concern ought to paj' 40, 30, 25 and 20, as against a large concern, 13 ; that is your rule? A. Well, if he is a grocer, most of his business is fourth-class freight. 140 Thr Railroad Question. Q. And ho ought to pay 20, as against 13? A. Yes, sir. Q. That small man has no right to develop? A. He has the same chance that the other man has. Q. At 20 against 13? A. Oh, yes. Q. Do you call that the same chance? A. About the same chance, yes, sir. Q. You consider it the same chance? A. Yes, sir. Many reasons were assigned by railroad men in justifi- cation of their practices. It was claimed that special rates were given to regular shippers, but it has been proved that not all regular shippers had special rates, and that persons who made only single shipments were often for- tunate enough to obtain special favors. It was further claimed that special rates were given to those who, start- ing out new in business or developing new enterprises, needed aid and encouragement. But it was shown on the other hand that the aid and encouragement thus given to some bankrupted others, and in the end deprived the companies of more business than their policy of discrimi- nation brought them. Railroad managers also argued that they could afford to make lower rates on large ship- ments than on small ones for the same reasons that the wholesale merchant can sell his goods for less than the retailer. But while this may be a good reason why rates on car-load shipments should be lower than rates on ship- ments in less than car-load lots, it is certainly no good reason why five car-loads belonging to one shipper should be transported the same distance for less than five car- loads belonging to five shippers. In the case of local shipments the car is scarcely ever loaded to its full capacity; one shipment after another is taken from it as the train moves along, and the car perhaps reaches its final destination nearly, if not entirely, empty. The ter- Railroad Abuses. 141 minal charges are here also largelj' increased, and it is but just that the shipper should pay the additional cost of carrying and handling the goods. The case is entirely different when the railroad company carries five full car- loads from one station of its line to another. Whether they have been loaded by one or five persons, whether they are consigned to one or five persons, matters little to the railroad company. It merely transports the cars, and in either case its responsibility and its services are the same. The car-load must therefore be accepted and is now generally accepted by the best railroad men as the unit of wholesale shipments, and any discrimination made in favor of large wholesale shippers is arbitrary and unjust. In the shipment of some commodities, such as wheat, flour and coal, a small advantage in rates is sufB- cient to enable the favored shipper to "freeze out" all competitors. It is certainly not to the interest of any railroad company to pursue such a policy; for by driving small establishments out of the business it encourages monopoly, which almost invariably enhances prices and decreases consumption. The railroad thus suffers in com- mon with the public the consequences of its short-sighted policy. That even railroad managers realize that these practices cannot be defended upon any principle of justice or equity is apparent from the fact that one of the never- varying conditions of special rates is that they be kept secret. A specimen of a special rate agreement which was placed before the New York investigating committee is here presented to the reader: ' ' This agreement, made and entered into this eigh- teenth day of March, 1878, by and between the New York Central and Hudson Eiver Kailroad Company, party of the first part, and Schoellkopf & Mathews, of the city of Buffalo, N. Y., party of the second part; 142 The Railroad Question. ' ' Witnesseth, That said party of the first part hath prom- ised and agreed, and by these presents does promise and agree to transport wheat from the elevator in Buffalo, reached directly by said first party's tracks, except at such mills as time said tracks may be obstructed by snow or ice, to the which said second party may erect or operate at Niagara Falls, N. Y. , at and for the rate of one and a quarter cents per bushel. ' ' And further, that said first party shall and will at all times give, grant and allow to said second parties- as low rate of transportation on all property shipped by them from their said mills at Niagara Falls, and as favorable facilities and accommodation in all respects as are afforded by the party of the first part to the millers of Buffalo and Black Rock. And also that the said party of the first part will transport for said second party all of their east- bound New York freight at and for the price or rate of forty-seven per cent, of the current all-rail through rates, via the route of party of the first part, from Chicago to New York, at the times of shipment, adding thereto three cents per barrel for flour and one and one-half cents per hundred pounds for mill feed or grain, as a terminal charge, to provide for the incidental expenses attending local transportation. ' ' And will transport their freight to Boston and all points in New England, taking Boston rates at the same rate as to New York, with ten cents per barrel added for flour and five cents per hundred pounds added for mill feed or grain. ' ' Provided, however, and this agreement is made upon the express understanding and consideration, that said second party shall regard and treat this agreement as con- fidential, and will use all reasonable precaution to keep the same secret. ' ' And upon condition also that said second party shall ship by the first party's road all the product from their mill at Niagara Falls destined to all points in New York, Pennsylvania and New England, reached by said first party, directly or by connections with other routes. ' ' And this agreement shall be and remain in force for Railroad Abuses. 143 the term of five years from and following the first day of September, 1878, after which period it may be terminated by sixty days' written notice from either party, ' ' In witness whereof, the parties hereto have signed these presents the day and year first above written. "N.'y. C. &H. K. R. E. Co.," By J. H. RdTLER, ' ' General Traffic Manager. " ScHOELLKOPP & Mathews." It will be noticed that this agreement was based upon the expressed condition that Schoellkopf & Mathews treat it as "confidential," and use all reasonable precau- tion to keep it secret. It is difficult to account for this strong injunction of secrecy except upon the" assumption that the managers of the road, conscious of the great wrong which they inflicted upon the body of the people by their discriminations, hoped to escape public criticismby adopt- ing a policy of secret dealing. Much as special rates were sought after, but few shippers to whom they had been granted were contented with their lot, for none was confid- ent that his rivals did not have better rates than himself. Discriminations between localities had their origin in the natural desire of competing roads to increase their business at the expense of their rivals. When two or more railroads touched the same point each would attempt to secure the largest possible share of the through busi- ness by holding out every possible inducement in rates to the shippers of that place. Indeed, the freight rates at competitive points were often so low that railroad man- agers found themselves placed in a rather unpleasant dilemma. They either had to admit that the rates charged by them at non-competitive places were exorbitant or that they were carrying the freights of competitive points at a loss and were thus squandering the money of their 144 The Railroad Question. stockholders. They preferred as a rule to admit that they were doing competitive business at a loss, but asserted that, inasmuch as they were compelled to run their trains, they could better afford to do competitive business tem- porarily at a loss than not to do it at all. The same logic might with equal propriety be employed by the grocer. To draw to him distant customers, he might offer to sell to them at cost or even at a loss ; and then, to recuperate, he might advance the prices of his goods for his regular cus- tomers. If there is any difference between the grocer and the railroad company, it lies in the fact that the former's old customers would soon find relief at a rival store, while the patrons of the railroad at non-competitive points are like the traveler in the hands of a highwayman, without immediate redress. The railway company which discriminates between competitive and non-competitive points forgets that its line is a common highway for all points tributary to it; that all have equal rights, and that the only differences in tariff which the principles of the common law permit are those which arise from a differ- ence of. service and cost. All other differences that rail- road companies may make are unjust discriminations in violation of their charter and expose them to a forfeiture of the franchises conferred upon them. The nature and extent of the discrimination practiced between different places are often such that no interest of the company can possibly be subserved by them, and the conclusion is forced upon us that the advantages granted by railroad managers to certain places are designed to serve chiefly personal and selfish interests. The great fortunes amassed in a brief period of time by railroad managers can in almost every case be traced to stock, real estate, commercial and other speculations directly or indi- Railroad Abuses. 145 rt'ctly connected with railroad construction or manage- ment. And where other than personal interest cannot be shown, this is the only basis upon which the many appar- ent absurdities of railroad discrimination can be harmon- ized. It is claimed by railroad men that transportation by water is a regulator of railway rates which they must respect. It is contended, for instance, that, although the cities situated on our large lakes enjoy superior com- mercial advantages which are mainly due to their having at their disposal water communication with the Atlantic Ocean, inland towns have no cause to complain against the railroads for not equalizing those differences which nature has largely created. It might be more difficult to meet this argument if, owing to peculiar combinations, these water rates were not made to extend their influence to almost every inland city north, east and south in the Union, and if those cities were not given much lower rates than hundreds of places much nearer the lakes. The teamster who, half a century ago, found it impossible to compete with the canal, river or lake boats, simply surren- dered the field to them and confined his operations to such a territory as could give him assurance of a profitable business. Let the railroads do likewise. No company has a right to desti-oy a rival route, water or rail, by adopting special tariffs for competing points. There are at points accessible to water transportation certain freights requiring speedy carriage which will go to the railroads at profitable rates, but the heavier freights, as coal, lumber and even certain kinds of grain, should go to the carrier by water if he can afford to transport them at lower cost. There have been but few legislative investigations of railroad abuses in this country, but the disclosures which 146 The Railroad Question. they have made to the public are astounding. The most noteworthy of these were made by the Hepburn com- mittee, of New Yorkf to which reference has already been made. It is difficult to understand how a free and enlightened community could so long and so patiently^ bear railroad despotism. Individual discrimination might, under the veil of secrecy, long escape notice, but that a system of open and widespread discrimination affecting every non-competitive and even many a competitive point-in the State, doing visible and irreparable injury to thousands of shippers, and infringing upon the rights of millions, should long be borne by a free and enlightened people, is a strange phenomenon of democratic endurance. It would lead us too far from our subject to review in detail the many and glaring instances of local discrimina- tion which the report enumerates. A few will suffice to show their scope and nature. William "W. Mack, of Rochester, a manufacturer of edged tools, testified that, in order to save fourteen cents per hundredweight on his freights to Cincinnati, he shipped his goods to New York and had them shipped from there to their destination, via Rochester; and that he availed himself of the same roundabout route for his St. Louis shipments, and saved thereby eighteen' cents per hundredweight. In both of these cases the railroad company carried the goods 700 miles farther than the direct distance for a less charge. Port Jervis millers had their grain shipped from the West to Newburgh, a point fifty miles to the east of them, and then had it returned to Port Jervis on the same line, at a less rate than that charged for a direct shipment. The grain rates from Chicago to Pittsburgh were 25 cents per hundred in March, 1878, and only 15 cents from Chicago to New York. Railroad Abuses. 147 Flour was earned from Milwaukee to New York for 20 cents, while the rate from Rochester to New York was 30 cents at the same time. It was also carried from East St. Louis to Troy at the same rate as from Rochester to Troy. The rate on_ butter from St. Law- rence County, N. Y. , to Boston, over the Ogdensburg and Lake Champlain and Vermont Central, was 60 cents per hundred ; from the nearer couhty of Franklin, 70 cents ; it then continued to increase as the distance decreased, until it reached 90 cents at St. Albans, Vermont. Soap shipped by Babbit & Co. , of New York, to Grouse & Co. , of Syracuse, paid 8 cents per box when the freight was paid in Syi'acuse, but 12 cents per box when paid by the shipper in New York. It cannot even be Said that New York fared worse than any of her sister States. There is hardly a business man in any community in the United States who cannot cite many cases of similar discrimination. Hundreds of well au- thenticated cases have been reported from every part of the countrj'. A few striking ones maybe given space here: The Illinois Central Company hauled cotton from Mem- phis to New Orleans, a distance of 450 miles, at $1.00 a bale, while the rate from Winona, Miss. , to New Orleans, about two-thirds of the distance, was $3.25 abale. The same company charged for fourth-class freight from Chicago to Kankakee, a distance of 56 miles, 16 cents per hundred, and only 10 cents to Mattoon, 116 miles farther. The rate from New York to Ogden was $4.65 per hundred, and only $2.25 per hundred from New York to San Fran- cisco. The car-load rate on the Northern Pacific was $200 from New York to Portland and just twice as much to a number of points from 100 to 125 miles east of Portland. The Chicago, Burlington and Quincy hauled stock from 148 ?7«e Railroad Question. points beyond the Missouri Eiver to Chicago for $30 per car-load, while it exacted $70 per car in Southwestern Iowa for a much shorter haul. To what extent local discrimination has been carried by railroad companies is well illustrated" by the following in- cident: A nurseryman residing at Atlantic, Iowa, a sta- tion on the Chicago, Rock Island and Pacific Railroad, 60 miles east of Council , Bluffs, bought a car-load of grape- vines at Fredonia, New York. Finding that the through rate from Fredonia to Council Bluffs, plus the local rate from the latter place to Atlantic, was less than the rate for the direct shipment from Fredonia to Atlantic, he caused the car to be consigned to Council Bluffs, intending to have it thence hauled back to Atlantic. Being short of stock at the time the train containing his car passed through his town on it,; way to Council Bluffs, the consignee prevailed upon the station agent to set out his car. In due time he received a request from the general office of the railroad to pay an amount equal to the rate per car-load from Council Bluffs to Atlantic. The request was promptly complied with Ijy the appreciative nursery- man, who after all had been saved an annoying delay by the courtesy of the company's agent. An infinite number of similar discriminations might be cited. They all show the same violation of the funda- mental principles of justice and equity, the same despot- ical assertion of the power of the railroads to regulate the commerce of the country as the caprice or selfish interests of their managers might direct. Discriminations between commodities, or, as they might also be called, discriminations in classification, are prob- ' ably the most common of unjust railroad practices. For the purpose of establishing as near as may be uniform Railroad Abuses. 149 rules in all matters pertaining to rates, the ^'arious roads operating in a certain territory usually form traffic asso- ciations. The general freight agents of the roads that are members of the association in turn form a select body known as the rate committee. These committees of freight agents have for more than twenty years consti- tuted the supreme authority in all matters pertaining to freight classification. The trunk line classification recog- nizes six regular and two special classes, and every arti- cle known to commerce ia placed in one of these classes. One whom Providence has not favored with the myster- ious wisdom of a general freight agent might suppose ■ that considerations of bulk, weight, insurance and simi- lar factors formed a basis of railroad classification. Noth- ing, however, is farther from the truth. Freight charges, when permitted to be fixed by railroad companies, are invariably such as the traffic will bear, and freight classi- fications are arranged on this principle, provided compe- tition by water, rail or other land transportation does not demand a modification. It is, as a rule, not to the advan- tage of " railroad to entirely starve out any commercial or* industrial concern along its line. Hence tariffs are scarcelj' ever made entirely prohibitory. Kailroads pro- ceed here upon the principle of the robber knight of med- iiiival times, who simplj' plundered the wayfaring trader to such an extent as to reduce his profits to a minimum. He never stripped him, for ]Sj doing so he would have prevented his return* and would have destroyed his own source of revenufe. In like manner a railroad will never annihilate any weak branch of business along its line, nor will it, if it is in its power, permit any business to pros- per without paying to it heavy tributes out of its profits. FiVerv commodity is therefore made to pay a ti-ansporta- 150 The Railroad Question. tion tax based chiefly on its value and the profit which it yields, and all classifications are prepared with this object in view. The protection which, through exceptionally low rates, is extended by the railroad companies to certain indus- tries, may not be objectionable per se, but the question arises whether the railroad companies or the people should exercise the right to determine when and where such protection is necessary. Moreover, to tax one branch of commerce for the benefits bestowed upon another is a practice of extremely doubtful propriety, and the power to do so should certainly never be conferred upon a private corporation. When customs laws are pro- _ posed in Congress ample opportunity is given to the rep- resentatives of the various industries of the country to be heard upon the subject. No hasty step is taken. Mem- bers of Congress have every opportunity to ascertain the sentiment of their constituents, through the public press, petitions and private correspondence. The subject is dis- cussed in all its phases, both in the committee-rooms and upon the floors of both houses of Congress. Every detail is fully considered, and many compromises are often necessary to secure for a t)ill the support of the majority. When it finally passes it represents the will of the people, or at least the will of their legal representa- tives, who may be expected to know their wants and are accountable to them for their acts. Freight classifica- tions, however, while they are fu^ly as far-reaching as customs laws, are made by a few freight agents meeting in secret session, listening to no advice and acknowledg- ing no higher authority. It is claimed by the Railroad men that it is to the inter- uj;t of railroad companies to do justice to all, and that Railroad Abuses. 151 the best classification for the largest number of people is also the best for the roads. If this be true, it is difficult to see why railroads should fail to consult their patrons in the arrangement of their freight classifications. Intel- ligent shippers may certainly be supposed to know as well as the railroad companies what classification is to their common interest. Railroad managers are naturally des- potical. They do not wish and do not tolerate any out- side interference with what they obstinately term their private business. Even if the general policy of the com- panies designed the greatest good to the greatest number, the opportunities and temptations of their agents to pur- sue selfish ends or take advantage of individuals in the preparation or application of their tariffs are such th^t in the practical execution the evil will always outweigh the good. It is not within the scope of the present inquiry to re- view in detail the various classifications in force, or to point out the unjust features. The author will confine himself to showing by a few characteristic examples that the power now in the hands of the railroad companies to classify the various commodities of commerce for the pur- pose of rating is greatly abused and is a potent means of railroad extortion. And that it may not be charged that abuses have been cited which are a thing of the past, the examples will chiefiy be taken from cases which have come before the Interstate Commission for adjudication. A complaint was filed with the commission in 1887 by T. J. Reynqlds against the Western New York and Penn- sylvania Railroad Company, from which it appeared that that company charged a greater price for the transporta- tion of railroad ties from points in the State of Pennsyl- vania to points in the State of New York than was 152 The Railroad Question. charged at the same time for the transportation of lumber between the same points. The commission held that this was a case of unjustifiable discrimination and ordered the company to place railroad ties in the sanie class with other rough lumber. Many Western roads for years have been guilty of the same discrimination. The reasons for such a policy are obvious. A high tariff on railroad ties pre- vents their being shipped, depreciates their market price at home, to the sole benefit of the discriminating .com- pany, which is thus enabled to buy ties at a low price. Prohibitory rates on ties and rails are also often main- tained by railroad companies to either delay or render more costly the construction of new lines which threaten to become their competitors. The Union Pacific Kailroad Company several years ago even went so far as to make prohibitory rates on steel rails intended for the construc- tion of a road which promised to become a competitor of one of its connecting lines. From another case decided by the Interstate Commerce Commission it appeared that the Lake Shore and Michi- gan Southern Railway Company charged for blocks intended for wagon-hubs, and upon which only so much labor had been expended as was necessary to put them in condition, a higher rate than for lumber, claiming that such blocks were unfinished wagon material and were - therefore, as articles of manufacture, subject to higher charges than raw material. The commission justly held that these blocks were as much to be regarded as raw material as the boards from which wagon-boxes are made. In the classification of the Southern Railway and Steam- ship Association pearline was placed in the fourth class, with a rate of 73 cents per hundred pounds, and common soap in the sixth class, with a ratj of 49 cents per hundred pounds. Railroad Abuses. 153 This latter article, when shipped by large manufacturers, enjoyed besides a special rate of 33 cents per hundred- weight. Pearl ine and soap are competitive; there is no appreciable difference between them as regards the cost of transportation ; but one commands a higher price in the market than the other, and upon this fact solely did the railroad company base its alleged right to levy upon pearline a transportation tax 120 per cent, in excess of that levied upon soap, though the service rendered by the company was the same in either case. The commission held that the discrimination made by. the "special rate " of the Southern Railway and Steamship Association be- tween pearline and common soap was unjust, and ordered that it be discontinued and that, with common soap in the sixth class, pearline be placed in the fifth. For years the rate from Indianapolis to New York was the same for corn as for its direct products, such as ground corn, cracked com, corn meal, hominy and corn feed. Such a tariff made it possible for Western mills to compete with similar mills that had been established in the East, since a discrimination of 5 per cent, was sufiSc- lent to absorb three or four times the profits of any West- ern mill. It was shown by the evidence produced that the actual cost of transportation was substantially the same for direct corn products as for the raw com. The only defense which the railroad company could make for this discrimination was that in the carriage of raw corn they had to meet lake competition. The weakness of this argument will be perceived when it is remembered that Indianapolis is 154 miles from the nearest lake-ship- ping point. There is but little doubt that this discrimi- nation was made bj' the railroad eompanj' because it was to its interest to haul the raw corn from the West to the 154 The Railroad Question. » East and to return it in altered form. Kailroads care, as a rule, little for a waste of force, if such waste is to their own advantage. In another case brought before the commission in 1889 it was shown that the "Official Classification" placed common soap in carload lots in Class V, while such arti- cles as coffee, pickles, salted and smoked fish in boxes or packages, rice, starch in barrels or boxes, sugar, cere- a line and cracked wheat are placed in Class VI. The chief reply of. the railroad companies to this complaint was 'that soap was justly placed in Class V because the components from which it is in part made stood in Class V. In another case it was shown that one kind of soap was burdened with a higher transportation tax than another, irrespective even of cost, because one had been advertised as toilet and the other as laundry soap. The principle of charging what the traffic will bear is well illustrated by the relative rates on patent medicines and ale aijd beer, as maintained by the Official Classifica- tion. In a complaint made by a prominent manufacturer of proprietary medicines against the New York Central and other roads, it was shown that the complainant's products were shipped at owner's risk, and that they were in bulk and intrinsic value similar to ale and beer, but that in spite of these analogies the former were rated as first- class and the latter as third-class goods, simply because they retailed at a higher price. Another unwarrantable discrimination is that in favor of live stock and against dressed beef. While Mr. Pink, the commissioner of the Trunk Line Pool, himself admit ted that the cost of carrying dressed beef from Chicago to Railroad Abuses. 155 New York was only 6:^ cents per 100 pounds in excess of the cost of hauling live stock, the trunk lines maintained on dressed beef a rate 75 per cent, higher than that on live cattle. The railroad companies asserted that this was due to those people in the East whose living depended on the live-stock interest. The railroads have in this assumed a paternalism which would not be tolerated even in the Grovemment, To protect the East^ railroads will not permit the West to engage in new industries. The position which the Interstate Commerce Commis- sion has assumed in interpreting the rights of shippers under the law which railroad companies are bound to respect in the preparation of their tariff sheets and classi- fications cannot but be most gratifying to the people. In a decision relating to the classification and rates for car- loads and less than car-loads, filed March 14, 1890, the commission laid down the following rules for the gHidance of railroad companies: " 1 . Classification of freight for transportation purposes is in terms recognized by the act to regulate commerce, and is therefore lawful. It is also a valuable convenience both to shippers and carriers. "2. A classification of freight designating different classes for car-load quantities and for less than car-load quantities for transportation at a lower rate in car-loads than in less than car-loads is not in contravention of the act to regulate commerce. The circumstances and con- ditions of the transportation in respect to the work done by the carrier and the revenue earned are dissimilar, and may justify a reasonable difference in rate. The public •interests are subserved by car-load classification of prop- erty that, on account of the volume transported to reach markets or supply the demands of trade throughout the country, legitimately or usually moves in such quantities. ' ' 3. Carriers are not at liberty to classify property as a basis of transportation rates and impose charges for its 156 The Railroad Question. carriage with exclusive regard to their own interests, but they must respect the interests of those who may have occasion to, employ their services, and conform their charges to the rules of relative equality and justice which the act prescribes. ' ' 4. Cost of service is an important element in fixing transportation charges and entitled to fair consideration, but is not alone controlling nor so applied in practice by carriers, and the value of the service to the property car- ried is an essential factor to be recognised in connection with other considerations. The public interests are not to be subordinated to those of carriers, and require proper regard for the value of the service in the apportion- ment of all charges upon traffic. "5. A difference in rates upon car-loads and less than car-loads of the same merchandise, between the same points of carriage, so wide as to be destructive to compe- tition between large and small dealers, especially upon articles of general and necessary use, and which, under existing conditions of trade furnish a large volume of business to carriers, is unjust and violates the provision's and principles of the act. "6. A diflference in rate for a solid car-load of one kind of freight from one consignor to one consignee, and a car- load quantity from the same^ point of shipment to the same destination, consisting of like freight or freight of like character, from more than one consignor to one con- signee or from one consignor to more than one consignee, is not justified by the diflference in cost of handling. "7. Under the official classification the articles known in trade as grocery articles are so classified as to discriminate unjustly in rates between car-loads and less than car-loads upon many articles, and a revision of the classification and rates to correct unjust differences and give these respective modes of shipment more relatively reasonable rates is necessary and is so ordered. " The efforts which the commission has made to bring about a uniform classification throughout the country are in the right direction, while the results of its labor are not yet satisfactory. Railroad Abuses. 157 In their fifth annual report, the Commissioners, after giving an account of their efforts and the shufHing and double-dealing of the railroad companies with them upon this matter of uniform classification, said: ' ' Its conviction remains unchanged that the necessi- ties of commerce require that the existing classifications be consolidated, and that this result should be accom- plished as speedily as may be found practicable ; and it does not feel justified in asking for the further efforts of the carriers the same measure of indulgence which from time to time it has heretofore suggested should be ex- tended to them, and which was thought to be required in the public interest. ' ' The commission can not but think that if legislation to that end be enacted by Congress the carriers will speed- ily consummate the reform already^begun in this direction. It is therefore recommended that an act be passed requir- ing the adoption within one year from the date of its pass- age of a uniform classification of freight by all the carriers, subject to the act to regulate commerce, and providing that if the same be not adopted within the time limited, either this commission or some other public authority be required to adopt and enforce a uniform classification. " The present confusion which exists in the classifica- tion and rates of the seventeen hundred railroad organ- izations of the country makes it difficult for the commission to do justice to all interests and localities. With the adoption of a uniform classification it is to be hoped that in time manj' of the present inequalities will be adjusted, especially if an intelligent public sentiment upon the subject of railroad regulation is maintained. A prominent railroad manager in the East, whose devotion to corporate interest is only equaled by his political am- bition, has recently made repeated efforts to convince' the people that railroad abuses are things of the past and that, if any such abuses still linger in isolated districts, 158 The Railroad Question. they are simply unavoidable exceptions to the rr.le which will soon have to yield to the general spirit of fairness and amity for which, in his opinion, the railroads have of late been distinguished. He reasons that the law has fulfilled its mission, that the railroads have reformed, and that it now behooves the people to relent and to extend to the much persecuted corporations the hand of friend- ship and good will. The postprandial eloquence of this gentleman has often suavely intimated that the repeal of the Interstate Commerce Act would be the most oppor- tune recognition of restored confidence. Still bolder champions of the railroad cause do not hes- itate to demand the repeal of the law. It is not likely that the sophistry of jailroad hirelings will triumph over the practical logic of an intelligent public. No law, be it ever so wise, can in the space of a few years correct all the abuses which -half a century of unbridled railroad doniination has developed. Yet, since both the friends and, the enemies of the law agree that it has been par- tially successful in its operation, it should Ipe continued ^nd improved to keep it in harmony with new condi- tions and a progressive public sentiment. It is claimed by railroad managers that the adoption of a uniform classification will remove the only vestige of discrimina- tion still left. This Is not true, for by fax the largest number of complaints that have recently been brought before the Interstate Commerce Commission charged per- sonal and local discrimination independent of any ques- tion of classification. It is shown by the reports of the commission that dis- criminations are still practiced by various companies, that annual passes are still illegally issued to bribe or appease men of influence, that discounts are still given to favor Kailroad Abuses. 159 shippers under various pretexts, that some large rail- road centers still enjoy more favorable rates than smaller towns, and that the long and short haul clause of the Interstate Commerce Act Is still violated by railroad com- panies. There ar6 besides these scores of other devices in vogue among railroad managers to subvert the prin- ciples of the common law. No doubt discriminations are now much less frequent, and are possibly th