IH.
The Internal Commerce
of the
United States
And the Law of Its Development.
ADDRESS
OF
Hon. JOSEPH NlAtMO, jr., LL., D.
Before the National Statistical Association at the
Columbian University, Washington, D. C.,
JUNE 16, 1894.
Resolution Adopted by the National Statisti¬
cal Association, at Washington, D. C., June
16th, 1894.
Whereas, the National Statistical Association has
this, evening listened to an address of great import¬
ance on the subject of the Internal Commerce of the
United States by the Hon. Joseph Nimmo, jr., LL. D.,
who has given to that subject many years of official
and private investigation and study.
Therefore, be it resolved, that this Association
hereby orders the publication of Mr. Nimmo's ad¬
dress, and the appointment of a committee of three
to present the same to Congress through our fellow
Honorary Member, Hon. Wm. P. Frye, Senator of
tlie United States, who is hereby requested to refei¬
lt to the Senate Committee on Commerce, and through
our President, Hon. Amos J. Cummings, Member
of Congress who is hereby requested to refer it to
the Committee on Interstate and Foreign Commerce
of the House of Representatives.
The committee appointed under the above resolu¬
tion consisted of
HON. WM. LAWRENCE, of Ohio,
1st Vice-President and Chairman of Committee.
CHAS. S. HILL, National Secretary.
DR. J. M. HINES.
THE NATIONAL
STATISTICAL JOURNAL.
Volume i. JULY, 1894. Part 2.
The Internal Commerce of the United States.
By Joseph Nimmo, jr., L.L., D.
Mr. Chairman :
In addressing this association in regard to the
statistics of the Internal Commerce of the United
States, I shall be guided by what appears to me to
be the nature and scope of its work.
The word statist, originally a synonym for states¬
man, has by popular usage become the designation
of one engaged in à mere incident, of statecraft,viz. :
the compilation and tabulation of figures which re -
late to public questions. But of late years there has
been a tendency to restore the word statist to its
original significance through the undefined stages
of that progression which is expressed in the words
statist, economist, publicist and statesman. In the
several countries of Europe statisticians are among
the most conspicuous debaters of political questions.
The fact that the personnel of this association em¬
braces men of large practical experience in the con¬
sideration of public questions, seems to indicate that
its discussions will be along the line of the restora¬
tion of the word statist to its original meaning.
The Constitution of the National Statistical Asso¬
ciation clearly implies that its work lies mainly in
the broad domain of criticism. It is, of course, im¬
possible for the busy men who compose its member¬
ship to go much into the actual work of revising and
verifying figures. The work of the Association must
50 THE NATIONAL July
\
therefore be confined mainly to higher criticism.
This relates to ;
1st. The sources of statistical information and the
manner of compiling it ;
2d. The task of indicating and preparing statis -
tics which shall develop the actual and the relative
force of conditions, a knowledge of which is neces -
sary to the solution of problems which now com¬
mand public attention, and
3d. Statistics which develop the results of poli¬
cies or practices adopted in the actual conduct of
governmental affairs.
The latter of these, to my mind, constitutes the
most practical and important branch of the work of
this association.
With these prefatory remarks I proceed to the dis¬
cussion assigned to me.
The Government of the United States has never
attempted to collect statistics in regard to the quan¬
tity or value of commodities transported in the con¬
duct of the internal commerce of the United States,
and for the simple reason that it is an impracticable
work. Any attempt to collect such statistics would
clog the wheels of commerce, involve an annual ex¬
penditure of public money probably exceeding the
cost of the decennial census, and become such a
source of embarrassipent that it would fail of ac¬
complishment at the very outset. Of course the to¬
tal valuation of goods transported would constitute
the record of a movement in which the same commo¬
dity would appear more than once.* The State of
*The lowest estimate of the total value of the internal commerce as thus
ascertained is $25,000,000,000. The total amount of the bank clearing
house exchanges of the United States during the year 1890 amounted to $58,-
845,279,505. This sum embraces a large amount of exchanges not based upon
what are ordinarily regarded as commercial transactions. It also omilâ a
large amount of commercial tiansactions. So it is estimated that the annual
value of the internal commerce of the United States is somewhere between
$25,000,000,000 and $45,000,000,000. But all such estimates fall within the
category of conjectural statistics, and are of little practical value.
1894. STATISTICAL JOURNAL.
51
New York has for many years published statistics in
regard to the quantity and value of certain commo -
dities transported on the canals which are the prop¬
erty of that State—but such statistics although in -
teresting and valuable are of a special character,
merely throwing light upon the internal commerce
of the country over a single line, and with respect
only to certain leading articles transported. The
few other instances in which the quantities and
values of goods transported are ascertained may here
be passed without especial mention.
Although it is impossible to arrive at any precise
statement, or even approximate estimate as to the
value of the internal commerce of the United States,
it is entirely practicable to arrive at an approximate
estimate as to the total value of the products of la¬
bor in the United States—information of much
greater practical value. Ample statistics upon which
such an estimate can be based are furnished by the
national census. The total value of the products of
Agriculture, Manufactures and Mining reported by
the census of 1890 amounts to $12,419,775,349. But
this is considerably short of the total value of the
products of labor in the United States during the
census year. The census valuation of agricultural
production—$2,460,107,454 does not include the value
of the products of farms of less than three acres un¬
less the value of such products amounted to over
$500. The total value of products of manufactures
amounting to $9,872,437,283 does not include the
product of any establishment the value of which was
less than $500 during the census year, nor does it em¬
brace building and other important industries. The
census' valuation of products of mining—$587,230,-
662—is also probably something below the true value
of all products of that great industry, although more
nearly correct than the total for agriculture or man -
52
THE NATIONAL
July
iifactures. So, making due allowance for omissions
and undervaluations it appears safe to say that the
value of the products of labor in the United States
during the census year of 1890 amounted to fully
fifteen thousand million dollars ($15,000,000,000.00).
But even this enormous totality falls short of stat¬
ing the total value of the products of labor in the
United States. The census valuation of completed
products of the various industries is simply that of
such products in the hands of producers. When
these products are placed at the gates of commerce
the services of the transporter add to their values an
increment varying from a fraction of one per cent to
four or five hundred çer cent, and thus they all be¬
come, in a true sense, products of transportation.
Many of the products of agriculture, of mining, and
of manufacture, are the subjects of transportation
and of trade several times on their way from the
original producer to the consumer. The services of
the trader or merchant also add to products of labor
a large increment of value representing the use of
capital and personal services, so that all products
transported also become, to a certain extent, pro¬
ducts of commerce. Nor must we lose sight of the
vitally important service rendered to the internal
commerce of the country by the banker, for the
commodities of trade on their way from producer to
consumer, also acquire a considerable additional
value through the finance of commerce. But these
increments of value at the hands of the transporter,
the merchant and the banker, of course, lead us far
into the region of unattainable statistics. Still it is
possible to arrive at a fair estimate as to the total
valuation which can be assigned to all the products
of labor in the United States during the census for
1890, in the form in which they reached the final
artificer or the consumer? Without going into the
1894. STATISTiqAL JOURNAL. 53
detail of estimates I believe it amounts to fully
eighteen thousand million dollars a year—$18,000,-
000,000.
It is impossible to appreciate clearly the signifi¬
cance of such an enormous amount except through
comparison—for it is an accepted truth that the hu -
man mind can form no adequate conception of what
even one million imports. The comparison which
is most instructive in a politico economic sense, is
that between the foreign and the internal commerce
of the United States. In the light of such a com¬
parison even our enormous foreign market for Amer¬
ican products becomes relatively insignificant.
The total value of exports from the United States
during the year 1890 was $845,000,000. This consti¬
tuted but 4.7 per cent of the estimated value of the pro -
ducts of labor. Take from the domestic exports of the
United States in 1890 the value of the exports of cot¬
ton, amounting to $251,000,000 and we find that the
exports of products of labor from the United States—
embracing all products of agriculture other than cot¬
ton, and all products of manufactures and of mining
constituted but 3.3 per cent of the estimated total
value of such products.
The total value of the imports of merchandise into
the United States during the census year amounted
to $774,000,000, and constituted but 4.3 per cent of
the estimated value of products of American labor
as they reached the hands of final artificers and
consumers.
These figures clearly illustrate the enormous pre¬
ponderance of the internal over the external com -
merce of the United States, and develop the fact
that within ourselves we possess all the elements of
a great and prosperous commerce. Our foreign com -
merce is, in a word, but a mere auxiliary to our
54
THE NATIONAL
July
enormous domestic commerce and industry and
must be so treated.
Just here it appears proper to advert to tlie fact
that tlie agricultural, manufacturing, mining, trans¬
portation, commercial and financial interests of the
United States exist not as independent entities but
as intimately related members of one great sensitive
commercial and industrial organism, tlie hurt of any
one part of which produces a constitutional distur¬
bance which is felt to the remotest corner of every
other part. The statistics which represent the enor¬
mous preponderance of the domestic over the foreign
markets available to the producers of this country
therefore clearly indicate the wisdom of maintaining
the policy of defending those protective conditions
under which our home markets have been so enor¬
mously developed.
Reason and experience unite in the conclusion that
it is utterly impossible to maintain simultaneously
the policy of defending American rates of wages and
the values which such wages sustain and the policy
of recourse to foreign values, maintained by the
much lower foreign rates of wages. The very ap¬
prehension of the adoption of a policy based upon re¬
course to foreign values has caused a disturbance of
vitally important commercial relationships unpar-
allelled in our history,, and a reduction of values
and of wages extending to every branch of domestic
enterprise by a law as imperious as that of water
seeking its level.
There is an abundance of available statistical data
clearly illustrating the conditions which govern our
internal commerce and determine the course of its
development. Such data is much more valuable even
than statistics which merely lead to the knowledge
of a grand totality.
1894. STATISTICAL JOURNAL.
55
As a rule, subject to a very few exceptions, the
statistics collected for purely business purposes are
most reliable and most valuable to legislators both
in solving problems and in determining and adjust¬
ing the conflicting claims of rival interests. I refer
particularly to the statistics published by boards of
trade, chambers of commerce, commercial and in¬
dustrial associations, and railroad companies. The
railroad transportation statistics of chief value are
those relating to mileage, cost of road and equip¬
ment, tonnage carried, receipts, expenditures and
above all statistics in regard to transportation
charges. The carriage of passengers, and of the
mails are important elements of commerce—so is the
transmission of telegraphic messages. The public
press of the country is also a potent agency of com¬
merce. Perhaps no other agency has been more po¬
tential in determining the course of our commercial
development. There is an abundant supply of reli¬
able data showing the progress of these various
agencies of commerce and their interdependent re¬
lationship.
At the beginning I suggested as perhaps the most
useful work of this Association the duty of inviting
public attention to statistical data which serves to
develop a knowledge of the actual and the relative
force of the conditions which govern the internal
commerce of the country, and which record the re¬
sults of tentative legislation. This can be illustrated
by reference to the merits of certain concrete ques¬
tions. Accordingly I shall invite your attention to
the light thrown upon that complex and far-reach¬
ing question the "railroad problem" by certain
statistical expressions of results.
Men who have not yet passed the meridian of life
can remember when each railroad company in this
country was, and strove to remain a law unto itself.
56
THE NATIONAL
July
The various companies repelled the juncture of their
tracks. They also repelled joint traffic of every sort,
including joint freight charges and the common use
of cars. Besides certain of the more powerful rail -
road corporations sought by an extension of their
lines to secure a widely extended control of the com¬
merce of the country, and thus to gain the power of
.protecting their rates against the competition of ri¬
val" roads, and against the competition of commer¬
cial forces. But all this proved to be in vain. The
commercial and economic tendencies toward railroad
unity, embracing the juncture of tracks, the com -
mon use of freight cars, and the establishment óf
ten thousand interdependent copartnership relations
between companies was irresistible. The interac¬
tion of forces, thus promoted and intensified, finally
evolved the most gigantic combination for commer¬
cial purposes which the world has ever seen—the
American Railroad System. Almost from time im¬
memorial a deep seated prejudice had existed against
commercial combinations. This prejudice in an es¬
pecial manner directed against combinations among
common carriers was rooted in the belief that.the in¬
evitable tendency of combination is toward monopo¬
ly, the suppression of competition and the advance¬
ment of prices. At an early day it was laid down as
an incontrovertible dogma in railroad construction,
that where combination is possible, competition is
impossible. But that dogma has been utterly ex¬
ploded.
That combinations among common carriers on free
highways of commerce were more or less subject to
the objections urged against combinations gener¬
ally cannot be denied. And yet it is an historical
fact beyond question that combinations among rail¬
roads, which are not and in the nature of things can¬
not become free highways of commerce, have been
1894.
STATISTICAL JOUENAL.
57
promotive of a competition, wEicli has resulted in
an enormous reduction of rates and fares. This is
no longer a debatable question. It is patent to the
observation of every person who has given even slight
attention to the evolution of the American Railroad
System—that most gigantic and coercive of all com¬
binations. The competition thus evolved relates not
only to rival transportation lines but chiefly to that
subtle and all-pervading competition which has been
created among rival trade centres and rival produc¬
tive areas. The results of this complex and force¬
ful competition are to-day clearly read in unim¬
peachable statistics, as follows :
The average rate per ton per mile for the trans -
portation of freights of all descriptions on the lines
of eighteen of the principal railroad corporatioirs of
the United States fell from 1.985 cents per ton per
mile in 1873 to .799 of one cent per ton per mile in
1892. In other words the average charge in 1878
was about two and a half times as great as the aver¬
age charge in 1892. These reductions were gradual.
They clearly indicate the stress of persistent and en¬
during forces. This is indicated by the following
data showing the average rate per ton per mile
charged on the railroads referred to, from the year
1873 to the year 1892 :
Year.
Â.verage rat-e per ton
per mile.
Year.
Average rate per ton
per mile.
1873
1.985 cts.
1883
1.188 cts.
1874....
1.869 '•
1884....
1.087 "
1875....
1.686 "
1885
1.022 "
1876....
1.574 "
1886... .
.988 "
1877....
1.505 "
1887
.971 "
1878....
1.379 "
1888... .
.925 "
1879
1.244 " ■
1889
.922 "■
1880
1.292 "
1890... .
.884 "
1881....
1.215 "
1891....
.868 "
1882
1.190 "
1892
.799 "
58
THE NATIONAL
July
These reductions in freight charges throughout
'this vast country were not made voluntarily by rail¬
road managers. They simply represent the effects
of competition engendered by railroad combination
culminating in a national railroad system which is
unto the traveller and the shipper as one grand in¬
strument of commerce.
And thus a simple column of ñgures representing
the reduction in the average freight charge from
year to year on the I'ailroads of the United States
proves the great economic and commercial truth that
in a vast country where the most extensive and force¬
ful combination has been consummated which the
world ever saw, there has been simnltaneously de¬
veloped a competition of unparalleled intensity and
effectiveness for the benefit of everybody not inter¬
ested financially in the stock or bonds of railroad
companies.
From the Atlantic to the Pacific and from the
Lakes to the Gulf the people of the United States
now enjoy the advantages afforded by the most ex¬
tensive, the most expeditious, and the cheapest rail¬
road transportation on the globe.
At last the truth inculcated by the stern lessons
of experience has flashed upon the minds of legisla¬
tors and of the whole country that the solution of
the American railroad problem lies in the direction
of the perfection of that vast and complex organism,
the American Railroad System.
And now as a final illustration of the value of
statistics in demonstrating the success or failure of
policies and practices, I invite your attention to a
matter of the higliest public interest, affecting the
commerce of the whole country. It relates to a sta¬
tistical verdict which has, as I sincerely hope, put a
final stop to a notable controversy.
1894.
STATISTICAL JOURNAL.
59
In the course of the evolution of the American
Railroad System with its constantly falling rates, the
reductions made in transportation charges were not
uniform. In the intense competition between rival
railroads and rival trade centers many discrimina¬
tions arose. These were greatly intensified by rail¬
road wars of rates. In the light of history sucli
discriminations now appear to have been inevitable
incidents of the transition from a disconnected, to a
closely connected and intimately associated national
railroad system. The complaints which these dis¬
criminations evoked were proclaimed in the halls of
Congress, and in time the pressure brought to bear
made national legislation for the regulation of the
railroads a political necessity. The Congressional
investigation which led to the scheme of regulation
which was adopted, was conducted by the Senate
Committee on Interstate Commerce, of which Sena¬
tor Cullom, of Illinois, was chairman. ■ The report of
that Committee was submitted to Congress January
18, 1886. It was one of the most voluminous, and I
hesitate not to say, the most valuable treatise ever
presented to any government upon the subject of
transportation. As a legislative achievement it re¬
flected the highest honor upon its distinguished
author. Senator Cullom.
The practical result of this great report was the
passage of the Act to Regulate Commerce embracing
the establishment of an Interstate Commerce Com -
mission charged with the duty of investigating all
infractions of the law and of passing upon them.
The Commission was endowed with no administrative
authority, in the sense of power to make rates ; it
was not authorized to interfere with the general au¬
thority exercised by the administrative officers of the
railroad corporations: nor was it given any ju-
60
THE NATIONAL
July
dicial authority. It was simply empowered to exercise
the moral influence of its mediatorial oíRces, and to
report to the federal courts all cases where the com¬
panies refused to abide by its decisions. In this way
it was enabled to institute judicial proceedings for
the enforcement of the provisions of the Statute. In
a word the Commission was under the provisions of
the Act to Regulate Commerce, endowed only with
the function of effecting justice in the conduct of
railroad transportation through the moral force of
the soundness of its decisions and of its representa¬
tive character as an exponent of public sentiment.
Beyond that came the power of the federal judiciary,
and every facility was pi'ovided for invoking the ex¬
ercise of that power.
The bill presented by Senator Cullom was in some
measure a new departure in governmental adminis¬
tration. It was regarded by its author as a tenta¬
tive measure, but time has proved it to be one of the
wisest products of statesmanship. It voices the
growing tendency of tlie age toward utilizing moral
forces to the utmost in the maintenance of justice
and order, holding the strong arm of governmental
power as much as possible in reserve.
For awhile the Commission under the guidance of
Judge Cooley, its chairman, proceeded in its assigned
work admirably. The railroads obeyed its mandates
in fear and trembling, and, for awhile, peace reigned
within our borders. But no human authority ever
yet existed very long without having its powers
tested. The competitive forces which were involving
the American railroad system were in constant ebuli-
tion. Competitive struggles, culminating in wars
of rates prevailed extensively, and unjust discrimi¬
nation were, as formerly, their inevitable concomi¬
tants. Although the Commission in its third annual
1894.
STATISTICAL JOURNAL.
61
report committed itself fully to the ideas upon which
its functions had been determined by the act to reg¬
ulate commerce, its chairman, Judge Cooley, soon
thereafter became the proponent of a new theory of
railroad regulation. It came about thus : The com -
panics having appealed from certain decisions of the
Commission, the courts decided that the Commission
was invested with no judicial authority whatsoever.
The distinguished author of "Constitutional Limi¬
tations ' ' expressed his dissent to this view, and at
once rushed to the conclusion that the Commission
must be endowed by Congress with a clearly defined
judicial function. This opinion was expressed in the
fourth annual report of the Commission, submitted
November 9, 1890, wherein it was declared that the
decisions of the Commission should not only have
prima facie, but full judicial authority; i. e., that
the Commission should become a full Hedged branch
of the federal judiciary. But the courts sternly ad¬
hered to their views in regard to the exclusiveness of
the judicial power as promulgated by Hamilton and
Story and Marshall, and the Commission was forced
to submit. Besides the proposition was so complete -
ly outside of the limitations of the constitution and
of the principles upon which the constitiition is
founded, that the formal appeal of the Commission
to Congress for judicial powers failed to gaiil any
serious attention.
Judge Cooley however did not stop at the acquisi¬
tion of judicial power. In his address before the
Convention of Railroad Commissioners held at Wash¬
ington on March 3 and 4, 1891, he boldly declared in
favor of conferring upon the Commission the power
of rate making—the plan proposed being to subject
all rate sheets to governmental revision. This in¬
volved the monstrous proposition of making the
62
THE NATIONAL
July
national government responsible, not only for the
course of the development of the internal commerce
of the United States, but for the commercial pros¬
perity of each part, and of the whole of this vast coun -
try. It has been remarked that when a great cor¬
poration leans upon an ordinary man the ordinary ^
man is apt to give way. But what would have been
the fate of the Commission with an internal com¬
merce amounting to twenty-five thousand million
dollars a year leaning upon it. The proposition thus
made to the legislator was as astounding as anything
recently promulgated from reincarnation to the gov -
emmental ownership and control of the railroads.
But it is eliminated by its enormous statistical con¬
clusion.
The distinction between the regulation of commerce
in the interest of .justice and order and the adminis¬
trative control of commerce is as broad as that be¬
tween liberty regulated by law and governmental
imperialism. The one is true Americanism, while
the other is unmitigated despotism, for despotic power
can be exercised under the form of democratic gov¬
ernment as well as under the forms of monarchy.
Nevertheless under the inspiration and influence
of Judge Cooley, Congress was asked to place upon
the brow of the Interstate Commerce Commission the
triple crown of moral, administrative and judicial
functions. Such an admixture of governmental powers
has never been exhibited on this planet except in the
case of an absolute monarchy wielding at once the
legislative, executive and judicial functions of gov¬
ernment.
The contention of Judge Cooley constituted a clean
cut case of conflict between the judgment of a great
statesman and the judgment of a distinguished jurist
in regard to a vitally important question of public
policy. The jurist had ventured into a field of
1894. STATISTICAL JOURNAL. 63
speculation completely outside of .judicial determi¬
nation, while the statesman, Senator Cullom, with
nearly forty years of vigorous experience behind him
as lawyer, state and national legislator, and governor
of a great state had projected his ideas into a range
of thought and of practical politics entirely familiar
to him. In the course of three years—for we make
history rapidly in this country—the judgment of the
statesman as to the nature and scope of the functions
of the Interstate Commerce Commission was fully
vindicated by the practical experiences of the Com¬
mission in their administration of the provisions of
the "Act to Regulate Commerce," and these experi¬
ences are sharply expressed in certain brief, but
eloquent statistics. It is interesting to note just how
this has come about. From the beginning the Inter¬
state Commerce Commission has been dominated by
gentlemen of acknowledged ability, of highly re¬
spectable legal attainments, and of unquestioned
force and purity of character—just such men as were
needed in order to administer an office wielding the
authority of the moral purposes of this great nation.
The results of their experiences as expressed in their
last annual report, submitted December 1, 1893, fully
vindicate the forecast and political sagacity of the
statesman. In brief the teaching of those exper¬
iences in the language of the Commission are as fol¬
lows :
(а) The administration of the Commission has been
instrumental in enlightening the public mind and
in reforming the views of railway managers.
(б) The work of regulation is continually pro¬
gressing in different ways.
(c) The civil and criminal proceedings in the State
and Federal Courts is being successfully performed,
and.
64
THE NATIONAL
July
(d) The successful performance of the functions of
the Commission under the provisions of the existing
law are demonstrated by the following figures :
While hundreds of complaints were heard and set¬
tled through the mediatorial and advisory offices of
the Commission, only sixteen cases came to a formal
hearing and determination, of which not to exceed
eleven were decided against the railroad companies.
In only one of those cases was the reasonableness of
rates called in question, and in that solitary case the
judgment of the Commission was against the com¬
plainant. So the statistical expression of the results
of the Commission in regulating the abuses of a
railroad system of 200,000 miles in extent and sub¬
serving the commercial and social interest of a great
nation whose population stands at about seventy
millions and whose annual commerce is valued at
twenty-five thousand million dollars, is expressed in
the following figures :
Number of cases of unreasonable rates.. . .Zero.
Number of cases of unjust discrimination.. 11
In the entire range of my statistical investigations
and computations I have met no such eloquent fig¬
ures as this humble zero and this instructive little
number eleven. They triumphantly vindicate the
forecast and political sagacity of Senator Cullom in
basing the powers of the Commission mainly upon
moral forces, they do credit to the Commissioners,
they reflect honor upon the country, and they ilium -
inate the civilization of the age in which we live.
An apparent error-was made in the original Inter¬
state Commerce Act, against the views of the Senate,
whereby the railroads were debarred from making
traffic agreements rendered necessary by their oper¬
ation as one great system of transportation, but an
1894.
STATISTICAL JOURNAL.
65
amendment of tlie law curing that defect is now
pending and hopefully will become law.
And now, Mr. Chairman, in conclusion permit me
to add that while I discard the idea that statistical
inquiry is in itself a separate science, and while I
long ago abandoned the idea that the problems of
this life can be figured out, I perceive the inesti¬
mable value of statistics which express the lessons of
experience and which record the success or failure
of legislative attempts to sustain sound political
principles. In my humble opinion, it is in this field
of inquiry and demonstration that the statistician
who aims high will achieve his grandest successes
and reap his most abundant reward.