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STATEI^ft^UíPl^IMONY
RAILROAD MANAGERS,
OF
SHIPPERS, FARMERS AND OTHERS,
TAKEN BEFORE THE
COMiMlTTEE ON RAILKOADS AND INTERNAL IMPROVEMENTS
OF THE EXTRA SESSION OF THE THIRTY-FOURTH
GENERAL ASSEMBLY OF MISSOURI.
, F
JF?FERS01sr CITY, MO.:
TRIBUNE PRINTING COMPANY, STATS PRINTERS AND BINDERS.
1887.
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TI?.^l^S1P0K/T^TI02:sr
STATEMENTS AND TESTIMONY
OF
RAILROAD MANAGERS,
OF
SHIPPERS. FARMERS ÄND OTHERS,
TAKEN BEFORK THE
COMMITTEE ON RAILROADS AND INTERNAL IMPROVEMENTS
OF THE EXTRA SESSION OF THE THIRTY-FOURTH
GENERAL ASSEMBLY OF MISSOURI.
JEFFERSON CITY, MO.;
TRIBUNE PRINTING COMPANY, STATE PRINTERS AND BINDERS.
1887.
H ^ ^''''1
lSf7
Senator Taggart oífered the following resolution :
Resolved. That the Chairman of the Committee on Railroads and Internal Im-
' «
peovements he instructed to employ, under the resolution heretofore adopted, a
shorthand w^riter at $10 per day; and said committee are directed to have the
notes of said testimony transcribed at a price not to exceed 20 cents per folio, and
that the same when transcribed shall be reported to the Senators from time to
time, whenever the amount transcribed equals or exceeds twenty pages, and shall
be printed and laid upon the table of the Senators.
Five thousand copies of said testimony shall be printed.
The resolution was read first and second times and agreed to, May 27,1887.
A. S. COKER, Secretary Senate.
Wednesday, May 25, 1887.
Senator McGinnis offered the following resolution, which was read,
and adopted :
Resolved^ That the Committee on Railroads and Internal ImproTO-
ments of the Senate be and they are hereby instructed to hear the
statements of railroad managers, of shippers of all classes, as well as
of farmers and others, upon the following points :
First—What constitutes reasonable maximum rates for freight—
taking the schedule furnished by the railroad commissioners as the
basis of the estimate?!
Second—What are the advantages and disadvantages of pooling?-
Third—Will a provision of law prohibiting a greater charge for a
shorter than for a longer haul be beneficial to the general public, ancL
if so, how ?
Fourth—Should the custom of rebates be abolished, and if scr,
why ?
Resolved, That the committee shall devote such time as may be
necessary to the hearing of evidence upon the foregoing points, hold¬
ing their sessions in the Senate chamber.
Resolved, That all persons interested in these questions are hereby
invited to appear before said committee and present their views thereon
as briefly and pointedly as the nature of the case will permit-
Resolved, That the said committee is hereby directed to employ a
competent short-hand writer and have full notes taken of the state¬
ments made before it on the questions herein presented, and to report
the same to the Senate, together with its conclusions thereon, by bill
or otherwise, at as early a day as practicable.
STATEMENTS ÄND EÏIDENCE:
statement and evidence of mr. ripley, general traffic manager
c., b. & q. r. r.
Mr. Chairman and Gentlemen—It is related that Dr. Johnson
went once in London to hear a female preacher, and that returning he
made in his note book this entry : " A woman preaching is like a dog
walking on his hind legs, it is not well done—the only wonder is that
it is done at all." I desire to have you, gentlemen, remember that I am
a mere hireling of a corporation, and that that part of the corporation's
work which I am called upon to perform is not the making of public
speeches. It is something entirely out of my line, and something, as
you perhaps discovered last winter, in which I have had vpry little ex¬
perience, but I am here, like yourselves, representing a constituency.
You represent the people of Missouri, and I am here representing a
constituency that is scattered from Maine to California almost, namely,
the stockholders and directory of this corporation. Between your con¬
stituency and mine there is a community of interest that ought to pre¬
vent any quarrel. So far as I am concerned—and I think I speak for
all the railroads of Missouri—I am certainly not anxious to have any
quarrel, and am exceedingly anxious that the best sort of feeling and
understanding should exist between the two parties.
Our interests are almost wholly identical—whatever contributes ta
the prosperity of your constituents contributes to the prosperity of
mine, and the two should pull together for the interest of the State at
large.
You are here for the purpose of answering what is alleged to be a
popular demand for legislation of some kind in regard to railroads.
For myself I doubt very much the very wide extent to which it is
alleged this demand prevails. I think it is not a difficult matter to
manufacture public sentiment against a railroad. To a great extent
the bitter sentiment that does prevail has been manufactured artifi-
6
€ially. In my own experience I do not find any such widespread senti¬
ment of dissatisfaction as is alleged in certain quarters to prevail. We
try to get as near to the people as possible—try to find out if they have
any grievances of any character that we may, if possible, remedy them,
or if they are not grievances, that we may convince those who think
they have them that they have no foundation. We do not find that
there are any of so serious a character as has been represented, but
granting for the present that grievances do exist and that some legis¬
lation is necessary, the question of vital interest to you and to us is
what shall it be and how shall it be brought about.
The present laws of the State of Missouri on this question are a
patchwork—a hodge-podge. I state this merely from what I have
heard and from the appearance of laws as they have been passed from
time to time ; they have been added to from time to time, apparently
with a view to taking care of some particular interest, or of remedying
some particular abuse, but the result is that instead of being well con¬
sidered and well rounded out, they are incongruous and conflicting.
It seems to me that almost the first step you have to take inprepar-
ing any new legislation is to wipe out all you have. I do not mean that
some of the principles which you have already should not be incorporated
in a new law, but it would be very difficult to incorporate any to what
you have without making the inconsistencies more apparent than they
now are. There is danger, too, I think, that in the mass of detail which
is presented before you that you are liable to lose your grasp on the
fundamental principles. It may be stated, I think, that the two prin¬
ciples which you want to enforce, and which it is just and equitable
should be enforced (and they are the only two, and whatever else you
may have in your laws the groundwork are these two propositions),
are—First: All rates must be reasonable.
Second: There should be no unjust discrimination—now all else
that you may have in your bill—all else that you may pass as laws,
save for the provisions you may have to carry out these two, are mere
verbiage and of no possible account.
You can, if you like, as means to bring about these two things,
prohibit pooling, incorporate, if you like, the long and short haul prin¬
ciple, peither of which I personally believe in, but since they have been
incorporated in the national law may be good enough for Missouri. I
do not believe they are good for either, but the two principles of dis¬
crimination and of reasonableness of rates are all there is in any proper
railroad legislation of the State, so far as commercial matters are
concerned. I think that you will all agree with me as to that, and the
only question therefore is—how to get out those two ideas?
You cannot pass any law in regard to unjust discrimination that
7
will be too stringent to suit any honestly managed railroad company.
A corporation that is being managed for the benefit of the stockholders
has no more desire to commit an unjust discrimination than you have
to have it done. There is no excuse for it. It is not for the best interest
of the company, and while there has been in the past history of rail¬
roads some cases where it has been done, they have, I think, grown
fewer and fewer as years went on, and I believe there was less of it
immediately before the interstate commerce law was passed than at
any time before ihat. It has grown less and less all the time, but so
taras that is concerned I do not think there is any chance for argument
as you cannot pass anything so severe that the railroads would not
welcome it.
The question of rates is one on which there always will be some
divergence of opinion, and yet I believe that something that would
commend itself could be arrived at by a body representing you, either
the railroad commissioners or some other body, and to which the rail¬
roads, if they do not entirely assent, could conform to.
There is always a difference between the buyer and the seller; the
buyer is apt to value the property he desires at less than the seller puts
on it. This difference between the buyer and seller will always exist.
A man who pays for railroad transportation, so long as he pays anything,
will think he pays too much, and quite likely the man who has it to
sell will never think he has enough, but between those two extremes
it seems to me that a fair bodj^ of men, selected by you, with possibly
a conference with the railroads, can arrive at something which will be,
as nearly as possible, fair.
A proposition to which I must seriously object and which I think,
upon reflection, will appear to all of you to be an exceedingly unjust
one, is that this legislature shall proceed to fix maximum rates, and
that the commissioners shall afterwards be given authority to reduce
them. This, as you will see upon reflection, is a jug-handle arrange¬
ment, If the commissioners have sense and ability enough to judge as
to rates at all, they should be authorized to advance as well as to re¬
duce them. It is manifestly unfair to the railroads to first fix a limit,
beyond which they cannot go, and then appoint a body of men whose
duty it shall be to correct these rates only for one side. To say that
the railroads shall, under no circumstances, charge more than a certain
amount, regardless of changed conditions—regardless of whether rates
so fixed are reasonable to th'e railroads or not—shall never be more
but as much less as three gentlemen, with the very best intention,
but subject to all sorts of pressure from all parts of the State, may
agree upon—is a gross injustice.
I am not competent to say whether it is proper for this legislature
8
to delegate this authority to the'commissioners, but I do say, that it is
unjust to authorize them to reduce and not to correct in the other di¬
rection. Is it not reasonable to suppose that this legislature is as likely
to make a mistake in the direction of making rates too low as to make
a mistake in the direction of making them too high, and if what you
do is not correct, should not all be subject to revision ?
The question of rates taken by itself, is almost wholly a question
of comparison. I know of no better standard by which to arrive at a
reasonable rate.
When we are asked the price of a brick house, simply the naked
question, what is a brick house worth, no man can answer it. There is
no real estate agent, even in Kansas City, can answer it ; but when
you are asked what is the price of a brick house of a certain size, in a
certain row, in a certain street, your mind instantly reverts to the ques¬
tion of what adjoining houses in the same locality are worth. In the
same manner when the question is asked, what is the reasonable rate,
I think almost every mind immediately asks, what rates are elsewhere
under substantially similar conditions, and for that reason, it seems to
me, that the State of Missouri, surrounded as it is by other States,
could very well borrow some ideas from the States that surround it
and which are situated similarly. There is Iowa on the north, Kan¬
sas on the west, Illinois on the east, and between the two, if not three
or four, it ought not to be very difficult to take into account the situa¬
tion of Missouri and arrive at what would be substantially reasonable
rates, compared with those in adjoining States. This is really the only
*■
standard w-e have to go by.
There are some differences between the situations of the several*
States. There are some rates on your Statute books that are lower
than in almost any other part of the country, and there are some things
higher; some which might very well be reduced, others that ought to
be advanced. The difficulty has been and is, that a common practice
has been to compare the rates with those in other States and where
those of other States are lower to reduce the rates here to about their
level, and where the rates in other States are higher to take no notice
of them ; but it seems to me that it would not be a difficult matter to
fix maximum rates which would at least be reasonable for two years,
and that the commissioners might be instructed in the meantime to
present to the next session of the legislature, if you like, whatever
changes they think should be made.
I do not wish anything I have said to refiect in the least upon the
present Board of Commissioners. I think they are reasonable and fair
minded men, but at the same time I do not think that this or any other
9
board should be entrusted with the duty or power of reducing rates
that the legislature has fixed, simply because it is not fair.
Now, gentlemen, if I understand the resolution that has been
passed here, which I caught only imperfectly, the questions raised
• were oí the abolition of pooling of the long and short haul clause and
the question of rebates.
I will speak as briefly as possible on this subject. They are not
matters that I have studied particularly of late, but I can talk about
them as they are matters coming up every day. As regards the long
and short haul it is very diflScult to convince a man located 400 miles
t/
from market, that he ought to pay the same or higher rate than a man
located 600 miles from the same market. At the same time it is some¬
times perfectly just that he should. I do not believe that it is the
province of railroads to do any more in the direction of equalizing the
natural advantages than what they naturally do, and naturally they do
a great deal of it. For instance, if Kansas City had no railroad—if
there was no railroad between St. Louis and Kansas City at all—Kan¬
sas City would enjoy a very much greater discrimination in its favor
than it ever has since the railroad was built. If there was no railroad
to Kansas City and none to Independence, it would be possible for
Kansas City to get all of its material and to export everything coming
there for export, at very much less than Independence or any other
town not located on the river.
The same thing applies in the case of any point where there is no
competition, either by rail or water. Take two points 200 miles
apart, one line of railroad connects them just 200 miles long ; another
line of railroad, or a composite line of two roads reaches the same
point with a line 250 or 300 miles long. Is there any reason why
the line 50 miles the longer should not compete for that business and
make the same rates between the two points ? Is it just that the long
line should shrink itsjlocal rates between those two points ? If. for in¬
stance, the distance from St. Louis to Kansas City by the Alton road is
fifty or sixty miles longer than^over the Wabash, isThere any.reason why
the Alton should not participate in the business between Kansas City
and St. Louis, and participating in that business is there any reason
why they should haul 200 miles to a point this side of Kansas City on
their line, at a less rate than is charged for 200 miles in a direct line on
the Wabash ? It is simply a question of whether they shall be allowed
having the long line to enter into competition. The railroad does a
great deal to equalize the natural disadvantages under which some
places labor, and it is not so much a discrimination against these local¬
ities as in their favor, that the railroad brings about; in other words,if
10
there were no railroads discrimination would be very much greater as
a rule.
At the same time the long and short haul clause has been adopted
by the Congress of the United States. I do not know whether you care
to follow everything they do, but I presume you think that what is
good enough for the United States would be good enough for Missouri,
and so far as the railroads are concerned, I think they are disposed to
say : '^If the people can stand it, they can."
I do not think there will be, on the part of the railroads, any
serious objection to incorporating a clause of that kind. I think very
much the same in regard to the pooling clause. To speak frankly, I do
not believe the Congress of the United States has any business with
the earnings of a railroad company after they have been earned in
accordance with law. I do not believe, as a matter of equity, the State
of Missouri has any right to say to a railroad company you must earn
money in accordance with rules laid down by us. You must charge
certain rates, and after you have earned this money upon these rates
it must not be divided with anybody else. I do not believe it is right
in equity or in public policy to say anything of the kind.
I believe the practice of pooling has resulted in doing away with
discriminations to a great extent. I believe if it had been allowed to
continue the result would have been that all complaints of discrimina¬
tion would have died away. It was the remedy, and the only one, the
railroads had been able to find for just the thing you now complain of-
It is very hard for me to speak dispassionately or with any patience
on this question because I so firmly believe that there is no equit¬
able right, even if there is a legal one, for the prohibition of pooling.
As to the question of rebates I do not think it is material. I do
not see any objection to its being prohibited. There are a great many
reasons, perhaps, why it should be prohibited. I think the idea of re¬
bates has not been generally understood. I think the general idea
about rebates is that it is an amount of money paid clandestinely or
privately to an individual whom the railroads desire to favor ; that is
not the railroad idea, but the public idea. The railroad idea is simply
that it is an amount of those earnings paid back to an individual
because it does not care to have its competitor know what it is doing.
A rebate is simply a means of pulling the wool over the eyes of a
competitor. This is its only use. There are a great many compensa¬
tions to a railroad in having that practice entirely forbidden. It
reminds me of what Charles D. Warner says about congregational
singing. He remarked that the advantage of it was that everybody
could practice his voice and improve his lungs ; the disadvantage was
that everybody else could do the same thing. The same is true of
11
rebates. The advantap:e is that we know absolutely what our com¬
petitors are doing, and they know what',we are doing, but on the whole
we are on an equality, and make no objections to prohibiting it, and I
can say there would be some advantage in this from a public stand¬
point.
It is a fact that where railroads desire to practice any favoritism
or discrimination in favor of individuals, they can do it much better by
means of a rebate than otherwise, and if it is desired, as I believe it is
and as it ought to be, to prevent that being done, and if the stopping
of rebates will bring about that end, by all means prohibit.
Mr. Knapp : Referring to the matter of discrimination in furnish¬
ing cars for one party in preference to another, should this as'well as
other forms of discrimination be prohibited ?
A. I certainly think it should. There are some times very good
reasons for furnishing cars for one and not for another, but v/hen it is
done as a matter of favoritism, there is nothing that you can say which
I will not endorse. A shipper is very apt to think that he is discrimi¬
nated against in the matter of cars, when in fact he is not. I have
known of a man getting four cars and his neighbor getting none. The
next day his neighbor would get four and he get none, when he
would be apt to think that he was very much abused, when in fact the
day previously the discrimination had been in his favor. The matter
of distribution of cars is always one prolific of trouble.
Senator Claycomb: You say you are connected with the Chicago,
Burlington & Quincy railroad?
A. Yes, sir.
Senator Claycomb : In what capacity are you employed ?
A. As general freight agent.
Senator Claycomb : In that capacity have you the fixing of rates ?
A. Yes, sir.
Senator Claycomb : I understand you to say you had no rule by
which you fixed rates, except by comparison with other roads ?
A. I hardly made that statement. I said I know of no better
way by which to arrive at reasonable rates than by comparison with
other roads, and that that was about the only guide that we or you, or
anybody else, could have. I presume that the rates on the first rail¬
road were probably a little less, but not much, than were charged on
the turnpike road, just enough to compete with the turnpike, and they
have been declining ever since.
Senator Claycomb : Are you familiar with the rates of Illinois,
Kansas, Nebraska and Iowa, as fixed by the commissioners ?
A. Yes; I have had experience with allot them. I know com-
12
paratively little of Kansas, but the rates of the other three States I
know very well.
Senator Claycomb : In order to establish rates from a comparison
with those of the States mentioned, I would like you to give the com¬
mittee your idea in regard to how thc^t comparison should be made;
and whether the rates in this State should be higher or lower than in
the States mentioned, and how much ?
A. I think that a comparison with the rates of Iowa would be
best on account of the geographical position of that State, but the
trouble with this comparison is that it is getting to be a question of
rivalry between the States as to which can make the lowest rates. For
instance, the State of Iowa has lower rates than the State of Missouri
on a number of articles, while the State of Missouri has certain other
articles on which they make less rates than the State of Iowa. Not
very long ago I was called upon to answer a charge made by the Gov¬
ernor of Iowa that we were charging too much on a certain commod¬
ity, and one of the principal arguments in his charge was that our rates
on that commodity in Iowa were much higher than in Missouri on the
same article, and while the result of the decision was by no means to
ê
put rates as low as those in Missouri, it was the means of calling the
attention of the Illinois commissioners to the fact that the rates on
that commodity in Illinois were much higher than those in Iowa, and
they are proposing to pitch in and see if they cannot get as low as Iowa
and Missouri, whereas this particular item happens to be the only one
on which their rates are higher than those of Missouri.
On a great many other things, the rates are a good deal less, but I
should say, that in general, rates in Missouri should be about the same
as in Iowa. I think the traffic of Iowa is probably greater.
Senator Parcher : What was that commodity ?
A. Coal.
Senator Claycomb : What is the comparative difference between
the rates of Iowa and Illinois? Have you compared the two?
A. Yes, sir; the Illinois rates on merchandise do not differ
materially from the Iowa rates, but Illinois rates on certain commodi¬
ties, notably grain and live stock, and things of that kind, are consid¬
erably lower than Iowa.
Senator Claycolmb : Can you say by what per cent, Illinois rates
are less than those of Iowa ?
A. I cannot say, exactly, but live stock rates are probably 15 to
20 per cent, less in Illinois than in Iowa. Grain rates in Illinois are
probably 30 per cent, lower. One thing, I think you overlook, and I
hesitate somewhat in making the statement, because I fear you will not
believe it : I believe the business of Missouri and the business of Iowa
13
is less valuable to the railroads than it was 15 years ago. I am satisfied
as to Iowa, as I have made up the figures, and believe the conditions
in Iowa are working out in the ¡State of Missouri. If you will stop
and think a moment, you may be more disposed to believe that state¬
ment. Fifteen years ago the entire business of this State and of the
State of Iowa was farming. It was the only business carried on. Every
product of those farms was exported in its most bulky state. Every¬
thing consumed in the towns or anywhere else, was imported, and the
railroads did the hauling both ways. Now, that is changed very large¬
ly. Instead of the grain being shipped out, it is put into cattle. Three
cars of corn go into one car of cattle, and we get no more for hauling
cattle than for a car of corn. In the same way, every product is re¬
duced to its lowest possible form for exportation. The population has
increased, and a very much larger proportion of what is raised on the
ground, is consumed at home.
So far as concerns Missouri, I have not the figures, but have gone
into it sufficiently to know what the efiect has been, but as regards Iowa,
I have made up the actual figures and believe that the same conditions
prevail in Missouri as in Iowa, so that when the claim is made, as I
have heard some times, that rates in Missouri have not been reduced
in 10 years, my answer is—that it is very questionable whether there
should not be an advance, for the reason that the business is not worth
as much now as then.
I do not say that the railroads are not doing more business, but the
business that goes through Missouri is from Kansas, Colorado and
Texas, on which those States pay the bill, and not Missouri.
Mr. Babcock : If the railroads were prohibited from charging more
for a less than for a greater distance, would not the competition be¬
tween the roads under such a law, have the effect of making reason¬
able local rates ?
A. In general, I think that would work an advance in thé through
rate, rather than in a reduction of the local. That has been the effect
so far under the interstate commerce law ; rates that were made by
roads competing with water lines and others, prior to the taking effect
of that law, are no longer made, because the roads cannot afford to
make them under the present law. Formerly it Was only a question
of wheter property could be taken between Chicago and San Francisco
for instance, and make one dollar over operating expenses, but now the
question is, whether we can afford to take it and sacrifice all the local
business, as we must do, if through rates are reduced.
Mr. Bobb : What is the effect of unrestricted competition ?
A. The effect of unrestricted competition is bankruptcy to the
railroads, and certainly no gain to the community. It unsettles all
lá
commercial Yalues, and I think that merchants and others at compet¬
ing points, which get the advantage of such competition, would admit
this themselves. A fair rate surely is better than any amount of un¬
restricted competition. The result of it is the worst kind of discrimi¬
nation. The man who has the most business to do, can do it the cheap¬
est, simply because he is able to offer the largest bait to somebody to
take it.
Mr. Robb : What do you consider unrestricted competition ?
A. Competition not controlled by law or by pooling agreement.
I mean, without some agreement for the division of the earnings, and it
is as impossible to make a combination among railroads that will hold
as to make a combination in any other trade. While your whole coun¬
try is full of combinations on almost every article you buy, they all
rçst on a money basis and never have succeeded where they did not.
Mr. Robb : I would like to ask if ordinary business principles
could not be relied upon to regulate these matters ?
A. On the contrary ordinary business principles are just what
bring about these troubles.
Senator Johnson : Would it be different in any other business ?
A. I think not. Ordinary business principles instead of prevent¬
ing these wars bring them about. It is ordinary business for any line
in competition with another to any given point to get its share of the
business. If for any reason it is higher than its opponent and cannot
get the business at the same rates its opponent does, it has got to take
it for less. It is not human nature nor business for the other line to
recognize the right of that line to make any less than they make, and
of this you all know the result. It is that the rates at competitive
points go to an abnormally low figure, and the railroads pay the bill^
and I claim that the community is in no wise benefited. It is the duty
of a man who is running a railroad to take any business he can get^
that pays him more than the simple operating expenses for that trans¬
action, regardless of bills for anything else. His track is there, his
equipments are there, and if he can get a dollar or a cent more than
the cost of the transaction, it is his duty to his stockholders to take it^
if that is all that he can get. The result of that you all know.
Senator Moran : I understood you to say, Mr. Ripley, that it is
part of your duty as general freight agent, to fix rates for the transpor¬
tation of freight. About how often per annum do you find it nec¬
essary to revise your schedule ol rates ?
A. We have no fixed time for revising our whole schedule, but of
course, our daily labor is revising something, and in fact the only re¬
vision that ever takes place is a redaction. In my ten year's experi-
15
ence in this position, I do not know of half a dozen cases where
revision has resulted in an advance.
Senator Moran : I understood you to say, you felt that in fixing a
schedule the commissioners should be allowed to increase as well re¬
duce rates ?
A. Of course it is unjust that they should do one without doing
the other, I do not intend to advocate the making of maximum
rates with authority to advance or reduce. I simply said, if such
authority was given at all, it should be delegated both ways.
Senator Moran : How would it do to empower commissioners to
fix reasonable rates for the transaction of business, and then if the
company charged a higher rate than was fixed by the commissioners, in
the event of prosecution for extortion, leave the burden of proof with
the company to show that the rate charged was reasonable ?
A, That is the Illinois law, and I think it would be a great im¬
provement on what has been proposed in some of the bills, giving the
commissioners power to reduce without the power to advance. But at
the same time, I personally question the advisability of putting the
rate making power in the hands of the commissioners, for two or three
reasons. I question whether they want it, and I question whether
their usefulness would be impaired in the least, if they did not have it.
I would advocate putting in the hands of the commissioners the power
to prevent any offenses against the law, but the rate making power, I
think, as far as possible, they should keep clear of. The most success¬
ful boards of commissioners in the country have been those who have
had simply recommendatory power, and I think their recommendations
have always been complied with. There is danger in allowing the
commissioners to fix rates not only in Missouri, but in any State, that
they may be unduly infiueoced by the railroads on the one side or by
the public on the other. I think the commissioners should recom¬
mend to the legislature such changes as should be made, and I do not
think anything would suffer if a schedule of rates compiled by this
legislature were allowed to stand for two years.
Senator Parcher : Mr. Ripley, I understood you to say that in the
revision of rates on your system of railroads in the last ten years, that
there has not been a single instance of an increase of the rates. If this
committee or this committee together with the railroad commissioners,
Mr. Ripley, and others representing the railway systems of the country,
get together and in the best light they have to day, formulate maxi¬
mum rates for this State, since you have not found it necessary to in¬
crease your rates during the last ten years, is it not probable that there
will be no change in the future, except to decrease them, and would it
*
not be just to the people as well as to the railroads to prohibit any ad-
16
vanee in the rates before the next session of this legislature, and why,
under the circumstance you have stated, would it be a jug-handle
arrangement as you call it ? And do you not think it advisable in order
to give some flexibility to rates, to empower the commissioners to re¬
duce them, even though they have not^the power to advance?
A. In answer to that question,*1 will say, that when I said we had
not advanced our rates in the last ten years, I had reference to the
rates which we, ourselves, controlled, that is to say, the interstate
rates. The State rates in!many of the States we have no control over,
and could not advance them if we would. If we were to make a tariff
according to our own ideas and not according to the ideas of the body
of railroad commissioners, we should make some changes. We should
advance some things and reduce others. My idea in making the re¬
mark I did as to the unfairness of permitting the commissioners to
reduce and not permitting them to advance rates was that in your
schedule to-day you have certain things which are made lower than
they should be, and certain other things that are higher than .they
should be, and the burden is not equally divided as between the vari¬
ous commodities. Pressure has been brought to bear on commis¬
sioners to reduce rates in special cases, and I fear the same pressure
will be brought to bear again in the case of the commissioners having
power to reduce the rates. They would be urged and expected to
make reductions on special commodities, and they would have no right
to consider claims that might be made on the other side for an advance.
If we could start with a fair schedule, I do not fear that there would
be any real reason for changing it in two years, either up-or down.
There might be some reason for advancing some or reducing others,
but I do not fear the result for two years, but I do fear the result in the
case of making maximum rates and giving authority to anybody to re¬
duce the rates and not the power to make any corresponding advances
for the railroads. In other words, it is just as likely that circumstances
will arise that will render it possible to charge higher than what we
should put into the maximum, and which would justify an advance as
that a reduction would be justifiable, and I say it is not fair that the
rule should not work both ways. When I said we had not advanced
the rates in ten years—I do not think I said we had in no case ad¬
vanced the rates, but that all the changes we had made, had been in
the nature of reductions. Occasionally it becomes necessary for rates
to be slightly changed in the way of an advance. To do justice to cer¬
tain localities, we might have to advance a rate a cent, or reduce an¬
other two or three cents. The general tendency, however, has been
very largely downward as you all know. I did not intend to say abso-
17
lately, that in no case had the rate been raised. 1 did say that the
change had always been in the way of a reduction, but I mean that
there had not been emy advances in that time.
Senator Parcher : Speaking of our rates here you stated once or
twice that some of our rates in Missouri were too high and some too
low ?
A. Yes, sir.
Senator Parcher : And you say these rates were substantially the
same 10 or 11 years ago ? Could we not arrive at what would probably
be a good schedule of rates for the next ten years to come better now
than we could then ?
A. It is pretty hard to predicate a position that will exist ten
years from now, but we probably could as there is a larger railroad in¬
terest than there was at the time these schedules were made.
Senator Parcher : Relative to commissioners' susceptibility to in¬
fluences, and to the power given them to reduce rates, you say they
will be susceptible to outside influences. If they have power to
increase as well as reduce, you would assume that a stronger influence
could be brought to bear in the former direction ?
A. I do not think my remark open to that construction. What I
did say was, that there would be danger, perhaps, in both directions, or
at least, that there would be danger to the community from the pres¬
sure brought to bear by the railroads, and to the railroads from the
pressure brought to bear by the community. I can very well conceive
how diíñcult it would be for a commissioner to resist the influence
brought to bear from his immediate vicinity to reduce rates on a spe¬
cific article. It takes a pretty strong man to stand u p under pressure
of that kind. I have known a commissioner in the course of my exis¬
tence, at least one, that frankly stated that he knew the rates were
wrong, but that the pressure from his part of the country was so strong
he could not resist it, and that if he did it would kill him politically.
He was not a Missouri commissioner.
Senator Parcher : You would recommend that this legislature or
any other should legislate against unreasonable rates and unjust dis¬
crimination. How would you determine what is unjust discrimina¬
tion ?
A. That is equivalent to asking for a definition of discrimination.
I do not know of any better answer to make to that than to say that
unjust discrimination is unjust. Discrimination itself is a word abused
as ordinarily used in railroad matters. The definition given by .Web¬
ster is the faculty of nicely distinguishing. Discrimination lies at the
foundation of the making of all rates. We discriminate between dry-
R M—2
18
goods and flour, between silk and salt. It does not cost more to haul a
car load of silk than of salt ; the only element of difference is in the
risk, and that any insurance company would guarantee for one per
cent., but if we should charge the salt rate on the silk we could not
live, and if we charged the silk rates on the salt there would be no salt
shipped. Therefore, it is part of our business to distribute the burden
to be borne by these commodities equally among them, but an instance
of unjust discrimination is one which enables any one man by means
of railroad rates to undersell his compatitor, no matter how it may be
brought about. Anything that by reason of railroad rates puts an un¬
due advantage in the hands of one man against his competitor, is an
unjust discrimination.
Senator Parcher : You would recommend this legislature to pass
a law against unjust discrimination. Supposing in business with your
company I claim you unjustly discriminate against me and bring suit
against you for the penalty provided by law, how would you recommend
that the case be handled ?
A. My own idea would be to constitute the railroads a tribunal
to try such cases. I think it gives better satisfaction than the courts,
and that a tribunal of that kind that does not observe strict legal forms,
to try both sides and decide on matters of this character, is preferable
to any process of law you can imagine. I am perfectly willing to sub¬
mit to such a tribunal as I would prefer to have a sort of buffer be¬
tween the corporations and the public to show us if we are wrong, and
to convince the public if they are wrong. I am willing to take my
chances with the people before a tribunal of that kind.
Senator Simrall : Do you think such 9 method better than to sub¬
mit to the courts ?
A. I do not think by any means the commissioners are more in¬
clined to be favorable to the railroads than to the people. I do not
know how the courts would work as I have had but little experience
with that manner of handling cases of this kind.
Senator Parcher : Would it not be expensive to make complaints
to the commissioners ?
I do not think that is the experience of States that have commis¬
sioners. My experience has been when a case is brought up that there
is no expense to the complaining party, and that traveling is all done
by the commissioners and the railroads. The usual course of procedure
is for the complainant to make his complaint in writing. This com¬
plaint is forwarded to the railroads and they answer it. If there is no
dispute as to the facts the commissioners decide the case without bring¬
ing the parties together, but if necessary to do any traveling the cus¬
tom is for the commissioners to go to the complainant and for the rail¬
roads to go too^
19
Senator Simrall : Why not resort to the courts in the first place ?
A. I have no objection to this, but think that better satisfaction is
given by the commissioners for the reason that they are in session all
the time, take up cases more promptly and deal with them more
promptly than the courts are likely to. Moreover, I think the public
is under the impression that it is expensive to go into a lawsuit with a
railroad.
Senator Gideon : What is your idea about fixing charges? Should
there be terminal charges on a mileage basis or upon 100 pounds, by the
car load, or what ?
A. It is a pretty well established principle that all rates must be
fixed by the 100 pounds. We have no other guide to go by. There are
a great many considerations entering into the making of rates. Com¬
modities are solid or bulky, valuable or cheap. It is a matter alto¬
gether of judgment and experience. I take your question tornean,
«
however, as to how the rates for carrying should be arrived at—
whether rates should be fixed per mile with a certain terminal charge.
Theoretically that is undoubtedly the way to make a tariff—that is, the
expense per mile ought to be reduced as the mileage increases, and the
terminal expense should remain the same, but it will not do to fix a
certain rate per mile and a terminal charge and apply that rate per
mile under all circumstances for short and long distances. There is no
reason why we should charge the same rate per mile for 500 miles that
we charge for 50. The same distinction is made in regard to wholesale
and retail transactions among merchants ; the longer the distance we
haul the property the cheaper should be the rate per mile ; that is to
say, it does not cost us as much, nor is it worth as much per mile to
the shipper to haul 500 miles as to haul 50 miles. If you were to fix a
reasonable rate per mile for 50 miles and multiply it by ten, for 500
miles, you would arrive at a rate for 500 miles, which would be prohib¬
itory.
Senator Moran : You would then fix the terminal charges and tel¬
escope the mileage ?
A. Yes, sir ; that is just it. The expression is a good one.
Mr. Miller: At what distances should rates be changed ?
A. At 5 or 10 mile jumps.
Mr. Miller: That is, reduce the hauling charge every 5 or 10
miles ?
A. Ordinarily reduce the hauling charge per mile.
Mr. Miller : Exclusive of the terminal charge ?
A. Yes, sir.
Mr. Miller : In speaking of commissioners, you said that they had
been found more satisfactory than the courts ; do you mean to the rail¬
roads or to the people ?
20
A. I mean to the people. I think probably you can tell better
than I how satisfactory the method through the courts might be, as
many of you are lawyers. I do not know, because there has been very
little of it tried, but I am very sure that there exists among the people
at large a disinclination to bring suits against the railroad companies. I
don't know whether there is any good reason for this or not, but I think
there is a feeling of that kind, and that it is hardly worth while to bring
a suit against a railroad company, because it is a long process and ex¬
pensive.
Mr. Miller : Have you not found that in making complaints there
is the same disinclination to go to the commissioners?
A. Quite the contrary. My experience is that complaints of all
kinds are made where it is understood that the commissioners have
power to act and decide cases of that kind. I think complaints of all
kinds go to the commissioners with great frequency, and there is no
complaint so trivial, so slight, that they do not take it up. A great part
of the cases are very small cases—cases so trivial that the commission¬
ers have only to mention them to the railroad companies to have them
settled rather than go to a hearing, and there are a good many cases
where a man has thought he had a grievance and he has been con¬
vinced that he had not. I think oftentimes he pockets his grievance
and says nothing to the railroad or to the commissioners. I frequently
have discovered cases of this kind. We have several thousand employes
and it is natural that among those men somebody says or does something
he ought not to, something which, were we to hear of it, we would not
indorse, but he says nothing to us and nothing to the commissioners,
but talks about it to his friends, makes it a pet hobby, says it is a small
matter, amounts to nothing, but it makes him mad all the same.
Mr. Leising: Would you consider it an unjust discrimination in a
case where a shipper can send his goods through the point which he
wishes to reach to a point beyond and return them to destination at a
less rate than he can secure on the goods from point of shipment direct
to destination ?
A. I think that a railroad company that would permit a state of
things of that kind would be very foolish.
Mr. Leising: The Missouri Pacific is doing it right along in our
place.
A. I think if they knew anything about it they would stop it, but
I think circumstances might arise which would justify a lower rate to
the point farther distant, and in such case it might happen that a man
could ship to a point immediately beyond him, and ship back at much
less than the direct rate, but I do not think railroad companies expect
or intend to have that state of things prevail if they know it.
21
Senator Johnson, of Madison: In appearing before the commis¬
sioners, is it not a bar to the people, the fact that the commissioners
are located at the capital and out of reach of the people generally ?
A. As I have stated, the practice in other States is for the com¬
plaint at first to be made in writing, and there being no dispute as to
the facts, which is usually the case, the presence of the complainant is
not required at all, and in cases where the presence of the complainant
has been required, it has been the custom for the commissioners and
the railroads to go to the complainants and not for the parties to go to
the office of the railroad commissioners. It seems to me that as
between journeying from any point in the State of Missouri to Jeffer¬
son City, and laying the case before the commissioners and coming
into the court, employing attorneys, etc., there can be no doubt as to
which is the cheapest.
Senator Ball : Would it not be wise for the commissioners always
to visit the place where the complainant is ?
A. I do not think there would be any ejection to this ; I think- it
would be a good idea. The railroad could usually go where the com¬
plaint is conveniently, since our facilities for traveling are perhaps
better than those of the general public.
Mr. Miller: I understood you to say that a reduction of the rates,
exclusive of terminal expense, is made in respect to the wholesale
principle, and that the railroad can afford to haul a longer distance at
a less rate. That brings the wholesale principle into the transaction.
Would you apply that as to quantities shipped?
A. No, sir.
Mr. Miller: What would be the effect of making a rate per car
for any number of cars that might be shipped ?
A. The effect, so far as the community is concerned, you would
have to judge of rather than 1. My own idea has always been what
I think is a general sentiment of the community, and that is there
should be no discrimination between the large and small shippers.
Mr. Miller: Has it not been the practice of railroads to carry large
shipments for less than small ones ?
A. Yes, sir; just as has been the custom of merchants to sell to
those who had most to buy cheaper than to those who bought smaller
quantities. One of the things which the interstate commerce law may
correct, and which we tried to correct by the pool system was that very
thing-
Mr. Miller: Is not that discrimination made now in the State of
Iowa on shipments of a number of car loads ?
A. No, sir ; there must be discrimination of some kind as to
quantity ; that is to say, we cannot deal very well in quantities less
22
than carloads on certain commodities. Certain commodities must have
car load rates, and it is perhaps entirely proper that they should.
Mr. Miller : What différence should be made between car load
and less than car load rates on articles usually shipped in car loads ?
A. There is a great difference of opinion as to this. It has been
a subject of a great deal of controversy, and one on which hardly any
two railroad men agree, and it is a subject of .controversy between
Chicago and St. Louis, and between Kansas City and Omaha, and all
other points on the Missouri river, and the state of things in force now
is a compromise between the two opposing factions—the Missouri river
man wants the rate on car loads very much less than on less than car
loads, so that the Missouri river man may be in better position to com¬
pete with the Chicago man, and the Chicago and St. Louis man wants
the difference reduced so that he may be in better condition to sell the
country trade. The result has been a compromise. There should be
some difference, as it is less expense for a railroad company to handle
car loads than less than car loads.
Mr. Miller : Cannot railroad companies afford to make a contract
for a shipment of one hundred cars at less than for a shipment of the
same kind of property in single car loads. Does it not cost them a
great deal to get the one hundred cars together?
A. Ordinarily the cost is not great. If it is possible for railroads
to contract for one hundred cars of new business—business which is
created, business which has not existed before—it might be, and prob¬
ably would be, advisable to make such rates as would enable that par¬
ticular business to move, but ordinarily it is not, in ray judgment, to
the b^efit of either the railroad or the cummunity that there should
be any discrimination between one car and any number of cars.
Senator Parcher: Would it not be a great injustice to the smaller
shipper to recognize the difference which Mr. Miller speaks of, and
would it not result in killing off' the little fish.
A. Yes, sir ; I think when a man comes to us and pioposes to ship
one hundred cars the chances are that the one hundred cars, if not
shipped by him would be shipped by one dozen or more smaller men,
and if shipped by him the others are presumably frozen out by that
action.
Senator Ball: I understood you to say that there is a difference
between the rates on car loads and the rates on less than car loads.
Have you not made a discrimination as between the few men who hap¬
pened to be able to ship car loads and the great number who have less
than car loads ? Is not the number of men who ship in car loads very
small as compared to the number who do not have as much as a car
load ?
23
A. The reason for the difference between the car load and less
than car load rate does not exist in making a difference between the
shipment of one car load and a shipment of ten or one hundred cars.
A solid car of anything involves a good deal less trouble and expense
to the railroad company than a car of mixed articles which must
be handled and sorted and way-billed, and I do not think that any par¬
ticular injustice is done, because in the case of wholesale dealers there
are very few commodities of which any one kind is handled in full car
loads.
Senator Ball : Take, for instance, the farming community of the
State. There are a great number of farmers who have not a car load
to ship ; are they not put at a very great disadvantage with a man who
has a car load ?
A. I do not understand that the^ farming community ships any¬
thing except articles of produce, all of which are shipped in car loads
if shipped at all. I do not suppose any one would consider that we
ought to haul half a car load of grain or li\e stock at the same rate
per 100 pounds that we charge for full car loads.
Senator Ball : If you pay a rebate, for instance, to a buyer, could
he not pay the smaller farmer more for his stuff than he otherwise
would ?
A. If we made the rebate to one buyer and to nobody else he
might pay the former more, but the chances are that the rebate would
get into his own pocket.
Senator Johnson of Madison : About this terminal charge matter,
is it practical ?
A. No, sir. The fixing of a terminal charge which shall be just
and which shall apply everywhere is simply an impossibility. There
is a great difference between what would be a reasonable terminal
charge in a large city and a terminal charge at a country station. In a
s
large city where there is an immense tonnage handled it may be that
the cost, taking into account interest on the plant and everything of
the kind, may be twenty-five cents per ton, but at the country station
where there is perhaps a quarter of a ton handled, it is likely to be
about one dollar. It is impossible to fix a tariff between all stations in
the State and fix a terminal charge which will apply to all of them.
That idea of making rates per mile and fixing an additional terminal
charge has, I see, gained more or less strength. I think I recognize it
as being the idea of one of the former commissioners of this city with
whom I have had many arguments on the same subject. I never con¬
vinced him and he never did me, but it is an utterly impractical scheme.
If we were to fix a terminal charge that was suificient to cover all ex¬
igencies and then fix a mileage rate it would have the effect of raising
24
the rate in some sections very materially, while on the other hand, if
we should fix it at a figure that would cover the cost at the larger sta¬
tions we should get it so small that it would not compensate us for the
terminal work at interior points-
Mr. Kelly: I would like to hear Mr. Ripley's opinion on the rates
proposed by the railroad commissioners?
Senator Mcöinnis : I would like to ask Mr. Ripley if he would be
willing to take a copy of the schedule of rates proposed by the com¬
missioners and go over it item by item and give this committee his
opinion, in a general way, in writing, of that schedule, delivering it to
the chairman of the committee at as early a day as possible ? I know
it would involve a great deal of labor, but at the same time it would
communicate to this committee a great deal of information ?
A. I hardly know how to answer that. I am quite sensible of the
compliment involved in the question asked, and, if desired, I will do
the best I can in that direction. Of course it is a matter that will take
some days, and one that I cannot attend to and do the subject any
justice while I remain here, but in the course of three or four days I
will endeavor to make such comparison of it as I can and send it. I
will say, in a general way, however, that I looked over the schedule
with two of the commissioners and that I took occasion then, as I shall
again, to criticise it considerably in some particulars, but will say that
my criticisms were not in all one direction. I do not say they were
all too low, but they were altogether too low on some things, and, 1
think, too high on some others. In other words, it is a difference of
judgment that will exist always between men. I do not know that
the burden which they propose to püt on the community would be
much lighter than that which they propose to put on the railroads, but
I would put more in some places and less in others. 'However, I am
expressing this opinion rather hastily, as I only had a short time in
which to look over the rates.
Senator Farchet: Let us hear about the rates on grain, live stock,
coal, flour, salt and lumber. What are your ideas of the commission¬
ers' rates on these articles, in which we are more interested than any¬
thing else ?
A. I think the rates on grain and lumber, and possibly on salt, as
I recollect it, although my recollection is not very clear, is, that up to
a distance of 150 miles might be somewhat reduced from the commis¬
sioners' figures. I think that the rates on live stock, particularly on
cattle, ought to be quite materially advanced from the commissioners'
figures.
Senator Parcher : For short distances ?
25
A. Yes, sir ; and long, too. The rates on cattle are too low. My
suggestion to the commissioners was that they make as light diiference
between cattle and hogs, making cattle higher that they are now. The
rates on lumber for short distances might be somewhat reduced. As
to the rates on coal, I would rather some railroad more interested in
hauling coal than we are should speak. I will simply say that they are
lower than in any State in the country at least 40 per cent. I do not
believe there is any justification for such rates in the State of Missouri,
but I know something of the history that brought that about and pre¬
fer that somebody else should speak about it, because we have not a
very large interest in the coal business in this State. I will say in
general in regard to the commissioners tariff, that I understand the
underlying idea of it is the Illinois cbmmissioners' tariff. It is a slight,
and a very slight, advance in most cases from the Illinois tariff. They
seem to have adopted the tariff where it was low and have very clearly
ignored it where it is high, and a combination of the two makes a lower
tariff than that in Illinois. The Illinois tariff in itself is not a model by
any means. It is the work of three gentlemen who have been in office
less than six months when they made it out, and we accepted it rather
than have any trouble, but I do not think there is a railroad in the
State that if it was dependent on State business could pay this interest
on that tariff. I am now speaking for our own line which has about
1,000 miles in Illinois, and perhaps occupies as good a territory as any
of it. If you cut us off at the Missouri river and we receive nothing
from Colorado, Kansas and Nebraska, our lines in Illinois on the Illi¬
nois [tariff] could not pay interest.
Senator Parcher : It has been suggested that the commissioners'
rates had little to do with the rates actually in vogue in Illinois. To
what extent is that true ?
A. It is not true at all. We are working wholly under the com¬
missioners' rates. The commissioners' rates were made in 1873, and
for ten years after that they were a dead letter. The railroads ques¬
tioned the constitutionality of the law, and it was not finally decided
in the United States Supreme Court until the fall of 1883. My recol¬
lection is that we complied with the Illinois commissioners' rates in
the early part of 1883 for the first time, so that practically that laV
has only had four years' trial in Illinois.
Mr. ßobb : I understood you to say this morning that those States
having a commission with only advisory power had been more success¬
ful than those in other States. I would like to ask in what States the
commissioners have simply advisory power ?
A. They have only advisory power in Iowa, and up to within a very
short time I think that has been the case in Nebraska. I think that is
26
still the case in Michigan, and perhaps one or two other States, but my
reference was particularly to the State of Iowa.
Mr. Eobb : I understand that in Iowa the legislature fixes the
rates ?
A. No, sir; the rate is not fixed at all in Iowa; the commis¬
sioners are simply authorized to request a reduction of the maximum
fixed by the railroads in case they consider the maximum unreason¬
ably high, but there are no rates fixed by statute or by the commis¬
sioners.
Mr. Robb: Can rates in any single State be taken as an absolute
rule for fixing the rates in any other State ? If called upon to fix rates
for the State of Missouri, what conditions would you take into consid¬
eration ?
A. That brings up the question of the character of the business
and comparison with the rates in surrounding States. While the rates
in other States should not be taken as a positive guide for making of
rates for Missouri, yet it would be entirely out of character that rates
should be very much higher or very much lower than in States simi¬
larly situated.
Mr. Robb : How would Iowa compare with Missouri ?
A. Iowa is probably more similarly situated than any other State.
Mr. Robb : When you say similarly situated, you mean with ref¬
erence to its geographical position ?
A. Yes, sir.
Senator Gideon : Do you mean also that it is similarly situated
as to the character of the business and its productions ?
A. Yes, sir ; that is also true.
Senator Gideon : Are not railroad rates often subject to change ?
A. As I said this morning, they are sometimes subject to change,
and particularly to reductions. There are causes arising all the time
which justify changes, and changes are very generally in the nature
of reductions.
Senator Gideon : Can there be any inflexible schedule fixed which
would do no injustice to either the people or the roads ?
A. Yes, sir; there could be a schedule fixed which would in no
ca'se do injustice, but m order to arrive at such a schedule the maxi¬
mum would have to be fixed so high as to be practically of no account.
You cannot in practice fix a maximum rate so high that in some cases
the railroad would not be injured by it, but if a reasonable maximum
was made it might be said that a railroad which could not live under
such rates ought not to have been built. There are portions in this
State which cannot earn operating expenses, and could not do it if
27
allowed to make their own rates. The same would be true under any
maximum rates.
Sanator Simrall : Cannot the maximum be made high enough
not to be an iujustice to any railroad ?
A. That is possibly true, but in the case of the railroads I have
just cited, if left perfectly free, they could not get enough to pay oper¬
ating expenses
Senator Ball : What is your idea of allowing railroads to fix their
own rates ?
A- Well, I had hardly expected to hear a question of that kind
from a committee selected for the purpose this one is, but I will say,
my idea is, that railroads can fix their own rates better than anybody
else can, and if allowed to do so, I do not believe the people would
suifer. My honest judgment is, that the State would not pay any more
money for freight if the railroads fixed their own rates than if fixed by
law, but I will say, at the same time, that I would prefer, inasmuch as
the other States have more or less supervision over railroad rates, that
Missouri should not be an exception, and would prefer that the rates be
fixed, and that the commissioners be given the same power as in Iowa.
Mr. Richardson : Suppose the commissioners did reduce the rates,
is there any penalty to enforce their decision ?
A. In Iowa the commissioners have no mandatory power to bring
about reductions in rates, but I think there has never been a case in
which their recommendations have not been complied with. I believe
some three years ago there was a law passed in Iowa providing that
the Attorney-General should enforce decisions of that kind made by
the commissioners, but I am not positive as to this.
Mr. Miller : In connection with the question asked by Mr. Robb,
I want to ask what circumstances determine when there shall be a re¬
duction ?
A. Ordinarily, commercial conditions caused by competition oí
one kind or another, not necessarily competition between railroads,
but more often competition of one locality with another, or competition
of one production with another. For instance, there are cities on the
Missouri river, four or five, or perhaps six, that are all afiected when
one is aifected. For instance, when a railroad was built from Kansas
City to Memphis, it affected business, not only between Kansas City
and St. Louis, but the business of St. Joe, Atchison, Omaha, and even
Sioux City, because all of those cities have the same products, and are
seeking the same markets with them.
M. Miller : When I refer to changes in rates, I mean those on the
single line of road.
28
A. There are comparatively few of such changes, and such as are
made, are usually made in order to bring about substantial equality
between different towns or localities. For instance, country towns 10
or 15 miles apart on different railroads have got to have substantially
the same rates, and have got to have them, even though one of them
happens to be 50 miles further from market than the other. •
Mr. Miller: Do fluctuations in values of property cause fluctua¬
tions in rates ?
A. Yes, sir; but the fluctuations are not usually so wide as to
affect rates materially, but there have been instances where such has
been the case.
Mr. Miller : I have observed that there have been frequent
changes in classification. What are the circumstances leading to
changes in classification ?
A. The classification is usually changed at the request of some
particular interest involved. The classification committee meets every
three months, and at such meetings classifies articles on which there is
no classification, and occasionally changes those already classified.
There are always delegates from various interests asking for changes
in classification, and it is needless to say they all want reductions. It
is very seldom that any change in classification is made looking to an
advance. Usually classification is merely a sorting out of various ar¬
ticles and properly classifying them.
Senator Moran : The usual object of asking a change in classifi¬
cation is to get a lower rate on a particular commodity, is it not ?
A. Yes, sir ; as a rule. For instance, the manufacturer of pre¬
serves, pickles, etc., comes^to us with a prepared classification which
he thinks should be adopted on his goods, and will suggest putting in
certain articles they know more about than we do, perhaps, in a higher
class, and certain others in a lower. We have conferences with repre¬
sentatives from interests of every character. Such few advances as
are made are made in this way : Instead of classifying a commodity
regardless of its value or the method of packing it, we very often sort
it up, put some of it higher, and some lower, according as the gentle¬
men who represent that particular interest, and who know all about it,
think is a correct thing to do.
Senator Moran : What States have found it practicable to incor¬
porate a schedule of maximum rates in the law itself, and do the roads,
if there be any such State, charge less than the maximum rates ?
A. So far as my knowledge goes it has not been tried.
Senator Moran : I understood you to say you would be willing to
trust the commissioners as between the interests of the roads and the
public, as to the reasonableness of rates on certain classes of goods
29
when there was a misunderstanding between roads and the public. If
you would be willing to consent to this, is it not virtually synonymous
with allowing commissioners to fix a reasonable rate?
A. I think there is a great difference. Requiring the commission¬
ers to fix rates is one thing, and requiring them to pass on rates already
made is another. The latter is a case in which both parties are to be
heard, and in which there is an opportunity of presenting the case
fairly on both sides. It' the commissioners are required to fix rates we
do not know what influence may be brought to bear on them to favor
a particular industry, neither does ths community know what influence
may be brought to bear on them on the other side.
Senator Moran : I understand you to say that the schedule fixed
by the Illinois commissioners was adopted some ten years ago ?
A. The first schedule was made in 1873, and the last one in 1881
or 1882.
Senator Moran : This schedule was fixed by the commissioners ?
A. Yes, sir.
Senator Moran : Are they not the rates on which your company
is doing business, and could not a schedule of maximum rates be fixed
in Missouri which would be fair to the railroads ?
A. There are no rates you can fix in Missouri which will enable
railroads to get those rates. If you go on the principle that they are
going to get the maximum rates that you fix you are very much mis¬
taken. There are a great many cases where commercial conditions
will absolutely preclude our getting the rates you allow us. In many
cases we have to take business at less than the average cost. I do not
say at less than the cost of service, but at less than the average cost
of doing our whole business. For instance, if a man should go to the
Missouri Pacific and ofi'er to establish a brick-yard fifty miles out of St.
Louis and put brick into St. Louis in competition with what is made
there, providing the Missouri Pacific would make him a rate that was
considerably less than the average cost of doing all their business last
year, they would probably do it, and would make money by doing it ; as
a large proportion of their expenses are fixed regardless of any increase
they would be foolish, very foolish if they did not take it at a rate that
would pay them more than the actual cost of the transaction itself with¬
out regard to interest on the plants or anything else.
Senator Moran ; In States like Illinois, where the commissioners
make reasonable maximum rates, and in Georgia whei^ they make in¬
flexible maximum rates, have the companies su'flered any injustice or
%
have earnings been as large as in those States where the companies
make their own rates and where the commissioners have only advisory
power ?
30
A. As I have stated our rates in Illinois have been very much affect¬
ed by the adoption of the commissioners' rates. I think our loss by com¬
plying with those rates as compared with the rates we were charging, has
been in the neighborhood of half a million dollars. The Chicago, Bur¬
lington & Quincy, I believe, occupies as good a territory as there is in
Illinois, yet taking our yearly earnings on Illinois business, we are not
able to earn enough in the State to pay our operating expenses within
the State and interest on bonds, and if we were cut off at the Missouri
river and had no business east of there, we should be in a bad way.
Mr. Bridges : If Illinois rates were extended over other portions
of your line, you say you could not live ?
A. No, sir; we could not, if the other States did not pay tribute
to the State of Illinois.
Mr. Bridges : What States pay most of it ?
A. I think the States of Nebraska and Kansas. The railroads in
the States of Missouri, Iowa and Illinois, are being supported by the
business of Kansas, Nebraska and Colorado.
Mr. Bridges : Yes, but you mentioned not only the States west oí
the Missouri river, but some other States.
A. I said if it was not for the business of Missouri, Iowa and some
other States, the Illinois lines could not live, and I say further that if
it were not for the business of Kansas and Colorado, the Missouri lines
could not do it either.
Mr. Bridges : The other States have to make it up ?
A. Yes, sir.
Senator Moran : Then how is it if the rates are so low that you do
not make reasonable dividends, that the companies as I understood
you to say, are charging less than the rates ffxed by the commissioners ?
A. I say in most cases we are charging full commissioners' rates,
but there are some cases where it is impossible to obtain them and then
we take simply what we can get.
Senator Moran : When did the companies ñrst begin to do busi-
iness under the rates fixed by the commissioners in Illinois ?
A. I think in February, 188B.
Mr. Kellv : Is it not a fact that on the Missouri Bacific the rate
that prevails, 210 miles West of St. Louis, is the same rate that is
charged from St. Louis to Omaha, and if that is the case would not Mis¬
souri pay tribute to Nebraska instead of the other way ?
A. The fáct is, that the rate to Kansas City and the rate to Omaha
is the same in some cases, and in some cases the rate to Omaha is a
little the higher. This is wholly in the interest of Missouri ; primarily
it is in the interest of the Missouri Pacific road, but it is also in the inter¬
est of Missouri for if it were not the case, St. Louis would be shut out
31
of Omaha altogether» This is not because the Missouri Pacific wants
to do it, but because it is one of the commercial necessities spoken of
some time ago. St. Louis and'Chicago are competing for the trade of
Kansas and Nebraska, and consequently if the Missouri Pacific expects
St. Louis todo any business in Nebraska it has got to make the same
rate from St. Louis to Omaha that is made between St. Louis and Kan¬
sas City.
Mr. Kelly: It is 500 miles from Omaha to St. Louis by the Mis¬
souri Pacific ; can they afford to carry freight 500 miles as cheap as
210 miles?
A. No, but it is better than not to haul it at all.
Mr. Kelly: If they are losing anything on that end of the line do
not we have to make it up in Missouri ?
A. That is a fallacy ; it is not a question of whether they should
advance their rates or reduce them, but whether they shall be permit¬
ted to get a little revenue out of business, which is a little out of their
bailiwick.
Mr. Miller : 1 understand the Missouri Pacific schedule increases
until it gets to Montserrat, 211 miles out, apd that the rate remains
the same until they get to Omaha?
A. That is probably true. Under the interstate commerce law
the Missouri Pacific has submitted the question, whether they shall
abandon the business of Nebraska to Chicago and the Chicago roads,
or whether they shall base their rates at all intermediate stations upon
the rates they are obliged to make on Nebraska business. I think if
they bad gone out of that business, there would have been a pressure
brought to bear on them from St. Louis which they could not have re¬
sisted, and I do not see what injustice is done to Missouri, because the
Missouri Pacific makes a less rate to Nebraska in order to let Missouri
get a share of the trade.
Mr. Kelly : Does it make as low a rate from Omaha as from Kan¬
sas City ?
A. How. much would they get if they put their rates up and how
would their station, this side of Kansas City, be helped ?
Mr. Kelly : You do not mean to say that they are carrying the
business for less than they can afford ?
A. I think the gentleman fails to understand me. The rate from
Chicago to Omaha is a certain fixed amount. If St. Louis [expects to
do any business to Omaha they must make the same rate as is made
from Chicago in order to do it. The rate from Chicago to Kansas City
is the same as to Omaha, the distance being practically the same. Now
the St. Louis roads, so far as Kansas City is concerned, of course base
their rate on the rate from Chicago, but when they go up to Omaha
32
they have before them the alternative of abandoning the Omaha busi¬
ness to the Chicago lines entirely, or of extending the Kansas City rate
straight up the river to Omaha—which shall they do? Would public
sentiment in St. Louis justify them in giving it up ?
Mr. Kelly : You said they would not lose anything by carrying:
business 500 miles for a certain rate ; if they can afford to do this with¬
out loss can they not affort to haul 211 miles for less ?
A. I submit that that does not follow at all. They have a rail¬
road between St. Louis and Kansas City and between Kansas City and
Omaha. They are able on their Kansas City line to live and pay ex¬
penses, but between Omaha and Kansas City they cannot even pay
expenses unless they do some business. The question is, whether the
rate which they are obliged, by force of circumstances, to make at
Omaha, on which they do not make any momey, shall be applied all
over their lines—if they do that they cannot pay interest. It is quite
possible to do business between St. Louis and Omaha at the same rates
as between St. Louis and Kansas City, and not lose any money, but at
the same time they cannot pay interest and dividends on that basis, if
applied to their entire line. ,
Senator Moran : When you take this business from St. Lonis to
Omaha, at practically the same rate that you haul it from St. Louis to
Kansas City, is it not so much traflïc which does not really belong to
you, but which you take, and is it not so much added to your gros»
earnings, thus enabling you to do the intermediate traffic cheaper than
you otherwise would; in other words, if not allowed to compete for the
through traffic from St. Louis to Omaha—if you had to abandon that
class.of business would you not have to make it up on the other busi¬
ness ?
A. I do not know that we should be allowed in any case to ad^
vanee our local rates in Missouri, but as a matter of fact, the trans¬
action of the through business is, in my judgment, all that has ever
permitted us to live in Missouri, Illinois and Iowa, upon the rates we
are allowed within those Slates. If we were obliged.to do as the
gentleman suggests, and reduce all our local rates to the level of the
through rates, that is to say,'the same rate per mile that we take on
our through rates, we should certainly either have to very largely in¬
crease our local rates, or to very largely decrease the character of the
service..
Mr. Kelly: The objection is to charging the same rate for 500
miles that is charged in Missouri for 211 ?
A. In other words, charging a fair rate for 211 miles in Missouri,
and charging in Nebraska a little more than what it costs them to do
the business.
33
Senator Moran: Do not the Chicago roads haul freight from
Nebraska at less rates per mile than from the Mississippi river ?
A. Yes, sir.
Senator Moran : They carry it at less than Illinois rates ?
A. That is true, but the great volume of business of Iowa and
Nebraska that goes across the State of Illinois, is in train loads. There
is no expense connected with it except the actual hauling of the
property—we simply have to hook on and draw it, so to speak. The
cost is very much less in that way than where we have to pick it up.
Senator Oastleman : Mr. Ripley, you spoke of being of the opinion
that the rate per can for hauling one car should be the same as that
per car for hauling many cars, but that the rate for hauling less than a
car load should be proportionately greater than that for hauling a car
load for the same distance under the same conditions. I suppose there
is some general rule by which you could determine what that differ¬
ence ought to be, is there not?
A. That is merely a matter of judgment, and a matter concerning
which railroad men dijïer a good deal. I speak with a good deal of dif¬
fidence on the subject because my idea is, that a very much less differ¬
ence should exist from what other men think, and a good many rail¬
road men do not agree with me.
Senator Castleman : You have your own opinion as to what the
difference bet ween car loads and less than car loads ought to be ; what
per centage of difference should, in your judgment, exist between car
loads and less than car loads ?
A. That depends on the commodity hauled, and to some extent
on the distance hauled. I think that instead of arriving at the differ¬
ence by a per centage, the difference in the cost of handling should be
the measure of difference in the rates.
Senator Castleman : Is not that uniform ?
A. No, sir ; as it is impossible to reduce it to a percentage.
Senator Castleman : Could you not arrive at it by some uniform
method ?
A. I know of no better method of ascertaining the cost than to sit
down and figure it up.
Senator Castleman : You say the cost of handling in car loads and
less than car loads would be relatively the same ?
A. I do not understand what you mean by relative cost.
Senator Castleman : You speak of the difference of car load and
less than car load rates being determined by the cost of handling ; the
cost of handling a given calss of freight as compared with another class
under the same conditions is uniform, is it not?
R M—3
34
A. Yes, sir.
Senator Castleman : And the cost of handling less than car loads
of a given class of freight, as compared with car loads of the same class
would be uniform, would it not ?
A. Yes, sir.
Senator Castleman : Can you not establish the difference that
ought to exist between car loads and less than car load rates ?
A, Suppose the rate was 10 cents and the difference in handling
cents, then the same difference of 3^ cents would exist on a haul of
500 miles as well as on a haul of 50 miles—now where is your percent¬
age ? Instead of fixing a percentage you have got to add a fixed sum
to the rate, and that sum would not vary materially and the percentage
basis is not practicable for that reason. In the case mentioned the 3^
cents would be 33 per cent, of 10 cents, but would be but 10 per cent, of
30 or 35 cents.
Senator Castleman : Can you then give us no idea as to what the
uniform difference between car loads and less than car loads should be ?
A. I could do that as regards any particular commodity, but there
are perhaps 25 or 30 different commodities on which that rule would
apply, and it is a rather difficult computation.
Senator Johnson : Are not all rates made on the per hundred
pounds basis ?
A. Yes, sir ; nearly everything. Cattle and sheep ought to be but
are not now.
Senator Castleman : Have you examined the bills which have
been introduced here, and can you give us any idea as to what differ-
ence should be made in them between car load and less than car load
rates ?
s •
A. I have looked over some of them, but have not had a chance to
give them a careful examination. As I have said, I think in a general
way the difference should be based upon the difference in the cost of
handling. I think on a great number of the commodities there will be
no substantial difference—car loads and less than car loads would be
very much the same, but of course there are exceptions. Most of the
articles which are mentioned in the bills are such as are handled almost
altogether in car loads. Take agricultural implements—there is a case
where the difference between car loads and less than car loads is and
should be very great. In one case we deal with solid carloads, loaded
at the works and unloaded by the shipper.
Senator Castleman : If I understand you, the Missouri Pacific is
taking business between St. Louis and Omaha, and St. Louis and Kan¬
sas City at practically the same rates. You say that as they have the
plant between Kansas City and Omaha they are doing no one any in-
35
jury, provided they can pay anything over operating expenses, if they
could not get it otherwise. In building this line were not all these
facts taken into consideration?
A. I presume they were, but the line was built primarily for the
purpose oí furnishing an outlet for the Missouri Pacific to Nebraska,
from the east and south—from Texas and Louisiana.
Senator Oastleraan: And you say it requires no additional plant
to do this business ?
A. Practically none. It is only incidentally that the road hap¬
pens to be in the trade between St. Louis and Omaha. That may have
been one of the objects, but primarily it was to connect the Missouri
Pacific system with Nebraska.
Senator Oastleman : You think, then, that the road makes these
rates for the benefit of the city of St. Louis ?
A. I think it is done for the benefit of the Missouri Pacific road
primarily, but it is certainly a great advantage to St. Louis.
Mr. Miller : The business is of no benefit to the Missouri Pacific
Kailroad unless the earnings are such as will pay the cost of transpor¬
tation and interest on the bonded debt ?
A. It is a benefit if it pays anything over operating expenses. It
requires no aditional plant, and interest on the bonds is going on
whether they do any business or not.
Senator Oastleman : Is it not a fact that your doing this business
at such a small profit makes it necessary to increase your rates some¬
what along the line between St. Louis and Kansas City ?
A. In the first place I am not here representing the Missouri Pa¬
cific road, but I can, perhaps, give the reasons which actuate them in
doing this business, as the same principles apply to us and to any other
well managed railroad. I say the Missouri Pacific is doing no injury
to anybody in Missouri by taking this business, so long as they make
a dollar over and above operating expenses, as this business enables
them, rather than otherwise, to reduce their rates in Missouri. There
is no case on record, and never was, where a reduction of the through
rate caused an advance in the local, never.
Mr. Miller : If the business that the Missouri Pacific does on the
line between Omaha and Kansas City pays only a small profit above
the cost of the transaction, from what source does their interest, and so
forth, come from?,
A. I think I have already said that the business between St. Louk
and Omaha was merely an incident to the construction of the road, and
that it was primarily built as an outlet for the Missouri Pacific from the
south into Nebraska. If it had been desired to build a railroad be¬
tween St. Louis and Omaha they would have taken a shorter route—it
36
is only incidentally that it happens to serve the purpose of forming a
line between St. Louis and Omaha.
Mr. Miller : A road to be profitable must earn interest on invest¬
ment as well as the cost of transacting business. Must not some other
part of the system pay interest on the investment in this case ?
A. I have not said that the Nebraska line was not doing this.
Mr. Miller: In such case as this somebody must pay for the trans¬
portation and other expenses of that part of the road ?
A. If paid at all, yes.
Senator Castleman : You say that the earnings of the Missouri
Pacific line from Kansas City to Omaha are not sufficient to pay for
maintenance and fixed charges ?
A. I did not say that, because I do not keep the Missouri Pacific
books—I know nothing about it. I merely say if they are more than
enough to pay operating expenses they should take the business, and
that it is no discrimination against Missouri if they do.
Senator Castleman: Do you not think that unless the rates from
St. Louis to Omaha are too low the rates from St. Louis to Kansas City
are too high
A. I do not think that follows at all. I do not mean it doesjnot cost
more to haul the business to Omaha than to Kansas Citv, but I do not
€/
claim that it is worth just as much to the Kansas City man to ship corn
or any other commodity to St. Louis as it is to the Nebraska man to
ship the products of Nebraska from Omaha to St. Louis.
Senator Castleman: If the rates from Omaha to St. Louis are so
small as not to go very far to help pay oS interest on bonds, it must be
paid somewhere ?
A. That is true, but it does not come from the business of Mis¬
souri. The business which supports the line through Missouri is that
coming from Kansas and the southwest, and more or less from
Nebraska—the business of Kansas is not Missouri business. Mr. Miller
will tell you that not one-tenth of the business shipped east or west
through Kansas City is properly Missouri business.
Senator Castleman: Well, going back to the general principle
that if the line referred to does earn less than enough to pay interest
on bonds, it is the Missouri freight that must sustain it ?
A. No, because the Missouri line itself is supported by the busi¬
ness from other States which crosses it.
Senator Castleman: Is not this an argument that applies just as
well in Kansas, Iowa and Nebraska, and Illinois, and do you not use it
in Illinois with reference to Iowa business, and in Iowa to Nebraska
business, as in Missouri to the southwestern businesss ?
A. I should undoubtedly say in Illinois just what I say here, that
37
the railroads of the State are being supported by business from other
States, because it is true. It is just as true there as it is here.
Senator Castleman : But the line from Kansas City to Omaha is
supported by the business between St. Louis and Kansas City?
A. I do not think it follows. I do not want to pettifog this case,
but it certainly seems to me that it is a clear business proposition ; that
with a railroad built between Kansas City and Omaha, and with a rail¬
road already existing between Kansas City and St. Louis, no matter
for what purpose they were built, that any business which can be
gathered up from the Nebraska line over and above its cost and
brought in over the road in Missouri should be taken.
Senator Castleman : You have reduced your rate between Kansas
City and Omaha to match the rate from Omaha to Chicago. If it were
not for the competition of Chicago you could charge a higher rate from
St. Louis to Omaha, but since you cannot you say you have to make
these rates for the purpose of making running expenses, but that if it
were not the competition with Chicago you could charge a proportion¬
ately higher rate to Omaha than to Kansas City. Supposing it were
not for the competition of Chicago, and there was but the one route to
Omaha ?
A.* Omaha, in that case, could ship nothing at all in competition
with Kansas City. If St. Louis were the only market, it would be
right to make a higher rate to Omaha than is made to Kansas City, and
there would, perhaps, be no injustice done to Nebraska, or at least to
that portion of Nebraska tributary to Omaha, but the trouble is that
Omaha is just as near the seaboard as Kansas City, and it is just as
near Chicago as Kansas Oity, and the seaboard being the ultimate des¬
tination of the products of Kansas and Nebraska, and Chicago and 8t.
Louis being in competion for the intermediate handling, the railroads
have found it necessary and advisable to so equalize the rates as to
give both St. Louis and Chicago a chance to do the business, the dis¬
tance being practically the same both ways.
Senator Moran : If you take location into consideration, does not
that northwestern trade properly belong to St. Joe, and is it not unfair
for you to enable St. Louis and Kansas City to compete with St. Joe
for it ?
A. The same conditions apply to St. Joe as to Kansas City.
Mr. Babcock : The rates from St. Louis to Omaha, and from St.
Louis to Kansas City are the same. Under these conditions is it not a
discrimination to charge more between intermediate points than is
charged between St. Louis and Omaha ?
A. The law says it is a discrimination, and it is not being done.
38
The law says this, and the Missouri Pacific makes its rates accord¬
ingly, rather than go out of the business.
Senator Ball : If Omaha had to pay double what is charged Kan¬
sas City, would not that shut Omaha out almost entirely?
A. It would be shut out almost entirely wherever it comes in
competition with Kansas City.
Senator Ball : Does not this long and short haul clause virtually
force each community to live within itself?
A. Carried to its legitimate conclusion it does.
Senator Ball: Applying this long and short haul, could Chicago
and St. Louis compete for the Nebraska business ?
A. Yes, sir; they could continue to do so, because they are prac-
tiaally the same distance. St. Louis, however, labors under some dis¬
advantages as a market which might confine Nebraska to Chicago.
Senator Ball: Confining ourselves to the State of Missouri, sup¬
pose we want to ship from Nodaway county to St. Louis, on this long
and short haul, could a commodity be shipped from Nodaway county
and compete with those products raised nearer market
A. Probably not. Nodaway county is a long way from St. Louis.
Mr. Kelly : I understood you to say some time ago that the farmers
of Nebraska ought to get their products to St. Louis as cheaply as the
farmers of Missouri ?
A. No, sir ; you misunderstood me.
Mr. Kelly: I thought you said so. If you haul at the same rate
for 500 miles as for 211 miles, has the place 211 miles away from mar¬
ket the advantage of its natural location that it should have?
A. The question in this case is whether St. Louis is being injured.
I suppose St. Louis wants that trade, and Nebraska is just as near
Chicago as it is to St. Louis, and has a market there for all its produce.
I suppose it is more or less of an advantage to have a market in St.
Louis as well as in Chicago, and I presume that what the Missouri
Pacific road is doing is very much more for the interest of St. Louis
than for the interest of the Nebraska farmers. The advantage of the
Nebraska farmer is with reference to the Chicago market; it is only
because the Missouri Pacific road pursues a tortuous route to get to St.
Louis that they are put in the position of being obliged to haul 200 or
or 300 miles for nothing. It is only because they built on to lines they
already had, rather than build a direct line.
Senator Parcher : I would like to ask Mr. Kipley, in making his
comparison with the schedule made out by the commissioners, that he
employ or take note of the classification used by our commissioners,
instead of the joint western classification, for the reason that it would
39
be more ea&ily understood. I mention this, as he would be more apt
to use the joint western ?
A. There is no trouble about that, and I have no objection to
adopting the suggestion. I hope, however, that whatever your final
action may be, one of the things you do will be to abolish your present
classification. It is clumsy and inconsistent, and altogether out of line
with the classification used everywhere else in the country.
Mr. Bridges : Suppose the rate on wheat is raised 10 cents, say
from Sedalia to St. Louis, would that reduce the price of wheat at the
place of shipment or raise it at the point to which it is consigned? In
other words, would the producer or the consumer suffer ?
A. The producer.
Mr. Bridges : If wheat can be raised only for 65 cents per bushel,
and they can barely realize that, at the rates now in force, if the rates
are raised 10 cents a bushel would the production of wheat have to
cease ?
A. Unless it can be produced for 55 cents, yes.
Mr. Bridges : If the production is stopped, would that not, as a
matter of necessity, cause the consumer to pay the increased rate in
the end ?
A. Yes, sir.
Mr. Bridges : Then is your answer correct that an increase in the
rate results in injury to the producer ?
A. My answer is right and wrong both. It is right if the rates
were advanced from that particular locality and nowhere else, or if
they were advanced from this particular State and no other. It would
be wrong if the advance were general all over the country ; if from
every wheat-producing section the rate were advanced 10 cents, the
immediate result would be felt by the consumer.
Mr. Bridges: As a general proposition, when railroad rates are
advanced will the producer in the end suffer in the least ? Will it not
be the consumer in any event? Will it not be the consumer, and is
it not always the consumer who in the end pays increased rates of
transportation ?
A. I think that is so whenever there is a general increase ; yes.
Mr. Bridges: Then would not a law to prevent discrimination
as between localities, answer the purpose ?
A. So far as this State is concerned, yes ; but it would only apply
in this State. If rates were advanced above the rates in other States,
Missouri would be injured.
Senator Oastleman : Does not the question as to whether or not
the loss falls on the producer or consumer, depend upon the fluctua¬
tion of the market price ?
40
A. No, not in the sense in which the gentlemen put the question.
Senator Oastleman : The question was, if the market price remains
the same, and the rates of transportation are raised, does the loss fall
on the producer or consumer ? If the market price goes up ten cents,
and the price of transportation ten cents, it falls on the consumer?
A. Yes, sir ; but that was not the gentleman's question. It was
without regard to the market price. If the advance in rates did not af¬
fect the market price it would fall on the'producer, of course.
Mr. Kell\ : I would like to ask the distance from Omaha to Chi-
V
cago ?
A. Four hundred and ninety-four miles.
Mr. Kelly : Does it not cost a railroad more to ¡haul wheat 494
miles from Omaha to Chicago than it costs one of the Missouri trunk
lines to haul wheat 211 miles ?
A. Undoubtedly in does.
Mr. Kelly: If you can live at that rate are not the Missouri trunk
lines charging us too much for 211 miles ?
A. They do not charge as much.
Mr. Bodine : It is about 200 miles from Omaha to Kansas City, is
it not ?
A. Yes, sir.
Mr. Bodine : Is not the money and labor expended in hauling
produce, intended for the sea-board, that extra distance, just so much
loss to the community at large.
A. That is something I never looked at in exactly that way.
Mr. Bodine : If all the railroads in the country were owned by
the government, all the money expended in hauling that freight around
by Kansas City, instead of hauling it direct to the sea-board, would be
a loss to the people ? You say you believe it is for the general interest
of the people that the roads should prosper and the general interest of
the roads that the people should prosper ? Now, do you not think that
it is unwise that all this extra money and labor be expended ?
A. If the government or the people were paying the expenses of
the railroads that might be true, but so long as the railroads are pri¬
vate corporations, it seems to me that we might, with the same propri¬
ety, claim that there are about fifty clothing stores in St. Louis and
that the business could be done very much more cheaply by one.
Mr. Bodine : Do you not fail to draw the distinction between the
two classes of business ; one is a function of the government and the
other is mere private business ?
A. I do not understand that the railroads are exercising any func¬
tions belonging to the State. They are regulated within certain
41
bounds, but I do not understand that beyond certain bounds they are
of interest to the public.
Mr. Bridges : I find that the Missouri Pacific has two schedules of
rates, one showing the rate from St. Louis to a station 100 miles out on
their line, and a local distance tariff showing rates between local sta¬
tions on the same line, and the rates in the local distance tariff are
from twenty-five to thirty per cent, higher than for the same distances
from St. Louis. I would like to ask if you consider such a difference
reasonable ?
A. Yes, sir; because the business moving between the local sta¬
tions is very light in volume, in the first place, and if such a distance
tariff is published it probably covers the branch lines where it is mainly
used. Of couse the great bulk of the merchandise is covered by the
tariff from St. Louis, and they can hardly afibrd to make the same rates
on the small quantities moved between points on branch lines. I am
speaking without having had any conversation with them and without
any knowledge of the tariff to which you refer, but I can conceive that
that is what they would be obliged to do.
Mr. Bodine : Does your road recognize the charges fixed by the
commissioners in this State ?
A. No, sir.
Mr. Bodine : Of course you have had your attention called to that
part of the Statute which authorizes the commissioners to reduce ratés ?
A. Yes, sir.
Mr. Bodine : Your road does not recognize the right of the com¬
missioners to reduce any of the rates ?
A. No, sir.
Mr. Bodine : You are not a lawyer ?
A. No, sir.
Mr. Bodine : Upon what grounds does your company base its
refusal to comply with these rates ?
A. I believe it is done by the advice of counsel, but am not
familiar with the reasons.
Mr. Timmons : Do you pay any attention to the rates fixed by the
commissioners in Illinois ?
A. Some years ago the roads put their rates down in accordance
with the rates fixed by the commissioners.
Mr. Timmons : What was the cause of their making this reduction ?
A. It was done after a test of the constitutionality of the Illinois
law.
Mr. Timmons : Do you refer to any particular case ?
A. So far as we were concerned I think there were two cases ; one
of them I do not recollect, the other was the Neal-Ruggles case.
42
Mr. Timmons : What was the nature of the case?
A. Putting a man off a train for refusing to pay more than the
legal rate.
Mr. Timmons: Since that time your company recognizes the
decisions of the commissioners and admits that they have the right to
fix a schedule of rates ?
A, I do not know that we admit that, but we conform to the rates.
The case referred to was the origin of our decision of the matter. It
was referred to our directors in Boston, and that was their final deci¬
sion.
Senator Oastleman : You say the expenses of the roads are being
paid by private individuals ?
A. I meant the stockholders.
Senator Oastleman : Do the stockholders pay your charges ?
A. We have not as yet been obliged to ask them to do so.
Senator Oastleman: Is it not true that the shippers pay the
charges ?
A. In some cases the shippers do, and in some cases the stock¬
holders.
Ohairman : I think that is all, Mr. Ripley, unless you have some¬
thing further you wish to say.
A. I believe I am pumped dry.
statements and evidence of judoe trimble, solicitor for c., b. & q. r. r.
May 26,1887.
The Senate Oommittee on Railroads and Internal Improvements
met at 9:30 a. m.. Senator Johnson of Montgomery, Ohairman, presid¬
ing.
Senator Oastleman: I move that the committee take a recess un¬
til the House adjourn. The Honse will have a short session this morn¬
ing, and we have invited them to join us in the consideration of this
question.
The motion was seconded and carried.
The committee reassembled at 10:30 A. m.
Judge Trimble (representing the Ohicago, Burlington & Quincy
Railroad, and some other railroads), having been introduced by the
chairman, said :
Mr. Ohairman and Gentlemen of the Oommittee : I certainly feel
under personal obligations to you for inviting me talk to you. I appear
before you this morning under some embarrassment personally ; I have
no doubt that some of you have formed an impression that a gentle¬
man who belongs to the lobby is hardly worthy of your confidence ; I
43
am sorry if you think so. I generally try to maintain a fair reputa¬
tion in the country where I live ; if I have injured it since I came
here it is by association with other gentlemen, I feel largely by associ¬
ation with members of the General Assembly. However, I don't think
I have suffered materially; possibly in the estimation of some gentle¬
men 1 have, because I have not had the honor of associating with them.
Now I confess I am a member of the lobby ; I am not able to see why
it should damage a man to belong to the lobby unless the methods of
the lobby are questionable ; but I presume every member of the lobby
uses largely his own methods ; I am not responsible for the methods of
any other gentleman ; I am not here to vindicate any other gentleman ;
let every gentleman vindicate himself. My father belonged to the
forty-gallon Baptists, and the fundamental principle of his church was
that every tub should stand on its own bottom. So far as my own
methods are concerned they are open—every gentleman can investi¬
gate them. I see before me a large number of the senators—the hon¬
orable gentleman from St. Louis, the gencleman from Carroll,, the gen¬
tleman from Madison, my friend Senator Mansfield, and other senators;
my friend Senator Smith, and a large number of gentlemen whom I
have conversed with whenever I had opportunity—always glad to have
the honor—and I am very willing to have them say what methods I
have used towards any of them—Senators Wood and Downing—at
least twenty of them, possibly more; and if any gentleman can bring
aught against me or my methods I am ready right now to have them
get up and say so ; I challenge investigation. If any gentleman wants
to criticise my conduct I am ready to meet him anywhere, at anyplace,
provided it is an open meeting; no side issues, no assault in the dark;
if I am not able to answer anyone I will admit it openly ; give me half
a chance, that is all I ask. If my character cannot stand investigation
let it go down. Now is there anything, Mr. Chairman, dishonorable in
being here as a friend of railroads, provided I use proper methods ? I
don't know, if there were a bill here to regulate the sale of whisky in
Missouri I expect these saloon gentlemen would be here. I have no
doubt, whatever you might think of their personal standiug or charac¬
ter of their business, you would listen to them. It it were a bill to
regulate the great naining interest of this State—for it is vast—I may
say growing every day through the agency largely of those very indus¬
trial interests - that I have the honor to represent—railroads—some
miners would be here, and no doubt you would treat them with great
consideration, for it is a legitimate and valuable industry in this State.
If there were a*bill to regulate the agricultural interests, and to affect
materially their prosperity, the farmers would be here, and we would
all treat them with great deference because they are largely in the ma-
44
jority« I am here to represent another interest—the railroadinterest—
the greatest wealth producing agency of any age in the history of civili¬
zation, a large agency that is just in the very commencement, as I hope,
of its history ; an agency that has given to this republic a power
to accumulate wealth with greater rapidity than any nation on earth
ever accumulated it before. We have made more wealth since the
great struggle over the perpetuity of the Union—we have accumulated
more wealth within twenty years through the agency of railroads, aided
by other idustrial interests in this country, than was accumulated by
the Roman Empire in five hundred years of her early history. Isn't it
amazing that we can accumulate wealth with such tremendous efläci-
ency that our treasury is overñown; and the question among members
of Congress, as it always seems to be—a little singular, the question is,
What will we do with the money ? And as a consequence there are
different schemes to get rid of it. What shall we do with the surplus?
We don't know. It has decreased the interest on money in the country;
at the close of the war money was commanding from ten to thirty per
cent.; now, in order to provide circulation, even in the West, I mean
in business circulation, seven per cent, is a large interest. You know
bonds of Missouri can be readily sold at par at a very low rate of inter¬
est ; I presume four per cent, bonds would bring par and possibly a
premium ; these gentlemen that represent the financial interests of the
State understand that better than I do ; but look at the growth of the
credit of your State. A few years ago your credit was very low, as
every member of this General Assembly knows ; now no government
on earth ha's better credit than the State of Missouri. What has been
one of the principal agencies to enable you to redeem your credit and
put it upon such a solid basis that your bonds stand in the market
to-day equal with the bonds of the Federal Government itself? I
won't say what has been the sole agency, but what has been one of
the principal agencies—railroads ; railroads have done that. You are
not suffering very much I am sure. Some gentlemen, some members
of the Assembly have said perhaps the best thing to do would be to
adjourn without doing anything, thinking we are doing well enough ;
that IS for the General Assembly. Now, I am here, gentlemen, not to
express my private convictions as to what you ought to do, but simply
to say to you how the railroads themselves feel upon this subject.
Well, perhaps some gentlemen, possibly my learned friend here on the
right, would say. What have we got to do with that ; what have we got
to do with how the railroads feel ? Cannot we legislate without con¬
sulting the feelings of the railroads? Of course you can ; "but I am happy
to know that the interests of the people and the interests of the rail¬
roads are mutual, and that is the best security for the interests of both
45
that could possibly be p;iven, for there is no security like that of selfish
interest. Why, gentlemen and Mr. Chairman, you have not a com¬
pleted railroad in Missouri; the Missouri Pacific, perhaps, is more nearly
so than any other, but it is an unfinished road ; when it is finished, as
I hope some day, not far distant, it will be, you will see the ioundatious
of every bridge will be stone—unless something better is invented; in
the future every culvert will be stone ; every bridge will be steel, if
they don't invent something better—and this is the age of invention ;
every rail will be steel up to seventy-five or eighty pounds to the yard ;
possibly we will get a difi'erent kind of ties ; if not, they will have the
best kind of ties made out of the material we now use ; the entire road¬
bed will be ballasted with rock or gravel ; it will be double track, so
there will be no danger of these collisions which we have so frequently
in this country ; it will give to property and life very much better
security than it does to day ; grades will be cut down ; curves will be
taken out largely, and they will be able to handle your property per¬
haps at one half what they handle it to day. What is the history oi
railroad legislation the last twenty years, commencing with twenty
years ago ? Perhaps the average of rates, freight rates, was four cents
per ton per mile; east of Chicago along the trunk lines to day, the
average is one cent per ton per mile. There has been a gradual diminu¬
tion in freight rates ior the whole twenty years. What has accom¬
plished that? Not legislation; not legislative control; that has been
accomplished by other agencies, agencies that it would be very difiicult
for you gentlemen to control or to change without detriment to some
of the great underlying principles of commercial law that assert them¬
selves everywhere. The principal cause of this diminution in freight
rates has been improved methods ; the invention of the Bessemer steel
rail perhaps has done as much or more than any other one agency ; the
increase in the size of the rails, and the resulting increase in the size
of the locomotives and cars ; the augmentation of the wealth of the
corporation itself, which enabled it to cut down grades and take out
curves and improve all its appliances for business, has done more to
reduce rates—I am speaking specially of the West—than all the legis¬
lation that ever has been or ever will be enacted. Those are the ele¬
ments which are accomplishing for you the great destiny which I hope
awaits you in the future. It is not a very safe experiment for any,
except infinite wisdom, to undertake to interfere or regulate—to adopt
any kind of regulation which may in any way interfere with the great
influences at work to bring about your destiny. There are other reasons
why freight rates have been reduced : one is competition ; it don't
make any difference about your pools; I know pooling has been
a bugbear held up to the people; I don't care myself, personally—
46
I don't believe the railroads do, as to what you do about pooling ;
they have very strong convictions on the subject that anti-pooling
laws won't do you any good j as the National Congress has seen fit to
legislate to some extent at least upon that subject, why they are will¬
ing to try to stand it if the people think they can stand it. Competi¬
tion has done very much towards reducing rates, competition in towns
that are located on roads, competing roads ; for every road has to take
care of its own towns, has to give its towns every advantage which
other roads give to their towns. It is not simply the object of rail¬
roads to lower its rates in order to get immediate freight that may be
offered toit; their management is a little wiser than that ; they look
to the future; they want to build up their towns, and the wisest man¬
agement d-lways aims to build up the best towns; not one single town
like the great city of St. Louis or the great city of Kansas City, or the
prosperous town of St. Joe—call it a city out of deference to my friend
to the right—or Springfield, or any of these prosperous young cities in
the State of Missouri j that is not what they are trying to do, although
of course they are trying to build them up ; they are trying to build
up on their lines every town; of course, to do that they must extend
some favors to help them along; if they are not a wise management
they won't do that.
Now, Mr. Chairman, I have just said to you that the railroads of
this State are unfinished. I represent a road, for instance, that runs
down in the country represented by Senator Sebree ; that road is a
new road ; it has iron rails and wooden bridges ; we think we are very
economical ; we are not very aristocratic people that run it ; we save
all that we can; year before last we were $1,900 behind; the gross
earnings failed to meet the current expenses by $1,900; we have two
hundred miles of road; of course, gentlemen, we are running that
road on hope; we hope to develop something out of it in the future.
There are four millions of money in the road—didn't realize a cent of
income. If any gentleman doubts it, go to your commissioners, go to
your board of equalization ; that is the record ; they will tell you
what I say is true. Last year we made $3,000 net on that road ; that is
not much income on four millions ; still we keep running, so every
man gets the benefit of it ; we run it because we hope to built it up in
the future, to develop it so that it will pay us as well as benefit the
people. Of course, we don't build a road from patriotic considerations ;
people that have money to put into roads never do that ; we built it
because we hoped to make money out of it in the future ; that is sim¬
ply a resume of the condition of the railroads m your State ; there are
roads that are finer than that and roads that are worse ; I give that as
an illustration of the lines in your State. If these properties are
47
legitimate, and if these industries are legitimate, if you believe it is
your duty and your interest rather to encourage them, of course you
gentlemen won't pass any law that will embarrass them unnecessarily.
Now I think you will agree with me about that ; I am not here to say
that you shall not do anything, shant pass any law ; I don't believe
that ; and no Senator or member of the House will say I have said or
done anything to discourage him from passing a fair law to regulate
railroads ; of course, when I talk about regulation that means control,
that means embarrassment to some extent. It may be an embarrass¬
ment which in the future will work no harm to the railroads ; some¬
times we need regulation ; we cannot always have the kind of agents
everywhere we would like to have ; the agents themselves do wrong ;
we cannot always control them; they are not always right. We em¬
ploy cheap labor just like anybody else who is trying to make a living;
the station agents don't perhaps average over forty dollars a month in
small towns; they are necessary for us to have Sometimes they are
seduced by these ingenious gentlemen who ship steers,' hogs, corn and
wheat, and who get them to give a little advantage over some neigh¬
bor, one an advantage over another ; I don't believe that ought to be
done ; any law that would stop that kind of thing, I believe in it.
Senator Simrall : I want to ask whether a mere station agent will
take it upon himself to give one man a lower rate than another with¬
out authority from the general manager of the road, or one of its chief
officers ?
A. Well, it would be necessary to explain the character of the
organization. Senator, before that could be answered. We have a gen¬
eral freight agent; then we have soliciting agents, as I believe almost
every road has ; these soliciting agents are, of course, given discretion ;
they travel round over the country, and they and the station agents
handle this business largely. They, of course, have some discretion,
because there is very sharp competition, as you all know; of course,
the general freight agent must ultimately endorse it, or he would have
to discharge every one that does those things. Our soliciting agents are
given discretion ; undoubtedly they do those things sometimes without
consulting the general agent ; they have to have some discretion or
they could not run the business. I don't claim to know anything about
the details of the freight business ; I don't claim to be an expert on
freight ; I could not stand any such examination as Mr. Ripley went
through yesterday ; I don't claim to know anything abgut that because
I don't think any man that is not a practical freight man ought to pre¬
tend to know anything about that business.
Senator Castleman : Let me' ask a question. You say you give
your soliciting agents discretion ?
48
A. That is what I understand.
Senator Oastleman : They can vary the rates when they so de¬
sire ?
A. They can vary the rates when they desire.
Senator Oastleman : When they exercise this power that your
road gives them, that is what you call seduction by some of these
gentlemen who ship long horned cattle?
A. Yes, sir.
Senator Oastleman : That is it ?
A. Yes, sir; some of these gentlemen who ship long-horned cat¬
tle are very seductive in their methods, and they try to get the best
rate they can get, and the agent, to get their business, will give it ; that
is one of the great complaints in this State—discrimination. I have no
doubt that the best thing for the people, and for the railroads, too,
would be to pass a law to stop all that kind of business, and when you
have it, enforce it. I have no doubt of it—as far as the seduction busi¬
ness is concerned. I don't mean to be offensive to the gentlemen who
ship, they are a pretty smart class of men. I have no doubt they
would get away with any ordinary lawyer, possibly with a railroad
lawyer; I know I wouldn't like to tackle them. Now, I want to say,
too, that the road I represent has never advised me to oppose legisla¬
tion ; they are not grieving; they would worry along if you didn't do
anything at all, as they have for a long time ; .but they understand
that there is a feeling of discontent in the State—as there is in a great
many other States—among people towards railroads, and they believe
that any legislation that would tend to harmonize this great industrial
interest with the people of the State would be beneficial to both, be¬
cause there is a vast property that needs the protection of the law, and
of course needs the goodwill of the law-abiding people—the law-mak¬
ing power of the State. The railroads are a little afraid of strikes,
mobs—or have been—and they have great respect for the law-making
power of the State—the great mass of the people of any State—and
who send their representatives here to make laws, because they know
if they cannot live in peace with this great power they cannot stay in
the State or do any good. So they feel great anxiety to be on good terms
with the people of the State; or, to use the language of a leading rail¬
road man of this western country—a man that has grown right up in
your country—they believe they cannot successfully run a railroad
through an enemy's country ; they want to make peace with the peo¬
ple of the State, that is why I have always said, whenever I have
spoken to any member, that I thought that any kind of legislation that
tends to promote harmony, good will »between the people of the State
and the railroads was much better, even if it were a little oppressive
49
to the railroads. Every Senator I have talked to will corroborate that
statement. I appeal to the Senator from Clay if it is not true ?
Senator Simrall : Yes.
A. Of course there was not entire harmony between the lobby ;
they lobby are like other people ; they don't always harmonize.» but
that has been my view of the matter. There are a dozen Senators that
will corroborate that ; I have never said anything else. That brings us
to this proposition: it is conceded you have the power to control; what
is the best thing for the people of the State to do now ? Well, I think
one thing you have wisely intimated you will do, is to find out what
views railroad people entertain. I don't think that is any disparage¬
ment to your intellect nor to your capacity as legislators, or your states¬
manship. I remember that when Congress conceived the idea of passing
some bill to control the railroads of this country—the interstate rail¬
roads of this country—one of the things they did was^ to appoint a
committee and send that committee all over this broad land to take
testimony of leading railroad men, leading shippers, leading commer¬
cial men, and other men supposed to have peculiar knowledge of the
different phases connected with this very complex problem, for the
purpose of getting light to direct them in formulating a bill. They
spent months and months taking this testimony, and after they hatf
their testimony all taken, and a report had been made upon it by the-
committee appointed to take it, they formulated a bill. Finally that'
bill became the law known as the interstate commerce law. I am very
glad, Mr. Chairman and gentlemen of the committee, that the General
Assembly of Missouri have seen proper to adopt the same course. Of
course you cannot go into that so elaborately, but you have very kindly
«
and wisely determined to hear and consider such statements of railroad
people as see proper to come before you. Of course you are not bound
by anything they say ; it is simply a matter of light, and I don't see
why you should not get it. This is an extremely complex problem,
the problem of railroad control by legislatures ; it is not only com¬
plex, but it involves very large special experiences which men engaged
in the ordinary avocations of life never can acquire, never; they
are experiences known only to gentlemen engaged in the railroad
business itself. I don't know of any other way that you could get
light except by going to those kind of people ; oí course, when
you get it, you weigh it and you determine what you think you
ought to do in view of the light you have acquired; you are not
bound by anybody's statement; I don't pretend that. Now, to come
to the point exactly : what kind of control do you think the legis¬
lature of a State ought to exercise ; what control can you exer-
R M—4
50
eise that would be beneficial to the people and not discouraging to
railroad capital ? Because ever^^ railroad that has a line in the State
wants to build more ; it has got to issue its bonds and go east where
there is surplus capital and get money to build additional lines*. I had
a little talk yesterday evening with a man representing two lines ;
they are trying to get more bonds to build more lines in Missouri ;
that is the way we get money ; so it don't make any difference whether
we are here and have a railroad or it is some new company who wants
to build a railroad ; they are all interested alike, and they are all
opposed to any legislation that will discourage the investment of
capital in that kind of enterprise ; we are all mutually interested in
not discouraging it. The question is how far you can safely go and
yet protect the growing interests of the State ; I have no doubt you
can go some distance; I believe it is conceded everywhere that you
should have laws to prevent unjust discrimination. I have not heard
of any railroad—any member—that would oppose anything of that
kind. I believe you have laws on that subject ; perhaps you have no
very efiEicient mode of enforcing them ; that is a matter I will refer to
directly, for your Constitution provides certain restraints that should
be imposed, as I understand it. Oí course I take it for granted that
every member feels some conscientious obligations to try to carry out
and enforce the provisions of the Constitution. The Constitution, as 1
understand, requires some railroad legislation on the subject of long
and short haul ; it requires some legislation on the subject of discrimi¬
nation ; it requires legislation on classification and maximum rates. It
does not require any on the subject of pooling, as I understand it ; well,
the road that I represent has no objection; if you, gentlemen, think you
ought to put a clause in on the subject of pooling we have no objection,
because we think that matter is of no very great value, under the
present state of affairs, to railroads. While we believe pooling has
never done anybody any harm, and has done some good, we don't pro¬
pose to make any objection ; we don't think that a clause as to that in
any law you may enact, will discourage investment of capital in rail¬
roads. The long and short haul is provided for in the Constitution ; if
the legislature wants something of that kind I wouldn't ask any mem¬
ber to oppose any fair measure, the design and purpose of which was
to carry out a provision of your Constitution. My doctrine is, when
you have a law, whether it is fundamental or legislative, live up to it ;
I think it is very dangerous to have laws on the statute book, funda¬
mental or otherwise, and have them disregarded.
Now I will pass over the matter of discrimination ; it is not neces¬
sary to talk about that; I believe everyone concedes on all hands that
is plainly required by the Constitution, that there should be a provision
51
in regard to it, and the railroads would be glad to have you do it. So
in regard to the enforcement of the long and short haul; it is in the
Constitution. We submit ourselves, as representatives of the railroads,
to your wisdom on that subject ; we say we have no objection to carry¬
ing out the provisions of your Constitution; I think it is best. That
brings us to the question of maximum rates. The language of the
constitution is that the General Assembly shall, from time to time, es¬
tablish reasonable maximum rates—shall by law establish reasonable
maximum rates
Mr. Booth : Shall pass laws establishing ? "
A. Yes; shall pass laws establishing reasonable maximum rates.
I don't doubt but what it is plainly the duty of the General Assembly
to pass laws establishing reasonable maximum rates. I am not here
as a lawyer to say you can escape the discharge of that duty ; I have
too much regard tor my profession and for the supremacy of the law—
because it is only under the supremacy of the law that we can have
any security for person or property—I have too much regard for it to
say that any provision of the law should not be regarded with respect.
JSTow, I know it is regarded as a very complicated problem ; a great
many members seem to think that that cannot be done so as to be safe ;
they think that there is so much fluctuation that any reasonable maxi¬
mum rate you establish would be impracticable. The Constitution
seems to settle that ; it says you shall do it. The next thing is how
you are going to tackle the problem, how you are going to make the
classiflcation. Some gentlemen say : leave it to the commissioners.
I will not raise any constitutional question ; I don't think it would be
profltable—as to whether or not you can do that; but I think it is safe
to say—and I believe that the freight men will corroborate me fully
when they come before you—that if you adopt a reasonable maximum
rate that we can live on for two years, that would be wiser than to
leave it to anybody to determine what is a reasonable maximum rate.
That does not mean you can establish some power in the State to regu¬
late rates and take charge of them, and change them backwards and
forwards to suit fluctuating circumstances; that is not what I say. To
regulate rates is one thing and to establish reasonable maximum rates
is another, and a very different thing ; that means to put an outside
fence beyond which the railroads cannot go in regulating their rates ;
that is the plain meaning.
Senator Sebree : I want to ask—I don't want to divert the gentle¬
man's mind from his line of thought; I want to ask a question. Is it
possible to establish reasonable maximum rates without doing so with
reference to allowing a road to make a percentage on its investment ?
must it not be done with reference to permitting a road to earn a
52
certain percentage on its investment ? can it be done otherwise ? if so,
in what way ?
A. 1 think any reasonable maximum rate ought to be so ad¬
justed as to give the road an opportunity, if it were economically
and well conducted, to make a reasonable percentage upon its in¬
vestment when finished. I don't expect that the General Assembly
would establish a Jaw which would enable the Chicago, Burlington &
Kansas City to pay a reasonable percentage on its investment. They
have never but once since I have been connected with them—which is
fifteen years—never but one year earned more than paid their running
expenses. The roads in Missouri are in an unfinished state ; the rail¬
roads themselves are all new in Missouri and the west, are unfinished •
and if they make a living they ought to be tolerably well satisfied.
They are living largely on hope. Most of the roads that run through
Missouri, with rare exceptions, are not making money enough to live
on ; they don't expect to at present, they are simply developing ; they
are in an unfinished state, not developed ; I don't expect any law this
General Assembly can pass will enable them to make an interest on
their money, but I would be glad if they could; I would like to see it
passed ; but there is, perhaps, the Missouri Pacific, Chicago & Alton,
and Kock Island—I don't know about that in Missouri—I believe it
does make an income on its investment; what percentage I don't
know, what dividend—but whatever law is passed ought to be a reason¬
able maximum rate.
Senator Hazell : Eight in the line of Judge Trimble's line of
thought I would like to ask him if he means to take the position that
the constitutional provision in regard to passing a law to establish reas¬
onable maximum rates—this outside fence he speaks of constructing—
if that excludes the idea of regulation ?
A. Well, I intended. Senator, not to discuss that thing at all,
because I doubted whether it would be profitable. I supposed
there would be a difference of opinion about it, and I thought I
would put it rather on the ground of public policy than on the other ;
but I am very frank to say I think it does. The framers of the consti¬
tution seemed to anticipate the present feature of the interstate com¬
merce law—which is the product of the best statesmanship of to-day,
whatever you say of the effect of the law, we know the men who form¬
ulated it are amongst the ablest men in America—Edmunds, Reagan
and others; it is no use to say it is not the product of very able men,
whatever you gentlemen may think ; the framers of your constitution
seemed to anticipate what recently has crystalized into the form of a law
from the brains of the best men of America. I don't believe—in answer
to Senator Hazel—I don't believe it was intended by the framers of the
53
Constitution to give the General Assembly power to regulate railroads ;
I think it was their intention that the General Assembly should put up
an outside fence, say ''you cannot get outside of that say "you cannot
extort; within these limits you may regulate your own rates in other
words, leaving it flexible; every railroad man will admit it is extremely
important to do that. That brings me to a practical question. I am
not here to advise what you ought to do because I am interested in any
railroad ; I would like to see whatever you do fair.
Senator Hazell : The way I understand the judge—I only want to
get at his idea; he is a lawyer, I understand ?
A. Yes.
Senator Hazell : I want his judgment upon that question. Of
course I differ from him in the construction of the Constitution ; I don't
see how he confines that to passing a law to establish reasonable rates ;
the very language imports a different meaning to me—to regulate?
A. I didn't intend to be drawn into that kind of a discussion ; I
thought it would be better to settle it on the ground of public policy
rather than on constitutional construction.
Senator Parcher : I don't want to divert your mind, but I rise to
remind you that Senator Cullom was the father of the present Illinois
Statute. The Illinois Constitution was adopted, 1871-72, which is very
similar to ours ; the next legislature that convened after its adoption
gave the commissioners power to fix absolvte rates, under the present
constitution ; that legislation was overturned by the supreme court.
In 1873 the legislature enacted their present law giving the commis¬
sioners power to make rates, but only making them prima facie reas¬
onable. Since 1882-3, the rates have never been questioned, but ac¬
quiesced in. The commissioners there were given power to regulate
rates within the maximum rates established by the legislature under
the constitution ?
A. Yes, sir ; I am aware of it. Men will differ about these things.
There is quite a difference of opinion amongst the courts in the United
States on that question ; therefore I didn't think it was wise; I didn't
suppose I could accomplish any good, either for the railroads or any¬
body else, by discussing that question ; I didn't intend to go into it ex¬
cept as I have been called out by questions. I take the plain language
of the Constitution itself ; that is the best guide for any
man, lawyer or layman ; that says it is the duty of the Gen¬
eral Assembly to pass laws establishing reasonable maximum rates.
Now, what does "maximum" mean? that means not to regulate, to
put it down, but to pass the highest rate that can be charged and leave
it there. It is to establish, not to regulate ; establish means to make
a thing permanent. You establish a maximum rate ; when you get it
54
established we have something that stands there, that is a permanent
thing; there is an outside fence to control railroads, to prevent them
from extorting from the people ; that leaves them plainly within
that boundary, the right to regulate their rates ; in other words,
leaves it flexible ; I believe that is the best policy. The first thing
I want to talk about, is the question of the practicability of getting
at these maximum rates. The only men that have special ex¬
perience as to rates are these freight men, men in the business ; it is
an exceedingly complex problem ; I confess I don't know anything
about that ; there are gentlemen here, members of the General As¬
sembly, that know more about it than I do. When you come to com¬
pare notes together, some may have practical experience of rates, and
some have had observation about it, of course ; I believe there is a way
3^ou gentlemen can arrive at a reasonable maximum rate. You have
three commissioners, one who has served you at least six years—Gen.
Harding—another has served you over two years, and the other is
quite recently in his office. I had a talk with Mr. Ripley, and he said
to me : I am not certain but what he said it to you yesterday in his
talk—Mr. Ripley said to me, he believed the railroad commissioners
and the freight men could agree upon reasonable maximum rates. I
believe they can myself, for I think the commissioners are disposed to
be reasonable ; I know the railroad people ought to be reasonable,
whether they are or not—I think they are inclined to be—they are
business men, there is no reason why they should not be reasonable. I
believe these gentlemen could get togetherand agree upon rates which
will be satisfactory to you ; and I don't know any other way to get at
it. Here are three men representing the interests of the State, and
there are the other men representing the interests of the railroads ; if
they can agree upon this subject after an examination of differences, I
don't know why it would not be entirely satisfactory to you gentlemen.
I know if you were sick and were to call a doctor, you would take his
medicine like a little man, because you have confidence in him ; when
you have a lawsuit you go to some lawyer and trust your interest to
him. Here is a great problem ; you don't understand it perfectly, but
you have your commissioners, one of whom has studied it for six years.
If they and the freight men—practical men—if they can get together
and agree on maximum rates, I donT know why you cannot adopt
them. I want to say I don't believe, from my intercourse with mem¬
bers, that there is any member here but what wants to be fair to the
railroads ; it is only a difference in arriving at it. I believe your gen¬
eral feeling is the same. In a bill of particulars, as a lawyer would say,
you find considerable difference in the items of the bill, but I have no
doubt the general ieeling of members of the General Assembly is the
55
same; I know that they appreciate the importance aod value of rail¬
roads ; I have no doubt of that ; it is only a question of how far you
can go safely, without injuring yourselves as well as the railroads. I
don't know any better way to get at it than I have suggested. There
is this point of difference between us ; the railroad people—and I speak
not my own sentiment, I merely speak the sentiment of the people
who sent me here—the railroad people do not want to have the General
Assembly pass reasonable maximum rates, and then give to three men^
no difference who they are, the power to reduce those rates ; I believe
that would discourage them more than anything else you can do. I
don't say every railroad man has just the same view on this subject,
but the mass of the railroad people I know have, and especially the
railroad people I represent have that kind of feeling. There is a reason
for it ; I will assign it ; in the first place we desire some law that will
tend to restore peace between the people and the railroads ; if we had
not that feeling very strong we would be glad to see you adjourn with¬
out doing anything. We fear that if there is nothing done to relieve
this feeling, or to allay it, possiMy in the near future it will culminate
in something that would be seriously detrimental to these great indus¬
trial interests. I believe that is the impression my men have about
the matter. So we think it is to the interest of the railroads, as well
as to the interest of the people, to pass some law that will tend to bring
them into more harmonious relations. We would be very glad to sub¬
mit ourselves to any legislation that would tend to bring about that re¬
sult ; we don't believe that giving the commissioners power to reduce
rates alter you have fixed upon the maximum will bring about that result.
I will tell you why : every man forms his opinions largely through the
influence of contact with other men with whom he is intimately asso¬
ciated in business. History tells us that Kings are nearly all influenced
by courtiers ; there is an atmosphere right around them ; they can never
see what the nation demands ; that is the reason of so many failures.
We know in our own country that is largely true with our Presidents,
with a very few exceptions ; I am not sure but that the gentleman who
now presides at Washington—the gentleman with such a large name—
can see a little beyond the cabinet. I know Andrew Jackson could ;
he is about the only man I could bet my last dollar on—as the term is
—he was a man that oould always look over the heads of his cabinet;
they were his clerks ; and he saw the nation, saw what it wanted, and
he always said, ''by the Eternal I will do what is for the best interests
of the nation ; I don't care what the cabinet wants." He looked into
the future of the country ; it takes a very strong man not to be infiu-
enced by his immediate surroundings. You take the commissioners;
who are the men they come in contact with, deal with? It is the
56
shipper. Where is he ? He is in every country neighborhood all over
your broad and beautiful State. Understand it is the tendency I now
speak of. The shipper is the neighborhood leader; he forms neighborhood
opinion ; he ships cattle, hogs, corn and other things ; he is the man
that comes in contact with the commissioners ; it is to his interest to
get freight down, and if you place it within the power of the railroad
commissioners to redoce the rates he will make an appeal, of course.
Senator Allen : I would like to ask a question on which I have
been thinking about ever since I heard Mr. Ripley : Do you think
that a railroad running from St. Louis to Omaha, through Kansas City,
should be allowed to carry freight at the same price from St. Louis to
Omaha as it does from St. Louis to Kansas City ?
A. I will have to give an indirect answer to that, Senator.
Senator Allen : I am asking for information?
A. I have already said I don't claim to bean expert in freight
matters. We will take the Missouri Pacific to illustrate the idea. The
Missouri Pacific has a railroad ; it could handle sixty trains a day on
its tracks if it had got that amount of business; we will say it has
only thirty trains a day; so far as the track is concerned, I consider
that the great majority of the cost it has, say one-half of its capital,
dead, unavailable. Now if it could, by going to Omaha, get thirty
trains more a day over its track, it would make its entire capital avail¬
able.
Senator Allen : Please answer my question and then give an
explanation ?
A. I think they ought to be allowed to do it under certain condi¬
tions that 1 will name. Now I will give the explanation : They have
that capital already ; one-half of it is only available because there are
only thirty trains to Kansas City ; while if they go to Omaha, and by
eo doing get thirty trains more a day, they can work the capital to its
fullest capacity. Suppose they are making six per cent, on the busi¬
ness between Kansas City and St. Louis, and. can only make two per
cent, on the business between St. Louis and Omaha, isn't it better for
the road that they should be allowed to make this additional
two per cent if it don't cost anything ? In other words, if you
had a million dollars to loan, and you could loan a man $500,-
000 at six per cent, and the other $500,000 were idle, and some
man comes along and says 'T will give you two per cent, for it,"
you would say 'Take it ;" why should you not do it, if you have the
capital in your hands, if you cannot make it available at six per cent*
you had better make it available for something. Here is a roadbed
completed; it costs $30,000 dollars a mile, say; only one-half of it is
available ; if they, by going to Omaha, can make the other half avail-
57
able and only make two per cent., it is better to do that as a matter of
business ; it don't hurt Omaha.
Senator Allen : How does it affect Kansas City ?
A. If Kansas City deliberately made up her [mind] to grease and
swallow Omaha it might keep her from doing it.
Senator Allen : Would it be liable to swallow St. Louis in the
process ?
A. I doubt it.
Senator Allen: What advantage would it give St. Louis over
Kansas City
A. I don't know that it would give St. Louis any advantage over
Kansas City ?
Senator Allen : As a matter of public policy, do you believe that
one city within a State should be allowed to send produce or freight, or
whatever you may choose to call it, to a city beyond the limits of the
State as cheap as they should to a city within its own State, within the
same State?
A. That depends entirely on whether allowing it to do that
would hurt anybody ; if it don't hurt anybody I don't see why it should
not be allowed, if it helps it.
Senator Allen : As a matter of fact, isn't it discriminating against
a city of this State to allow any city to send freight through that city
to a city in another State in that way ?
A. That might or might not be. I think in your case, Senator,
it is not ; I will tell you why : Omaha has five or six lines to Chicago ;
it can do all its trade with Chicago ; if it can get a connection with St.
Louis, round by the Missouri Pacific, St. Louis will get part of the trade ;
Kansas City loses nothing ; nobody loses anything except Chicago ;
Chicago loses something and St. Louis makes ; that is all there is
about it.
Senator Allen : As a matter of fact, doesn't it drive Kansas City
out of competition with the markets of Omaha ?
A. No, sir; because Omaha has got roads already to Chicago—
can get freights just as cheap.
Senator Allen: I am talking about Kansas City, not Chicago?
A. I think you are mistaken ; Omaha has already—
Senator Simrall : I would like to ask a question : Has this body
anything to do with interstate commerce ?
Senator Allen : We are here for information.
Senator Castleman : I would like to know the nature of the ob¬
jection and then hear the ruling of the chairman on it.
The Chairman : It is not for the Chair to decide the extent of this
discussion ; it is for the com mittee ; the Judge will proceed.
58
A. I will be very |2;lad to answer questions, at the same time I
want to say I don't claim to be an expert; I only reason about these
matters as other gentlemen would. I don't think it would hurt Kansas
City, for Omaha has already her connections with Chicago—five or six
trunk lines running to Chicago ; she don't get freight any cheaper be¬
cause the Missouri Pacific carries it ; she gets the same rates exactly
that ss all, except she gets a choice of markets ; she may go to SL
Louis instead of Chicago; that is the only diflference.
Senator Allen: As a matter of fact, don't it have the effect of
allowing St. Louis to get into Omaha and rob some other city of it&
market ?
A. No, sir; I don't think so; I think you could run right round
the Missouri Pacific, go into Omaha from Kansas City and gobble them
up—go right into its territory ; I have no doubt you can.
Senator Ball : Could Kansas City get as cheap a rate from Omaha
as St. Louis could get from Omaha ?
A. I presume it would get cheaper.
Senator Ball : If it can get as cheap or cheaper, can Kansas City
be hurt by competition ?
A. Kansas City has some greater advantages through its situa¬
tion ; it can run back of Omaha and take lots of trade in there. If
she proposes to sap the life out of Omaha I have no objection ; I would
like to see them take it.
Bepresentative Kelly : At the same time wouldn't they sap the
life out of St. Louis?
A. That is a family fight I don't propose to go into, as I am an im¬
ported lobyist. Now, Mr. Chairman, I was talking about this matter
of allowing the commission to reduce the rates. I know if there i a
any truth in human nature still remaining, if human nature is the same
to-day that it was when Adam was compelled to go from the Garden
of Eden, and has been ever since, that constant applications from local
shippers in every neighborhood of the country desiring lower rates,
better rates, alwas asking ''Give," "Give," "Give," will infiuence these
gentlemen and cause them to yield to the constant demand for rates,
that would not be living rates, or the other alternative; if they will
have the moral courage to refuse, these same local shippers will, a&
was said the other day, say, " you are sold to the railroads ;" and the
clamor will be kept up. That is one objection I have to that feature,
but not the main objection. Possibly we would find it just as well to
have the commissioners fix the rate ; I don't speak of the present com¬
mission ; I have no doubt they are nice gentlemen, reasonable gentle¬
men ; possibly they would give us as fair a show as we could reasonably
ask, but the trouble is the other trouble ; if you feel it is to your inter-
59
est and to the interest of the railroads to secure a ieeling of peace,
have lasting peace between the railroads and the people, I know that
very thing would leave a constant source of comp aint ; that instead of
bringing about a state of peace between the people and the railroads,
it will keep growing and growing ; it cannot be otherwise.
Senator Sebree: I desire to ask a question, and before doing so I
desire to bear personal testimony to the reputation of Judge Trimble.
Judge Trimble, you have remarked very correctly, that we of the leg¬
islature know nothing about those railroad minutae, intimating pretty
clearly—and I quite agree with you—that we are not very capable of
making and fixing rates as required by law. That being true, doesn't
it make the necessity that much greater to leave that matter to these
railroad commissioners ? they can send for persons and papers, exam¬
ine railroad officers, investigate, and look after it more carefully and per¬
sonally than we possibly could do it ? And in addition to that I will ask
you if the testimony before the Interstate Commerce Committee does
not show clearly that is the only way to make operative this fiexible
law of which you have spoken, which I think, to my mind, can only be
done through the instrumentality of the railroad commissioners ?
Therefore, if we fix the maximum by law we might fix it too much,
and we would have to suffer two years ; the next legislature might
make it lower and lower. In other words, is it not impracticable for
the legislature by positive enactment to do that thing, but must we
not leave it largely to the railroad commissioners in order to carry out
the flexibility of the law you have spoken of? I just direct your atten¬
tion toit?
A. I am very much obliged to the Senator. No, I don't think it
is, Senator. The truth is, you never have three practical men in your
commission. If the people of Missouri should elect Mr. Newman—I
don't mean the Honorable member from Kandolph—I mean the freight
agent of the Missouri Pacific, if they would elect such a man as that I
would be glad to submit it to him, any business man that understands
the matter. I have great confidence in the present commission, but
what do they know about it practically ?
Senator Sebree: They are devoting all their time.
A- Yes, I have devoted several weeks to it, and don't know much
about it ; there is only one class of men that know much about it,
freight men, business men. You can take the freight rates of Iowa,
Illinois, Kansas, Arkansas, you can take the statements of the com¬
missioners and Mr. Ripley and others, and make a comparative state¬
ment, and make out a schedule of maximum rates in four days' time
that will be just as good as any that the commissioners can make out
in four year's time, for they would have to go to the very same sources
60
for information. You cannot make such a rate from day to day as Mr.
Newman and Mr. E-ipley could make, because you don't understand it,
and I don't understand it ; all these thousand little complications that
have to be considered from day to day and from hour to hour. When
you make your maximum rates you go to the same source of informa¬
tion these commissioners would have to go to ; you can go to it in
twenty minutes ; all you have to do is to go to the Library, take these
various rates in neighboring States, and take what the commissioners
have already done, take the statements of such gentlemen as Mr. New¬
man and Mr. Ripley, and get up a foundation for your classification ;
then make out your schedule ; make it on a comparative basis, and
you will get as near to it as they will.
Mr. Drabelle: In regard to shipments to Omaha from St. Louis
and Chicago your idea I believe is by allowing those shipments to
Omaha to go through Kansas City from St. Louis, St. Louis gets part of
the trade which otherwise Chicago would get?
A. Yes, sir.
Mr. Drabelle : Is the rate reasonable between Omaha and St.
Louis by way of Kansas City ; or, in other words, does not the road
necessarily have to haul between Omaha and St. Louis at an actual
loss, or do they in part haul it at an actual loss for the purpose of ccn-
trollingthat business in that way.
A. When you ask me as a question oí fact whether they do haul
at an actual loss or not, I am totally ignorant. If you put an hypo¬
thetical question, if you will assume it could make a little per cent,
over and above the actual cost, say one or two per cent., I am free to
say it would be a wise thing to do, to try to make it ; if the road has
that much dead capital and could not use it in any other way. If you
ask me as a question of fact whether they really make anything, that
must be left to gentlemen that know, for I don't know anything about
that.
Mr. Drabelle : The basis of my question was laid last winter be¬
fore the Internal Improvements Committee when it was stated by a
gentleman before the committee as a matter of fact that freight was
hauled through Kansas to St. Louis at a lesser rate than it would be
from points in Missouri to St. Louis.
A. That may be a fact.
Mr. Drabelle : I want to ask if the rates are not made on thé gross
earnings, and if they are made on the gross earnings would not, prac¬
tically, the people of Missouri not only be paying their own freightage,
but also a portion tor the people of Kansas ?
A. No, I think not; I don't think they make the rates on the
gross earnings ; I understand in making rates they take into considera-
61
tion a great many elements ; of course competition is a very important
element; the risk of hauling is a very important element; that was
illustrated yesterday by Mr. Ripley better than I can do. For instance
you take a car load of silks, and a car load of pumpkins, or rather, say
water-melons, for they are shipped by the car load ; one is worth
twenty-five dollars and the other is worth twenty thousand dollars or
five hundred thousand dollars ; while the railroad can actually ship one
almost as cheap as the other, yet they charge twenty times as much for
one as for the other. In fixing rates they take into consideration a
great many things besides the mere expense of hauling it ; that is too
complicated a problem for me to talk about.
Senator Ball : I want to ask a question : If they haul freight from
Omaha to St. Louis for a given price cannot the same road haul freight
from St Louis to Omaha west at the same price? don't the rule cut
both ways ?
.A. I think they ought to haul at the same price both ways ; I pre¬
sume so ; I have never been able to see the Missouri Pacific arrange¬
ment by which it goes into Omaha and works for trade, in any other
light except in the light of a great benefit to the capital city of the
State, with all due deference to the future capital city, Kansas City.
Senator Kerwin : I move that this body now rise and take a recess
until two o'clock.
The motion was seconded and carried, and a recess was taken.
The committee re-assembled at 2 p. m.
Senator Gideon : I move that all interrogatories propounded to
the parties who are discussing questions before the committee be
postponed until the conclusion of the argument.
The motion was seconded.
Senator Gideon : When a man is pursuing a certain line of argu¬
ment and questions are being continually propounded from a large
body like this, it frequently throws the speaker off his line of thought
and does him an injustice. I think we ought to let such as ask inter¬
rogatories write them down and ask them at the conclusion of the
argument.
Senator Hazel : I am opposed to the motion on two grounds. In
the first place, I presume that no gentleman would come before this
committee to talk to it about railroad legislation unless he knows what
he is talking about, and has thought beforehand of the matter he
intends to tell us about. In the next place, a man may be talking to
this committee, and he may suggest something; it may be be has
assumed a false position in my view of the matter, or it may be I want
to understand him more thoroughly, want more light, and right whilst
62
the point is being made by him, I think by calling the attention of the
committee to it is the better way, and thus we arrive at a conclusion
without waiting till it becomes cold. I believe the better plan will be
to propound questions as we go along. The speaker evidently knows
what he is talking about; it does not prevent him from pursuing the
line of his argument.
Senator Sears: Yesterday we permitted Mr. Ripley to get through
with his speech, and then we spent the whole afternoon asking ques¬
tions and getting answers; I think that a better plan.
The question was taken on the motion, and it was adopted.
Judge Trimble then resumed his argument as follows :
Mr. Chairman and Gentlemen of the Committee : I want to say,
Mr. Chairman, I do not claim to be an expert in anything that may be
before you, and that is in fact in the bills that have been introduced
and referred to you; I do not claim to be a freight expert; I know
*
something about the general principles of freight, but it is purely
theoretical. I don't think any man who has only a theoretical knowl¬
edge of the business ought to claim to know anything about it; but
there are some other matters I have thought of that I would like to
talk about.
I was discussing the question of the propriety of giving the com¬
missioners power to regulate rates, of course in that connection discus¬
sing the question of the establishment by the General Assembly of a
reasonable maximum rate. I take it for granted from my intercourse
with members that all of them believe that—well I won't say " all,"
but a great many believe if any bill is passed it ought to indicate a
reasonable maximum rate, and that seems tobe the general impression.
Now, if anything more is done it will be something in addition to that.
That presents two problems: First, will you establish reasonable
maximum rates; secondly, will you authorize the commissioners, after
you have done that, to change the rates—by lowering them of course.
I suggested before noon that the commissioners would be subjected
to such a business influence by local shippers, who compose the great
mass of shippers of the State, who permeate every neighborhood in
the commonwealth and make up public opinion, and who make up the
aggregate of the opinion in the State on the question of shipments—
that by their constant contact with the commissioners they would be
almost certain to make rates lower than the railroads could stand. That
thing has been well illustrated in the State of Illinois, and spoken of
by Mr. Ripley. There they allowed the State of Illinois to get off from
paying their share of the expense. The precedent of Illinois is hardly
a precedent for Missouri. If Missouri may do the same thing, if
63
Kansas and Nebraska do the same thing, what is going to become
of the railroad system? where will that end? We have to live off
«
the public. A railroad is like a county officer: it does not pro¬
duce anything; it does not manufacture; it does not raise corn
or hogs; it sells transportation to the public; all the revenue it
gets it collects off the public, just like the county government or the
State government. If Illinois does not pay its share of revenue to
keep up these industries some other State must do it, or the industry
must go down. It is unfortunate that any system should be adopted
that could enable a State like Illinois to escape paying its fair propor¬
tion. These public enterprises must be kept up or they have got to
stop, perhaps in self-defense, stop. If other States follow suit, the
result will be you will soon see your railroads languishing. They are
unfinished; they must make money to,finish or they must languish.
Suppose they do, who must suffer? Of course the stockholders suffer
more directly, perhaps sooner than you do. You are certain to suffer
some in consequence of it, so I don't think it wise that the people of
the country ^should adopt any system which may make the railroads
suffer, which will prevent them developing themselves. Every step
they make forward to complete their enterprises enables them to
handle your freight cheaper. As they have more improved appliances,
as more railroads are built, you have the benefit of competition and
your rates have come down, not all the time uniformly exactly, for
there is a little fluctuation up and down in the progress down, but a
uniformly general downward progress of rates for the last twenty years
till now, when any business man familiar with the matter will tell
you it is a matter of astonishment how cheaply your freights can be
handled.
I remember when I was a boy my father lived over in Indiana ; he
used to haul his wheat in an ordinary wagon eighty miles over a cor¬
duroy road and sell it for thirty cents a bushel, taking two-thirds in
trade. All the money he got went to pay his taxes ; he never expect¬
ed to make any money ; he expected to live and accumulate a little in
the increase in the price of his land. That is the way we lived, and
that is the way any gentleman of my age will tell you they lived. We
wore homespun ; our shoes were made of leather tanned from animals
that died of murrain, or some other disease, tanned by a local tannery.
The shoes were made by a local shoemaker who was paid in bacon or
€orn for his work. We never patronized people at a distance except to
buy powder and lead, and pewter to make buttons, iron to make chains
and hames, things oí that kind ; we never saw any fine gaitered boots
which you see everywhere now ; there wasn't any railroads to give
passes, either; we had to foot it.
64
Well, now, the object the railroads have—it is not my ob¬
ject—I don't own an}'- slock in railroads ; I am simply reflecting the
sentiment of the railroad people ; I don't know how you will flnd out
what they want except you get it from railroad men. I know what i&
to the interest of railroads is to the interest of the people. You know
how railroad capital feels about this ; so when you come to legislate do
not do anything that will discourage the development of the State»
They don't want you to turn over to three or five men, or any other
men, the power to handle one hundred and fifty millions of property
that has an income of forty millions a year, and then subject them to
all this local influence that spreads over the entire State, where men
are working in their own interest. All business is conducted on selfish
principles. That is the principle of political economy taught by Adam
Smith and every other writer since his day. All business is conducted
on selfish principles; of course, on honor, but still selfish. If you ap¬
point these three men or five men to regulate rates they will be sub¬
ject to the influence of these thousands of shippers permeating every
part of your commonwealth, bringing their concentrated influence to
bear on these three men constantly, from day to day. The inevitable
result, as I believe, would be finally to get the rates below what the
railroads can stand; whereas, if you fix reasonable maximum rates,es¬
tablish them as your constitution says they shall be established—let
them be established, fixed, not changed from day to day—they will
work for two years, and at the expiration of two years your commis¬
sioners' can take the statistics and report to you ; learn all they can
about the matter, then in two years make their report to the General
Assembly and let it make any modification or any change that experi¬
ence suggests.
Some gentleman asks me what is a very pertinent question, wheth¬
er any reasonable maximum rate can be established that is practical ?
1 do. There was a time, Mr. Chairman and gentlemen of the commit¬
tee, when rates were much more fluctuating than to-day ; there was a
time when roads were short, the country was new, developing not so
rapidly, when if there were a failure of crops in any locality it perhaps
aflTected the entire length of the road and left it almost without any
business, when they would charge more for what little they had to do
in order to live at all. There was a great deal more fluctuation then
than now. To-day your lines of communication are very long, and
roads that may be short themselves form running arrangements ; that
is to say, they have a virtual consolidation for business purposes so
that all freight lines are long, extending, you might say, from ocean to
ocean. In fact, so long are they that where there is a crop failure in
65
Nebraska and a good crop in Illinois, or a good crop in Kansas and a
poor crop in Missouri, it does not affect the lines as it used to ; they are
all interested together and they divide freights, and the crop failure is
equalized. The result is there is not such fluctuation as there was
years ago, each road not being dependent upon a good crop in its own
neighborhood ; it has its business relations so intimately connected
with other lines of the country—long lines of communication—that a
crop failure may take place in its immediate vicinity," but it has the
advantage of dividing the profits with other roads in the country—the
lesser road with the long lines belonging to the same corporation, un¬
der the same corporation. Take the 0., B. & Q., extending from Chi¬
cago to Denver; take the Union Pacific, extending half way across the
continent ; take the Missouri Pacific, with five or six thousand miles ; a
crop failure would hardly affect it seriously, for it would only aflfect a
portion of its line. They are more perfect than years ago; they have
more branches ; they have grown with experience, adjusted themselves
to varying circumstances.
There is no question in my mind—I think any freight man will tell
you—any good freight man will tell you that you can establish a rea¬
sonable maximum rate that will be perfectly safe to last for two years.
When Congress determined to investigate the question of railroad con¬
trol by the federal government, and had appointed its committee and
taken testimony as I have before suggested, they met together to devise
and formulate a bill to regulate interstate roads ; after considerable
deliberation this consideration being conducted by the ablest states¬
men of America, undoubtedly, and men who have devoted special
attention to this matter of traffic and railroad regulation and control,
they concluded, when they reported their bill, and passed it, that it
was not wise to touch the matter of rates at all, so they didn't under¬
take to regulate rates ; neither empowered the commissioners to do it;
nor did they adopt a schedule of reasonable maximum rates. They
thought, undoubtedly, after a very full investigation—and I accord to
those men the very^ highest motives of patriotism and public spirit,
every gentleman must necessarily accord to them the highest esteem
we can command ; to say the least of them, they thought it unwise to
touch that delicate and complex problem of fixing rates, or either of
leaving it to the commissioners, or regulating it directly by law. So
they have left it. I don't suggest that this General Assembly should
do that, because their Constitution has spoken ; I concede that ; I don't
ask any gentleman here not to follow the requirements of the consti¬
tution, but I do suggest that the Constitution requires you to fix a
reasonable maximum rate, and let it be the fixed rate for two years, so
R M—5
66
there can be no clamor, no constant demand from day to day from
local shippers to lower the rates on one side and the resistance by the
railroads in self defense on the other. I believe it is the best thing yoa
can do if you want peace ; remember that is my text. Railroads
«
can do without being controlled. If you can by any law commence
to establish harmonious relations between the people and the rail¬
roads we will be very glad to accept it, and try to live under it;,
for every gentleman must realize if this state of feeling on the
part of the owners of this country—the people—those who dictate
its policy, dictate its laws, continues to grow and intensify against this
special property, the railroad property of the country, it must finally
culminate in great evil to the property itself. We desire to cultivate
friendly relations with the people of the State ot Missouri. I am not a
resident of the State of Missouri, but I am fortunate, or unfortunate,
in representing 900 miles of road in the State. We don't want to leave
it; we could not if we wanted to. We want to do the best we can for
you, and in doing that do what we can for ourselves. Now what we
ask of you is to establish reasonable maximum rates ; let them be rea¬
sonable and let it be settled for two years ; let us try to do it so that
there will be no clamor, and in two years you will be able to take a
step forward.
The ablest and the best legislature that history gives any account
of is the British Parliament. Every lawyer knows that one of its most
commendable qualities is the caution with which it advances into the
future. Sometimes we Americans—a mercurial people like us—think
they are old fogies ; we say they are old fogies because they go slow.
They never take more than one step in the uncertain future. They
wait to see how it works, then they consider themselves justified in
taking another; it takes a long time ; they are fighting over the same
kind of a problem now; it. will develop in the future. What we say is :
try this ; see how it will work for two years. I believe the people of
Missouri can stand it. I don't believe you are suffering so much. In
fact, I believe if you were to enforce the laws against discrimination,:
certainly if you adopt the long and short haul, giving the benefits of
competition, and prevent discrimination, that is about all the legisla¬
tion you want. •
Mr. Chairman, some gentlemen will doubtless say we have had
this statute on the statute book a long time. Yes, we have had several
of them. They have not been enforced ; therefore, you have not der
rived any experience from them. About all they have accomplished
for you is to constitute the foundation for complaints, and possibly just
complaints and discontent. That is what they have done. It has
caused people to say, way these corporations, these rich railroads,.
67
trample on the law, disregard the mandates of the officers of the^State.
It does not occur to these people who make those complaints that pos¬
sibly the laws are so unfortunately framed that they cannot be enforced,
and that a railroad, like almost anybody else, would disregard them if
there were no method of enforcing them. But they constitute a ground
of complaint; and if the laws were so framed that they could be en¬
forced, practically enforced, I don't say they cannot now, but possibly
practically they are not so framed as to be very satisfactorily enforced.
If they were, and then the railroads v/ho trample on them disregard
them and bid defiance to the constituted authorities of this State, I
should say it was a just cause of serious complaint on the part of the
people; for I don't believe in having any law on the statute book that
is not lived up to, that is disregarded by any portion of the people of
the State, or an}'- that may come within your borders.
This brings me to what I deem a very important thing to be accom¬
plished by this General Assembly. If it does legislate at all, that is, if
you pass a law, if you place in the law a provision against discrimina¬
tion, and I know you will because that is the universal opinion—if you
have a law against the long and short haul—possibly you will have,
for that is in the constitution and expressly called for by its terms. I
don't think it very wise except in a general way. I have no doubt gen¬
erally that is the right principle, but there are undoubtedly circum¬
stances that justify the disregard of such a rule. I will not elaborate
that, for it can be done better by such gentlemen as Mr. Ripley, Mr.
Newman and others. If you have in addition to that a schedule of
rates, if you pass a statute against extortion—which you would if you
had a schedule of rates—for any charges over the schedule would be ex¬
tortion, then you would make those statutes enforcible. I think that
%
is more important than anything else. Now the question is, what pro¬
vision will you make for their enforcement ? Will you undertake to pro¬
vide as ''293" did, that the commissioners should listen for rumors and
if they imagined a law had been violated in any part, take a gun in hand
and start in the country upon a shooting expedition ? I say with all due
respect to the gentlemen that voted for "'293"—I am just merely speak¬
ing from memory—this bill provided if the commissioners suspected—
that is the meaning of the bill, that may not be the exact phraseology
—that if the law had been violated they should investigate it. That is
all right. They should go to the place where the complaints were made,
and they came to the conclusion that there was any just ground for
complaint they should immediately institute suit. Well, why ask the
commissioners to do that? It would be better to discharge them and ap¬
point some lawyer for $500 a year to go around over the country to com¬
mence suits. Now, against that we protest. We cannot protect against
68
being sued if we have violated the law ; we don't protest against that ;
it is the privilege of every man who thinks he has been injured by a
«
violation of law to sue us. But if the State is going to assume the re¬
sponsibility of doing the suing, I suggest, Mr. Chairman and gentle¬
men of the committee, with all due deference to the man that formu¬
lated bill 293, that if you want peace between the railroads and the
people, would it notbe wise to empower your commissioners when com¬
plaints are made, to make it a tribunal, not to send it out as a smell¬
ing committee, but constitute it a tribunal to which complaints may be
made, and say that it shall be your duty to investigate them, notify the
railroads, and if the railroads admit the truth of it make your order,
tell them w^hat they must do ; if they refuse to comply, then commence
you suit ; go into court and ask the court to enforce obedience to your
order ; if they deny it, if they say the charge is not true, then investi¬
gate it. Notify the complaining party and the party complained of
and let them appear before the commission as a tribunal to hear com¬
plaints, and both parties being present, let them make their order.
Ninety-nine times out of a hundred the matter would be settled by the
commissioners without any suit or investigation. If it was not and the
commissioners investigated it and made their order, it would be for the
railroad company either to refuse to obey it or to obey it j if they re¬
fused theu the commissioners could say to the court, we desire to have
you enforce oui order. In that way the commission itself would be
honored, dignified, be in a position where it could stand between the
people and the railroads, and where if it dishcarged its duty impar¬
tially, as I have no doubt it would, it would do more to restore peace
between the railroads and the people than any other method I can
think of.
You have had laws on the subject of discrimination. What has
been the trouble in not enforcing them ? The trouble is that if some
shipper of hogs thought some other neighboring shipper had the advan¬
tage of him in the way of rebates, or other reduction of rates, he would
not commence a suit against the railroads for a long, tedious, perhaps
uncertain suit ; he might not even know the truth of his suspicion, but
he would not commence a suit because he don't know whether it is true
or not, and because he don't want to involve himself in an uncertain
lawsuit at an exoense of two hundred or three hundred dollars, when the
A, '
amount involved was only five or ten dollars. I want you if you pass
a law to pass a law that will be enforcible ; if it don't work well, repeal
it when two years come around. If you will authorize the commission¬
ers to make it their duty in all questions involving matters of public
interest on the subject of overcharges, and violation of the statute on
the subject of discrimination, or of the statute on the long and short
69
haul, or on the pooling clause, if you have a pooling clause, or on any
matter of a quasi-criminal character ; to authorize them to prosecute
the suit in the name of the State at the expense of the State till a final
determination of the suit. If the railroad is beat charge it to the rail¬
road. Then these quasi-criminal statutes, that is the statutes forbid¬
ding discrimination and the long and short haul clause, and the pool¬
ing clause, if you have it, and overcharges or extortion—every one of
these statutes would be enforcible by the commfssion without involv¬
ing the citizen, when a statute had been violated as against his interest
—in a lawsuit with a great corporation.
It seems to me that is the practical method of getting at this thing.
You would have a statute that would be enforcible by the commission,
which would be of some value to the State 3 it would give character,
dignity and influence to the commission, and I believe that would work
and tend to restore peace between the railroads and the people. It is
to your interest to do that. You may say let the railroads go. Of course
they can go ; they can go to the dogs, and you can still live. But re¬
member, gentlemen of the committee, that there is a sentiment in this
country on the subject of property that is a little broader than the sen¬
timent entertained by property owners of the country. You may feel
no special interest in the prosperity of a railroad because you have no
stock in it, but you do feel an interest in the rights of property in
America. You know there is an element in this country which is try¬
ing to overthrow all rights of property ; if that element is to succeed,
or has your sympathy to the detriment of railroads, perhaps it wont be
long until other property besides railroads is before you in the same
way.
All property and all property holders are interested in maintain¬
ing proper respect for the law. We must stand together if we ex¬
pect to maintain and perpetuate a republican government, a govern¬
ment of law and order. So I say it is beyond my thought that any
«
gentleman can for a moment lose his sympathy for the rights of rail¬
roads as property in this country. If he does, if he has sympathy for a
spirit which would invade its rights, how soon will it be till it in¬
vades yours and mine ? The same spirit that underlies an assault on
the railroads would make an advance after it has accomplished its
purpose in that respect ; it may be the factory next ; it may be the
farm or the store next ; it is the contest that always has been waged
between the man that owns nothing and the man that owns some¬
thing ; it is the contest between people that own nothing on one side
and those that own something on the other. And railroads are inter¬
ested with you ; they own legitimate property; they are business men,
controlling important business interests, that are so interlocked with
70
your interests that all your interests are in common. It they are
protected you will certainly be. If they lose the protection that the
laws should give to all legitimate industries, possibly you may lose the
protection due to you. I speak now simply in the interest oí peace. I
believe in doing that. I am speaking in your interest as well as in
the interest of the railroads. I don't believe it would be wise that
you should authorize the railroad commissioners to bring suit to re¬
cover the price of a cow that was killed at a public crossing, or of a
hog that fell out of a car in transit ; or for any other piece of property
where it is purely a private matter. Give the citizen a clear right to
go into court and recover his money. He can always do that where
there is anything in it, for I don't know anything in the world so easy
to beat in a law suit as a railroad. I have been trying it for eighteen
years myself; I generally surrender before the first gun is fired; I
know that if I have not got a perfectly clear case I will be cleaned
out, if not by the court by the jury; every lawyer knows that, no dif¬
ference which side of the case it is on.
I don't suppose there is any gentleman, unless he has an idea dif¬
ferent from that of any gentleman I have heard of, expects to make
the commission the agent for everybody who has lost a hog, or has had
cattle destroyed. My suggestion is with respect to all statutes quasi-
criminal ; that the people are all interested in enforcing such statutes
as discrimination, long and short haul, extortion or such clauses ; that
if the commissioners believe, in their judgment, that the matter is of
sufficient importance, they be authorized to prosecute the suit; first
to investigate, make their order upon the railroad, and if it is complied
with that is the end of it ; if not, go into court and ask the court to
enforce the order. So in that way you make the railroad commission
»
a tribunal with power not only to enforce the law by hearing and de¬
ciding on complaints, but by calling the court to their aid if neces¬
sary to enforce their order. Yon will have a special tribunal, and I
have no doubt it will work much better, with much more efficiency,
than if you leave it just as it is now for every man- to try to vin¬
dicate his own right by going into court and suing in his own name,
if there has been a substantial violation of the statute on the sub¬
ject of discrimination or any of these matters.
I merely suggest these things. We have a great many statutes
on the book now that have not been practical. I have no doubt
the great trouble is when you come to consider it practically a citi¬
zen don't want—if he has been discriminated against—he don't want
to involve himself in a lawsuit for the purpose of saving five or ten
dollars prospectively, and they don't do it. I have never heard of any
such suit in the State of Missouri. I know none of the roads I repre-
71
sent have been sued. That may be because they are so honest they
have not violated the law; anyway we have had no trouble. When
anyone thinks he has a cause of complaint, and thinks he. has been
discriminated against he complains to his neighbor, and his neighbor
eomplains to the next, and he to the next man, and he complains to
the next man, and you have the whole State complaining but no re¬
lief given. Now they seem to be looking to you for relief. Why do
they look to you? they can go into court. Well, it is because they
think they have not a remedy that is practical or profitable as a rem¬
edy, and you propose to give them fundamental relief ; you propose to
give them the same relief over the country by giving them a different
tribunal to enable them to get their relief really in a different way.
Ï believe the practical way is to make it the duty of the commis¬
sioners to hear these complaints, to make their orders ; if the railroad
refuses to obey and the complaint involves a question of public inter¬
est as I have explained, that the commissioners call on the court to
back up their order—to enforce it. In that way the citizen is not in¬
volved in any tedious, vexatious litigation. The citizen who has got
any complaint will send in his complaint : 'T complain of such a road
that it has discriminated in favor of John Smith in the matter of rates,
at such a time and such a place." Suppose the commissioners call on
the railroad, if the railroad admits the truth of it, then comes their
order ; if the railroad complies with the order, that is the end of it ;
the complainant is satisfied ; he thinks the commission is worth some¬
thing to him. If the railroad refuses, says it is not true, then the com
mission investigate it ; if they find it true they enter their order, and say
to the railroad : "You must desist and pay this man back his money :
you must desist from violating this statute any more." I believe in mak¬
ing it criminal as well. In this way you get the statute enforced ; and you
don't call on a citizen to risk his own money and time, to incur a vex¬
atious lawsuit for the purpose of vindicating a law more criminal than
civil. It is a criminal statute. Why ask him, for the sake of recover¬
ing back ten dollars that he has lost by being discriminated against, to
involve himself in a criminal suit ? I don't think it right. I think if
you gave the commissioners power to prosecute such suits you would
have a statute which could be enforced—a practical remedy. That is
what the railroads want, for they believe that if you will pass such a
law you will have commenced to get peace restored ; that the people
will not cherish discontent against the railroads; that we shall not be
running through an enemy's country; we will be running through a
friend's country. This is something that the railroads will be glad to
have accomplished. I have no doubt many of the railroads do act in
«ome instances unwisely ; they are like other people ; they are in a
72
great struggle to make money, accumulate money, accumulate wealths
Most of us sometimes make mistakes in this struggle of life. I don't
suppose any man lives that has not made mistakes, in all the history
of the country in this active, energetic life, yet in the main honorable,
in the struggle to accumulate wealth that the people of this country
are engaged in, and that is commendable.
You will have a tribunal to settle disputes that may arise between^
citizens and railroads who have been guilty of disregarding the laws.
I am anxious that the railroads be treated like everybody else—made
to respect the laws, to do justice to everybody they deal with. Noth¬
ing occurs to me now further on that subject, except to repeat, if yon
undertake to establish a reasonable maximum rate, as I suppose you
will in any bill you may pass, that I believe if you will have the com¬
missioners and the railroad men get together that they can agree upon
a rate. I believe that the railroad people will agree to set a rate sa
low in comparison with other States—railroads in other States—as will
satisfy the commissioners that it is a reasonable maximum rate. Yon
can get a rate that will be reasonable; you can adopt it. But in con¬
nection with that I would say you cannot have a schedule of rates un¬
less you have a foundation for it ; that is, you must classify properly^
It will occur to any man who reads some of the bills introduced that
the gentleman who drafted the bills didn't have a very clear and full
conception of the necessity of having a classification, and the value of
a classification, and what purpose a classification would serve, and
what kind of a classification ought to be adopted by the people of the
State. It is utterly useless to adopt a schedule of rates unless you
have a classification. Everybody perhaps understands that. It is im¬
portant that when you adopt a classification it should be the most
desirable one you can get, because, as I have already suggested, our
commercial relations in Missouri are so intimately related with neigh¬
boring States and with every State in the Union, it is a desirable thing
to accomplish, first, that you have a classification which is uniform
through the country.
All the roads west of a line running through Chicago, south, have-
adopted what is called—what is known as the joint western classifica¬
tion. It is called some times the western classification. That was*
modified just prior to the first day of April, 1887, in order to meet the
interstate commerce law. ' That classification has been adopted by
every road running through Missouri; by every road running through
every neighboring State of Missouri. It has been adopted by, I think,,
over thirty-two western roads—every road running through lowa^
Minnesota, Wisconsin, Dakota, Nebraska, Colorado, Missouri, Arkan¬
sas, Illinois and other neighboring States. Any railroad man, any
73
freight man, I think, will tell you it is the best classification that has-
ever been devised up to this date. That classification was not got up
for the purpose of any bill ; it was got up for business matters and to
adopt itself to the law recently approved, known as the interstate
commerce law. That classification is harmonious ; that is a classifica¬
tion of neighboring States ; that is a classification that covers all goods
that are to be shipped so far as experience has developed. It is a
classification that is based upon experience, and is the result of over
twenty years' experience. It is a classification perhaps which will
continue to be enforced by the railroads of the west for long years to
come. If you adopt any classification, that is the classification for you
to adopt to start with. It is very full and ample ; it is a growth, it is
an evolution, not created for the purpose of legislation at this session
it is an evolution the result of experience, and is undoubtedly the best
classification you can take. If you take that you have ample material
upon which to base your schedule. If you take that classification,
then get a reasonable maximum rate based upon that ; any ordinary
farmer in the country can take the classification and take the schedule
of rates and figure up exactly what the railroad has a right to charge
him for carrying a load of anything that he wants to ship. It is simple,
precise ; any man can learn it in a few minutes, after the classification
has been adopted and the schedule of rates based upon it.
I want to state to the gentlemen present that this is not a matter
that I have experience about, but it is a matter I get from such gentle¬
men as Mr. Ripley, Mr. Newman and others. In fact, I noticed all
through the winter, through the various bills introduced, that there was
a difference on the subject of classification. I noticed that in the bill
introduced by Mr. Miller of Kansas City, who is Secretary of the Board;
of Trade, who has given some attention to the matter, theoretically at
least, and in other bills that were introduced. The matter of classifi¬
cation is a very important matter. Some portions of the classification
were home-made matter. I don't know how they got them ; that is not
the thing to do. There is no reason for abandoning the classification
that has been adopted by the western roads. It is perfectly satisfac¬
tory, as I have no doubt you will say when you examine it. I think in
any bill you adopt, if you adopt the classification, then base the sched¬
ule of rates on it, with the proviso that the classification shall not be
changed without the consent of the commissioners. That will give you
the best foundation for maximum rates you can ^get in the State of
Missouri. I have no doubt if you make your rate reasonable the rail¬
roads will try to live under it for two years to come.
Before I close I desire to say that sometimes little mistakes occur
from want of information on the part of railroad people. Mr. Newman
is the general freight agent of the Missouri Pacific. I may say that
for weeks there has been more or less prejudice against the Missouri
Pacific. As to the gropnds of that prejudice I have nothing to say. If
Mr. Newman were here he might be able to explain it away, or he might
become satisfied they have been acting badly. If he can explain it
away it ought to be done for your benefit as well as theirs. If they
cannot, if they have been acting badly, he ought to know it, for it is
a bad state of feeling to exist along the line of his road. He is anxious
to get here; I believe he can explain it and perhaps reform it, if refor¬
mation IS needed.
The Chairman: Do you think he will be here to-morrow? I un¬
derstood he telegraphed Mr. Ripley and said he could not possibly get
here to-morrow ?
Mr. Carroll: Mr. Ripley and Mr. Newman will be here Tuesday.
Judge Trimble : The question is about getting them here to-mor¬
row ?
Mr. Carroll: He cannot get here to-morrow; he telegraphed he
could not get here to morrow?
Judge .Trimble : [ would like to know if you are going to hold a ses¬
sion to-morrow? I am so anxious to have Mr. Newman here, not on account
of any interest I represent, but on account of the state of feeling sup¬
posed to exist between the people and the railroad that I will try to get
him here to-morrow. I think wherever there is a bad feeling between
the railroad and the people along the line it hurts all the railroads.
Senator Castleman : I think this matter might de settled right
here ; I think this matter had better be settled now. I move you that
this committee sit daily, morning and afternoon, until this matter]is dis¬
posed of, except Sunday. I will state that I received a telegram from
the Secretary of the Merchants' Exchange asking if the committee
would be in session on Monday. It seems Monday is Decoration Day,
and they will have a holiday on the Merchants' Exchange, and a dele¬
gation from the Merchants' Exchange will come here Monday if you
will be in session. Without specifying any day I move we sit • daily,
morning and afternoon, except Sundays, until this investigation is
closed.
The motion was seconded and was carried.
Senator Sears: Mr. President, I suppose now any member of the
Senate or House or committee will be permitted to interrogate Judge
Trimble about any question he desires ?
Judge Trimble : I am willing to answer any questions that I can.
Mr. Knapp : I want to ask two questions : Is it, or is it not, a
sound legal proposition that this Assembly can comply, and properly
comply, with even a mandatory requirement of the Constitution to
75
pass laws establishing certain things, either by direct means of estab¬
lishing them by statute, or indirectly by means of a commission which
would effect the establishment of those things ? And, secondly, what
are the facts in regard to the Constitution, laws, and present operation
of the commission in Iowa ?
A. In answer to the first question, Mr. Cooley says—he is a better
constitutional lawyer than I am—where power is delegated to a Gen¬
eral Assembly they cannot delegate it to any agents that they create
unless the terms of the constitution show that such authority as that
has been conferred. I have always thought, as this was an express del¬
egation of power—this power to establish by law reasonable maximum
rates—that it could not be delegated. I concede that upon that question
there is quite a diversity of opinion in judicial decisions. Speaking of
the situation in Iowa, with which I am quite familiar, it is quite an in¬
structive history. In 1874 we had a popular cyclone, and what was
called the granger law was enacted ; it would not, perhaps, be regarded
so extreme as it was regarded then, although, perhaps, it would not be
again enacted by that State. That law remained in force four years,
during which the State of Iowa built twenty-seven miles of road—
twenty-seven miles built by the C., B. & Q. from Crestón in order to
keep a competitor out ; they thought the ßock Island would build it, and
when they got the situation they stopped building the road. In 1878
that law was repealed, and the commissioner system, with advisory
power, was adopted^ and next year there were three hundred or four
hundred miles built, commencing after the law was repealed. Since that
time we have trebled our mileage. I mention that, for I think it well
enough for the gentlemen to know the history of extreme legislation
in Iowa. That commission was not authorized to establish reasonable
maximum rates, or to regulate rates, but it had advisory power ; that
is; it could communicate with the railroads and tell them what the com-
' mission thought they ought to do. That commission had advisory
power only ; that is all it has to-day ; but, as said by Mr. Ripley yes¬
terday, I believe no advisory order has ever been entered by that com¬
mission that has not been obeyed by the railroads of the State, except
♦
in one particular instance that I will call your attention to in a mo¬
ment. Now you say why is it that the railroads of Iowa have acted
so differently from the way the railroads in Missouri have acted? I
know they have; I will tell you. It reminds me of the old adage " a
burned child dreads the fire they got burned in 1874 to 1878, pretty
badly burned, too, by this granger law; they learned wisdom by ex¬
perience; they didn-t want any more of that kind of legislation that
they had had in Iowa. The granger law was a very arbitrary law,
the merits of which I need not go into ; it would take too long, and I
76
donH remember all the features ; biit ifc was the long and short haul
with a vengeance ; by that law they had to carry twenty-five pounds
twenty-five miles for a cent, and when you got to the other side they
would charge a dollar or two dollars for it; so the east half of the State
got it for nothing, while the other part of the State bad to pay about
double what they ought to ; that didn't suit the west half and the central
portion, and they repealed the law and established this commissioner
seystem ; they gave the commissioners advisory-power. The railroads
of Iowa having had four years of that kind of experience, and know¬
ing that the General Assembly stood right behind the commissioners,
were very willing—all the old companies especially—to comply cheer¬
fully with whatever the commissioners suggested. Luckily, we had
a very fair and honorable commission; among them, Peter Dye, re¬
cently spoken of and urged by the people of the State as their choice
for a place on the national commission. They treated the railroads
«
fairly ; the railroads treated them fairly ; they have obeyed in every
instance all their advisory orders except in one case which occurred
recently; so there is a better state of feeling to day between the rail¬
roads of Iowa and the people than there has been in the history'- of the
State since 1873 ; I think it is improving all the time. Very recently
the Governor of the State complained to the commission that the 0.,
& Q., was violating the long and short haul—which by implication is
found ill the statutes, only by implication—but is plainly found in the
interstate commerce law ; and following the suggestions of the inter¬
state commerce law the commission issued an advisory order that the
C., B. & Q. should not charge for hauling coal to Glenwood, where the
State has an asylum, more than to Council Bluffs. After a^hearing and
rehearing the commissioners decided that the road should cut down
the rate to Glenwood and make it not more than to Council Bluffs.
The road complied ; I suppose they might have legally resisted, but
they complied because they believed it wisdom to accede to all
demands as far as possible of the commission, in order to try to
preserve peace with the citizens of the State. They are trying to live
on good terms with the State ; the commission stands between the
people and the railroads, trying to do justice to both parties. In one
certain case since 1878, a corporation disregarded an advisory order,,
and at the next session of the General Assembly a bill was passed giv¬
ing the commission power to go into court and test the validity of their
orders, to ask the court to¡enforce advisory orders they made, putting
it very much, as I think, some bills here have done, that the order
should be prima facie evidence. I hope in any bill you may pass you
will give the commissioners power to hear complaints and make their
orders ; I believe it will tend to restore good feeling between the people
77
and the railroads; put an olive branch in one hand and a gun in the
other. If the railroads don't respect the olive branch, go and shoot ;
that is all right ; if they don't obey the law, make them. I want, how¬
ever, to suggest to you, gentlemen, that 293 " had some very exceed¬
ingly severe penalties. I believe in one place it provided for sending
railroad men to the penitentiary—I was a little uneasy about that my¬
self ; another provision was to fine them fifteen thousand dollars. Let
me suggest to you, gentlemen, that the men who have money east, and
buy up railroad bonds in order to furnish money to western enterprise
to build railroads, always look at your statutes with a great deal of
care ; they have lawyers whose business it is—and they are generally
these Yankee fellows ; they are very particular about "hell hounds,"
and things of that kind. They look at your statutes, and if they see
" penitentiary " there and " fifteen thousand dollar fines," they will
say : " These people of Missouri will try a railroad man and send him
to the penitentiary, and fine him fifteen thousand dollars for a mere
matter of business; I guess we wont invest any money in Missouri.".
I don't think these extreme penalties amount to anything in the en¬
forcement of the law. As Paley said, the eificiency of the law does
not depend on the amount but the certainty of punishment. Î think
it is well enough, if a railroad persistently violates the law, repeats it,
it ought to be fined more and more. I don't believe you will have any
trouble about that. If you have any ordinary penalty, it will be enough
to secure obedience. I think for the sake of developing your State,
when you draw a bill you don't want to put anything in it that looks
like it were malicious, th^t looks like you had no confidence in railroad
people, and as if you would send them to the penitentiary ior mistakes
in business, looks as if you would treat them as if they were horse
thieves and murderers. I think it would have a bad effect on men who
have capital in the east; it would be a serious injury. The people
want more railroads. I hope in the great future you will have four
times the mileage you have to day ; your State is not one-fourth de¬
veloped ; there is no interest in the State that requires development so
much as the railroads.
Mr. Hinton : You stated, I believe, that in 1874 the granger law
was passed in Iowa ?
A. Yes.
Mr. Hinton: That remained in force four years ?
A. Four years.
Mr. Hinton: You stated that there was little railroad building
going on in the State during that time?
A. I did.
78
Mr. Hin ton: I want to ask whether the panic that occurred in
1873, didn't have something to do with that ; that is, it was not all the
granger law ; didn't that have something to do with it ?
A. If you will take the history of the State you will remember
that the very hardest time was about 1878 ; we got down to the bottom
in 1879—m 1878—the very first year after that law was repealed, there
were in the neighborhood of four hundred and fifty miles of road built
in Iowa. I tried the thing, Mr. Chairman, myself ; I have been dab¬
bling a little in these matters some years. We organized a company to
build a road in Iowa in 1875; we had our bonds issued ; we sent them
to the agent east, and the answer of the agent was, We don't propose
to invest any money in Iowa till they repeal the granger law." No
agent in Iowa tried to sell railroad bonds from 1874 to 1878 ; they would
all tell you the same thing ; they wouldn't invest a dollar to build rail
roads in Iowa till that law was repealed.
Senator Simrall : I would ask whether the granger law was not
, maximum rates fixed by the legislature ?
A. That is my recollection. They were fixed on a very different
basis from what your legislature or any legislature would base fixed
rates ;*it was a schedule which was totally impracticable.
Senator Sebree : I want to ask Judge Trimble whether the testi¬
mony taken before the interstate commerce committee, and also the
report of the committee to Congress, does not show the singular fact
that there were more lines of railroad built during the years in which
those railroad matters were agitated than were built previous or suc¬
ceeding that. Did you examine that matter ?
A. What year ?
Senator Sebree : In the various years in which this railroad ques¬
tion was agitated and during these years these laws were passed;
doesn't that testimony, as well as the report of the committee, show
that more miles were built in those years of agitation than in the year&
preceding or succeeding ?
A. I don't remember now what is in the testimony of the
committee; I have not read it for a long time. Poor's Manual
says the greatest number of miles were built in 1872-73 and since
1879 ; ten thousand miles, I believe, were built in 1872 ; 1873 some¬
thing less than ten thousand; then it fell off; the mileage was very
small in 1875, 1876,1877-8 ; it commenced to grow about 1880 ; in 1882
there were about ten thousand miles built; in 1883 something less ; in
1884 something less ; in 1885 perhaps nearly ten thousand miles were
built ; I have no doubt there was quite a mileage built in 1875-6, but it
was not in States where there was any such legislation ; it was not in
Iowa, as anybody will tell you who knows the facts. In Illinois, since
79
1883, since this decision in the Rugg's case, there has been scarce^ any
railroad building in Illinois. I asked Mr. Ripley about that yesterday.
Whether it results from the decision in the Rugg's case I don't know
I cannot say ; I merely speak of it as one of the sequences, not a possi¬
ble consequence.
Senator Johnson of Madison: Can maximum rates be fixed so
that they won^t do injustice either to weak roads or perhaps to the
people, in your opinion ?
A. That is a question, Senator, that can be answered with much
more wisdom than I by such gentlemen as Mr. Newman or Mr. Ripley ;;
but in adjusting maximum rates I believe all bills I have seen have
tried to guard against that point by giving an increased percentage to
the weak roads. I have no doubt the roads could be classified by per¬
sons who were perfectly familiar with the roads of the State, could be
classified upon a basis of gross and net earnings, or some other basis, so
as to substantially do justice to all roads. I have no doubt that any
maximum rates you might adopt would do a little injustice. You can¬
not adopt any restriction which would not do a little injustice. There-
is hardly a tax paid but there is some injustice in it; we don't pos¬
sess infinite wisdom; and where you undertake to regulate there must
be a little pressure in one place or another?
Senator Johnson of Madison : Your definition of a maximum rate,,
a few minutes ago, was that it created a fixed fence or boundar3% My
question was whether any general rate could be fixed without oppress¬
ing the weak roads or doing injustice to the people ?
A. That is a very pertinent question and very import¬
ant. I think by giving these percentages to the weaker'roads—
I think every bill, even "293," undertook to do that—in fact, all bills—
no, the commissioners in "292" fixed that ; of course, they would take
that into consideration. Every bill that undertakes to fix a maximum
rate gives a percentage to the weaker roads, some ten, some twenty-
five. I don't think it very important that one or two roads should have
the benefit oí the best percentage. If the C., B. & K. C. should bo
be compelled to put its rate down to compete with such roads as the
Rock Island on one side and the Hannibal & St. Joe on the other—it
is in competition with those roads from one end to the other—I don't
mean there is competition wherever there is a railroad crossing, wher¬
ever it has a station ; the competition is much broader, taking the
whole commerce in the country. The Rock Island runs almost paral¬
lel to it; if it doïi't it is very nearly. The Rock Island, of course, tries
to get the business. I don't think a maximum rate that would suit the
Rock Island would suit us ; if we cannot live on it that is our mis¬
fortune.
80
Slnator Johnson of Madison : Would not any law that fixed max¬
imum fates place the weak roads so thoroughly in the power of the
strong roads that they could not exist at all?
A. The truth is all the weak roads belong to the strong
roads. I don't know any in this State, any weak road, that is
not a branch of some strong road, unless Mr. Houck's road is an ex¬
ception. The fact is, competition is already so strong in most parts of
the State, particularly in the northern half and in the central half, that
any advantage in the way of percentage you might give to weak roads
will not count for much, for they are fighting for existence against the
strong roads.
Senator Johnson of Madison : Suppose you make the railroad
commissioners a tribunal to hear and determine complaints, would not
the remedy in all minor complaints be beyond the reach of the people,
and tend to make the law inoperative as to all minor matters?
A. No, I think not. I would not take from them their right of
sueing on private claims ; I would merely make an additional remedy.
I think if a person has sustained an injury at the hands of a railroad the
courts should remain open to him, but I would make this an addi¬
tional tribunal. I don't think it would do to deprive them of the lux¬
ury of suing railroads.
Senator Sebree : What do you think of a rate predicated on the
earnings of a road ; what effect would that have on roads, especially
the parallel and weaker lines ; wouldn't it drive the business from the
weaker road to the richer road?
A. I think not ; the truth is, there are so many roads in the State—
my experience is confined to the northern half of the State—
Senator Sebree : Take for example the Wabash and the Pacific,
competing lines between certain points, one earning five thousand and
the other three thousand, how would it afiect them if thev were re-
7
quired to take a rate according to the earnings, wouldn't it drive all the
business away from the Wabash to the Pacific?
A. I suppose the Wabash is a good deal like other roads in the
f
State ; it has got to fight its own battles. If you adopt a maximum rate
the chances are that both roads will have to be at a great many points,
under it ; I don't think they will go much by maximum rates ; they can¬
not go above them. The truth is, competition settles all those ques¬
tions. The Wabash has got to fight for existence, like anybody.
Senator Sebree : A differential rate between roads, would it pre¬
vent competition ?
A. It might ; if you passed a law such as the interstate law I
think it would to some extent. The interstate commerce law says you
shan't charge any more or less ; they can change that by giving ten
81
days' notice. I don't know the basis upon which these gentlemen fix
their rate, the railroad people themselves ; but I do know this, if you
gentlemen undertake to fix maximum rates, which I suppose the con¬
stitution requires you to do, you have got to go to the best light you
can get ; you have to examine rates in different States, and then make
your rates upon the basis of the light you get by that examination.
That is the only way you can arrive at it. I want to explain one thing
Mr. Ripley omitted to explain. He said, yesterday, that the road's in
Illinois got less rates on certain commodities than the roads in Iowa.
He forgot to say one thing, that is, that the Illinois roads have very
much better grades, very much less curvatures, better track as a rule,
and a greater volume of business. Of course the larger the volume of
business and the better the grades, the less rates they can afford to
charge. Illinois has, take the C.B. & Q, east of the Mississippi river,
the main line, it has oearl}^ double the volume of business that it has
in Nebraska, three or four times as much as it would have on some of
its Missouri lines ; it has got better grades ; it has less curvatures, al¬
most a straight line; therefore with these advantages, an increased vol¬
ume of busines, less curvatures and better grades, it can handle freight
in Illinois very much cheaper than in Iowa, Nebraska or Missouri.
Notwithstanding the great advantage it has in the way of curvatures
and grades and volume of business, you were told by Mr. Ripley that
the difference between the rates in Iowa and Illinois was such that if
the Illinois roads were cut ofi at the Mississippi river they could not
live.
Senator Gideon : I infer from your remark you would take into
consideration the geography of the country in fixing rnaximum rates ;
you say it must be done by comparison with other States. If you take
Iowa on the north, and Illinois and Kansas, and take them as a com¬
parison in fixing maximum rates in this State, wouldn't it do some of
our railroads in this State great injustice ?
A. I think this: If the commissioners would get together with
the freight men, such as Mr. Newman, and the 'Frisco gentleman, and
the gentleman representing this road from Kansas City southeast,
and other freight men, I believe they can adjust a rate so that
all roads can do very well under it. Mr. Ripley said he be¬
lieved your commissioners would agree to it. I don't claim to
*
be a freight man ; I rely upon what Mr. Ripley and Mr. New¬
man say to me. I regard Mr. Newman as one of the ablest freight
men in the United States ; he is a gentleman of very superior ability,
large experience and a very upright and frank man; he and other
freight men, I am told, could adjust freights, arrive at a system of max-
R M—6
82
imum rates that would be reasonable, and that they could live under,
and Mr. Ripley said he believed the commissioners would agree to it.
They cannot deceive anybody anyhow very much. I believe they can
get a system of maximum rates ; they say they can do that, and 1 be¬
lieve it. If these gentlemen can get together, the 'Frisco freight man,
t he Missouri Pacific freight man, Mr. Ripley, and your commissioners,
and can agree on maximum rates, as I believe they can, I don't
doubt but what you gentlemen will be satisfied. -It is a plain business
matter ; I don't see why it should not be satisfactory ; you are not
bound to take it as a child does medicine. You will have the opportu¬
nity of comparing those rates with the rates in other States.
Senator Sebree : Do you know what percentage, what rate upon
the capital invested, does the rate filed by this Southwestern system
yield; what would be a just per centage'on the capital invested alter
paying fixed charges on the whole thing.
A. My impression is, if any railroad can make five per cent, it does
well. I don't suppose the railroads in Missouri make four, taking them
as a whole; some may make four; I think most of the Missouri roads
are not making anything to divide in the way of dividends ; perhaps
most pay interest on their investment ; not all of them ; I know two
roads I represent, I represent one little road in the State running from
Keokuk to St. Louis ; we don't ask protection ; we don't ask maximum
rates ; we can beat the river; we have a level track; we can haul
forty-five loaded cars with an ordinary road engine ; it is a daisy road ;
we are not asking for protection. Notwithstanding the remarkable
grade, there is no point between Keokuk and St. Louis that has a grade
over ten feet to the mile, yet last year we only made $100,000 net ;
some time we expect to make money.
The Chairman : Is not that road improving very fast ?
A. Yes ; the first year we fell behind $20,000; last year we made
over $100,000 ; we have been improving our line and charging it up to
construction ; that is not considered part of the running expenses.
Last year, you must remember, that there were very few roads in this
State that were making enough to live on. You take the C., B. & Q.
system; we have, I think, about nine hundred miles, including the
Hannibal & St. Joe ; Kansas Oit}^, St. Joe & Council Bluffs ; there was
not one of those roads, except the Kansas City, St. Joe & Council
Bluffs, which declared a dividend ; I think the Kansas City, St. Joe &
Council Bluffs declared a small dividend. You must not have the
impression that all the roads are making money in this State ; it is not
so, and you don't want to put any restraints on them that would be
unjust to them ; rates that you may pass wont hurt them very much,
in one sense, because they have so much competition ; they cannot
83
help themselves, anyway. Take the Chicago, Burlington & Kansas
City, take away all competition, run down to Carrollton, let them
charge what they pleased, it could get rich; but there are roads all
around it competing with it, and we ha\e to take what others charge.
Talk about pooling, it never did us any good.
Mr. Brown : it is provided by our statute that the commissioners
shall formulate rates, and I understand your road refuses to comply
with those schedules of the commissioners?
A. I do not know whether that is so or not ; I understand that the
Missouri roads did ; I don't know whether ours did.
Mr. Brown : That question was asked Mr. Ripley when he was
here ?
A. If he said as a matter of fact they had refused, that is so.
Mr. Brown : He stated that?
A. I don't know that as a fact ; the commissioners would know.
All I know is, I understand the commissioners had formulated rates,
and that the railroads of Missouri refused to comply with them.
Mr. Brown : Mr. Ripley stated they did that on legal advice from
counsel.
A. Perhaps some Boston counsel ; I was never called upon.
Senator Simrall : Perhaps you have reference to the Hannibal &
St. Joe? '
A. That was Strong & Mossman, then, that gave that advice.
Mr. Hinton : I believe you think that the railroad commissioners
and the freight agents can agree upon just rates between the railroads
and the people ?
A. That is the impression I have, from what Mr. Ripley told me.
Mr. Hinton : If thatis the fact now, why wouldn't it be the fact if
the commissioners were empowered to so act; why could not they fix
that after the adjournment of the legislature and after the passage of
such a law; why could not the commissioners and the freight agents
then fix rates which would be agreeable ?
A. That is a very pertinent question : if they will call in the rail¬
road agents and fix it as the railroad agents suggest, I would be very
willing to have them do so.
Mr. Hinton : Could they do it any other way ?
A. Yes, sir; they could do it in obedience to constant demands
made by a thousand shippers over the country ; that is the power I am
afraid of. It would finally result in reducing rates below living figures*^
If they didn't do that, if the commissioners had the courage to refuse,
they would say: "You have sold out to the railroads." Complaints
would continue; instead of settling matters we would have the same
trouble. I know you represent the shippers; you represent a great
84
many other people ; you represent a great many interests besides
those persons interested in getting a ten dollar reduction on a
car of hogs; you represent the mining interest, the agricultural
interest, the commercial interest; you have an entirel}'' different
motive in fixing rates from what the shippers would have. If the
commissioners have power to do it at their instance, ultimately the
pressure would be so great, coming from these men that are governed
solely by selfish interest in trying to get the rates down ior their per¬
sonal benefit, that they would have the rates below living rates. I
think that the rate should be established by you gentlemen who repre¬
sent all other interests in the country. The rates should not be gov¬
erned and controlled by the selfish interest of the shippers over the
country. I, as representing railroads, would rather leave the fate of
the railroads to you who represent other great interests in the country
than anyone else. Here are gentlemen representing manufacturing
interests; here are gentlemen representing all other interests on this
floor; you are the representatives of these people, the law-making
power of the State; I would rather take your judgment and delibera
tion over this matter; you have the same sources of information that
these three men would have. I would rather take your judgment and
settle the matter for two years and have a little peace, rather than
three man who will be every hour and every day subjected to the
selfish interest and power brought to bear by the shippers
Senator Sebree : I want to direct your attention to the constitu¬
tional question. The idea is, in order to make this law sufficiently flex¬
ible to do justice to the whole people ; we agree it ought to be flexible ?
A. Yes.
Senator Sebree : Keferring to the constitutional question, with
respect to conferring power on the railroad commissioners, are you
aware of the fact that the Constitution of Nebraska is exactlv like ours,
•/ 7
and that the Supreme Court of that State in 1883 or '4, in response to a
request from the legislature, gave it as their unanioious opinion that
that power could be conferred by the legislature upon the railroad
commissioners, without violating the Constitution. Further, are you
aware that a similar question was raised as to the legal effect of the
Constitution of Georgia, on account of the inability of the legislature
to make the law sufficiently flexible to answer the popular demand,
and that the court held they had the power to confer that authority
upon the railroad commissioners ?
A. In answer to the question about the Nebraska Supreme Court,
I don't remember that circumstance ; if the Senator says it is so, I
won't question it; it has not been called to my attention. I have
never thought it very profitable to go into investigations of that
85
kind, for I believed there were questions of public policy which
would settle that question without going into the Constitutional
question. The Georgia case involved the interpretation of a char¬
ter ; so with the Tennessee case, and perhaps the Mississippi case;
so it is hardly a fair authority. The Tennessee case so far as it
is authority, is authority the other way. I am v/illing to admit
there is very considerable diversity of opinion amongst the courts that
have had the question under consideration and decided it. I think the
decisions, wherever they have been made in favor of exercising dele¬
gated power are contrary to the fundamental principles of constitu¬
tional law as laid down by Mr. Oooley, the author of the work on con¬
stitutions.
Mr. Goodykoontz : In answer to Mr. Hinton, you said you pre¬
sumed the commissioners and the railroad freight agents could make
rates ; now, then, why could not they make them if we gave the com¬
missioners power; now I want to ask you if the uncertainty of what
the commissioners might do if it were left entirely to the commission¬
ers, would deter men from investing capital in this State in railroad
building ?
A. That is why I am here; that is what I think it will do, for that
is their feeling about the matter. I would not be here opposing it ;
the railroad people themselves would not be asking the General
Assembly not to do that if they didn't think it was a dangerous thing
to do. I am here simply because I represent their views ; it is a matter
of no interest to me personalh'' ; I know that I represent the views of
the leading attorneys and railroad men of this country upon that
question.
Mr. Kelly : I would like to ask whether a law of that kind has de¬
terred railroad building in Illinois ?
A. Mr. Ripley says it has since the law was declared to be consti¬
tutional.
Mr. Kelly: Another question. You seem to fear the influence of
the shippers upon the commissioners ?
A- Yes, sir.
Mr. Kelly : I want to ask you whether the railroads of this State,
with all the power and money they have, are not more dangerous in
that direction than the shippers ; whether they are not likely to have
more power with a body of men like the railroad commissioners?
A. Talking about making a lot of money is rather a delicate ques¬
tion to talk about. I would be exceedingly sorry to suppose that I had
to go before the commissioners with a pocket full of money. I hope
the legislature won't pass a law that would give rise to an inducement
of that kind.
86
Senator Sears : Has the agitation of this question stopped the
building of any road in Missouri ?
A. Yes; it stopped a road we were proposing to build right
through your country ; we had our engineers out surveying the line;
they were called off the moment that ''293" came up«
Senator Sears : We have one now building through our county.
A. What is that ?
Senator Sears : The Santa Fe.
A. The Santa Fe said all they wanted was the right of way across
Missouri ; they didn't expect to look for local business ; they will take
it if it comes along; they are trying to get to the Pacific Ocean with
their own road.
Senator Sears : Isn't there a new road at Chillicothe ?
A. That is a road that was being built last year.
Senator Sears : Are they not building it now?
A. That is the Chicago, Milwaukee & St. Paul ; that was nearly
all finished last year before the General Assembly met. We had a
line—in fact, we had our surveyors out there—we were going to finish a
line of road through to Kansas City, and they were called off and will
never go back till this matter is settled ; besides all that, we had pre¬
liminary surveys to your county; the surveyors were called off'just
about the time that the General Assembly met.
Senator Sears : I don't think it stopped on that account.
A. It stopped anyway; it is a sequence, if not a consequence.
Mr. Timmons : I would like to ask the Judge a question : Judge
Trimble, suppose this legislature should follow your suggestion to pass
a law having in it an inflexible rate, an absolute rate, would not Mis¬
souri be the only State in the Union which would have such a law as
that ?
A. I cannot answer that; I think not, but I am not certain about
it ; I think most of the States have not any kind of rates at all ; that
IS my impression. I think there is a little misapprehension about this
business of inflexible rates. Let us see about that; it won't do to
make any mistakes. If you confer on the commissioners power to do
anything, what do you confer on them? You don't mean to confer on
them power to regulate rates from day to day. What power have you ?
You cannot confer anything you have not go. So the first thing to find
out is what you have; the next question is, can you delegate it? You
cannot delegate it unless you have got it. You have power to estab¬
lish reasonable maximum rates; you have no power to regulate freights
from day to day; you cannot appoint a commission to take charge of
the Missouri Pacific, to go to its office and run its freight from day to
day; you cannot do that; but you may have authority to delegate
87
power to do exactly what you could do yourself—to fix maximum
rates—that is, rates that are fixed, that are certain and remain for some
time. You don^t expect your commissioners from day to day to be
changing rates on consultation with different parties. When I say we
want flexibility in rates 1 am speaking of that kind of flexibility which
enables a gentleman from day to day and hour to hour to meet his bus¬
iness customers and deal with them without having a cast-iron law to
go by. The maximum is simply an outside fence, you- may call it, and
you could move it in two years ; you could not authorize the commis¬
sioners to move it every day ; that won't do at all. If they establish
rates under your authority they will establish maximum rates. In
fact 293 " used that very language, it empowered the commission¬
ers to establish reasonable maximum rates ; you don't empower them
to regulate rates ; they don't go to the office of the railroad people from
day to day and exercise the privilege to regulate rates between them
and the customers. What we mean by flexibility is flexibility within
the outside limit, to handle business on business principles. You don't
propose to appoint commissioners to take that out of our hands. If
you authorize the commissioners to do anything it is to constitute them
an authority to establish maximum rates, and leave us, inside of the
maximum rates, to transact our business on business principles.
Mr. Timmons: I understand, Judge, when yoü refer to flexible
rates you wish to make them flxible so far as the railroads are con¬
cerned, but not as far as anybody else is concerned ?
A. If you establish maximum rates we cannot get outside of
those.
Mr. Timmons : Or the railroad commissioners?
A. They would do the same thing you did. If they established
rates they would have to be maximum rates. They would not under¬
take to fix a rate every time we shipped a load of goods; they would
establish an outside boundary. I don't think any bill has been pro¬
posed to authorize them to regulate rates, but to establish maximum
rates. If they go further than that they would have no power to do it.
Mr. Timmons : I would ask. Judge, if the railroad companies in
Illinois recognize the constitutionality of the statutes of the State ?
A. I presume they do ; although the gentleman who was chair¬
man of that commission, in his testimony before the Congressional
committe, said that in establishing maximum rates they did not act on
the impression—as I remember the testimony—that they had the legal
power to do so, but that their orders were advisory after consultation
with the railroad companies themselves; that they generally agreed
upon the rates of course; it is a kind of one-sided agreement; I am
willing to admit they cowed the freight men ; they said you have to do
88
so and so. Mr. Ripley said they came down because they didn't want
to make a fight.
Mr. Timmoos : Would you advise us to have our maximum rates
in our bill so high that they would be sure not to work injury to the
railroads in any instance ?
A. No ; I would want them fixed so that the railroad peox)le could
not charge extortionate rates of any kind on their lines. I don't ex¬
pect any law you would pass would irjure them in the ordinary sense
of the term ; it would prevent them from making as much money as
they otherwise would expect. Competition, long and short haul and
other matters regulate rates.
Mr. Timmons : Do you think that maximum rates should be made
so high as to leave the railroads considerable freedom ?
A. They ought to be so high as to give them a fair chance to
make a decent living. I believe in taking into consideration the physi¬
cal condition of the roads. Their business, the volume of business,
grades and curves, and other matters are proper to be considered so
that they can be classified. A reasonable maximum rate for such roads
as the 'Frisco, Missouri Pacific, C. & A., and Rock Island, would not
be just to all of them. I don't think they could make as much money
as if they were free to charge anything they pleased and if there were
no competition. I don't think your maximum rate is going to do you
any good anyway ; I think competition will regulate it ; my idea is to
put the maximum rate on load lots so low that they cannot charge an
unreasonable rate on any part of the line ; I believe they can do that
and yet make a fair percentage on their investment. When I say that,
I don't mean eight or ten per cent, interest on the investment, I mean
four or ifve. I think that a railroad that can four per cent, on its capi-
tal is doing very well ; I don't know why they should make more than
a government bond, for it is a permanent investment. If it pays four
per cent, to day it will probably pay it one hundred years from now. It
is reasonably permanent; almost as much so as a government bond.
Senator Hazell : I understand that Judge Trimble takes the posi¬
tion that under the Constitution we can only pass laws to establish
reasonable maximum rates ; I understand him to state that the railway
companies should have the privilege of regulating the charges within
the bounds of these maximum rates ; am I right ?
A. You are right about that.
Senator Hazell : Now then, under section 14, article 12 of the Con¬
stitution says, 'The General Assembly shall pass laws to correct abuses
and prevent unjiist discrimination and extortion what do the words
'Correct abuses" mean under the rule that a Constitution shall be con¬
strued liberally ?
89
A. Possibly it would tuean that if they discriminate against places
or persons, or something similar to that. It would not be an abuse to
charge a man for hauling a car lot a certain price if it were within the
limits. If railroad companies charge an unreasonable tariff for any
kind of service it may be collected back without any statute at all, or
any provision in the Constitution at all, as Judge Oooley says.
Senator Hazell : Suppose we establish maximum rates and the
rate to Tipton were 55 cents on one hundred pounds of first-class
freight, and they hauled the same to Boonville, twenty-five miles fur¬
ther tor twenty cents a hundred, first-class freight, would not that per¬
mit the railroad to discriminate within those maximum rates?
A. If you had a reasonable maximum rate which provided that
they could charge fifty-five cents to Tipton, and you had a long and short
haul clause, they would hhveto charge at least that much to Boonville.
If the charge to Boonville were twenty cents they could not charge
more than that to Tipton. There might be cases where they would be
justified in charging less ; suppose the Missouri Pacific should under¬
take to haul lumber from St. Louis to Tipton for twenty cents a hun¬
dred, and then for ten cents to Boonville, and it turned out they were
hauling lumber to Boonville, to a new country, just to build up manu¬
facturing establishments there, for the purpose of building up those in¬
dustries, everybody would say that it was right—haul it for nothing if
they wanted.
Senator Hazell : Would not the words '^to correct abuses" include
regulation ; are not discrimination and regulation synonymous ; it pre¬
scribes a rule that a certain charge shall be made for a certain distance,
and under this section of the Oonstitution would not the General As¬
sembly have authority and power to regulate rates ?
A. I don't think they have power to regulate rates in the sense I
speak of. Senator. If you will observe the sense in which I use the
term ''regulate that mean regulate from day to day and hour to hour,
to transact business between the railroads and the customers, to adjust
rates as they come up, but all the time within the limits of the maxi¬
mum rates. I know what the Oonstitutial provision is; I don't know
exactly what it means when it says "correct abuses." I take it for
granted if you pass a statute for the long and short haul it would cover
the case you refer to at Tipton ; that would be an abuse of that statute;
they would be punishable for it. If you had a statute on the subject
of discrimination, and any railroad violated that, that would be an
abuse, and the General Assembly could pass a law to prevent that; I
don't question that ; I don't think that has any reference to fixing rates ;
I don't think that means to give pow;er to the General Assembly to fix
rates, for that is given in the other provision in express terms.
90
Senator Sebree : I want to a^k would it not be proper and right
that railroad companies should be allowed to make special rates—no
matter what ycu call it, rebates or whatever you call it, rates that are
lower than the general rate, in order to develop certain undeveloped
enterprises ; and is not that thing in the interest of the people ?
A. I have no doubt of it.
Senator Sebree : Is it not to the interest of the people to permit
a railroad company, if it sees proper, in fighting rates, cutting rates^
to permit it to agree to rates below the rates fixed by law ; is that not
the interest of the people ?
A. I have no doubt of that.
Senator Sebree : If in the interest of the road, it is in the interest
of the people, because the people get the lower rate ?
A. I don't think there is a particle of doubt about that. That re¬
minds me of an incident that occurred two years ago when the first
bill was introduced; I remember there was quite a struggle; I was
then, as now, an Jionored member of the lobby, trying in my humble
way to protect the interests of the Chicago, Burlington and Quincy
people. While the matter was up there were some mercantile gentle¬
men came from Kansas City with a bill from some elevator people. I
thought the elevator people were like the gentlemen who followed in
the wake of the army ; they were trying to speculate a little ofi" the
misfortunes of the railroads. When there was a profound state of
peace and rates were firm, they would go out among the farmers, buy
up the grain and put it in the elevators till they had one and a half
million bushels. Then they tried to stir up a war amongst the rail¬
roads, till one road agreed to cut rates, and the others had gone one
better—I think that is what you call it (laughter)--8o they would get
the benefit. When they started the war those elevator people un¬
loaded ; they would ship while the war was going on ; it was no benefit
to the producer, no beneft to anybody except the elevator people.
When peace would be restored, like the gentlemen in the wake of the
army, they would go out and fill the elevators up, and precipitate
another rate war, and ¿make a lot more money. So they wanted to
stop the pooling business. They filled their garners in a state of peace
and shipped it in a state of war ; it was good for the elevators. During
the time these elevator gentleman were here with their elevator bill
affairs took an unexpected turn to the other side ; some merchants
came down from Kansas City, and a pretty large delegation came from
St. Louis, and they said, ''we want stayable rates; we don't want to
fill up our establishments with goods at maintained rates and then see
some of our neighbors fill theirs up at war rates; we want to know not
only that the rates are stayable, but we want to know that we are get.
91
ting the same rates our neighbors are getting; we don't want fluctua¬
tion—down to-day and up to morrow, that is not for the business
interests of the country." The railroads must transact business like
other people. Sometimes railroads have an agreement as to rates and
one will go to cutting ; they get outside of that and you have a rate
war; there is bound to be, no use talking aboutit, talk about pools,
talk about division of profits, in the very nature of things the laws of
oommerce are such that railroads must have rates that are stayable, or
you must have war. The alternative of war is peace. When you have
war you have got to sujffer; it is always destructive. When peace
«ornes back it means reconciliation, agreement, and uniform rates that
will continue just as long as peace continues. When you have a rate
war it is detrimental to the business interests of the country.
Senator Sebree : I want to ask you this question : When a rate
war goes on and rates are put low^er, does it not also depress the value
of the articles in the market; does that benefit either the shipper or
producer ; is there any profit either to the producer or shipper ?
A. There is no profit to the producer ; thei;e is no profit to the
îîhipper, unless, like the elvator gentlemen, he has his garners filled,
and when war commences he ships what he has filled in a state of
peace. The average shipper who buys to day and sells to morrow, don't
derive and benefit from that; it is no advantage to anybody.
Senator Sebree: On this special rate question you would allow
them to make special rates, in a general way, to give character to
enterprises ?
A. Yes, I understand.
Senator Sebree : Within the maximum rate?
A. Of course.
Senator Sebree : Making it public so everybody can have access
to it and receive benefit from it?
A. That is exactly what I understand the interstate commerce
law intends to provide for; and I think it would be a wise thing in any
bill you pass, to authorize the railroads to give special rates to new
industries. Suppose you can start some kind of a factory in this town,
and you go to St. Louis to the manufacturer there to buy material for
the plant; then you go to the railroad people there and say''here, wo
are going to start a factory"—no difference what it is, suppose it is a
car factory, one of these immense establishments that will emply two
thousand people, you say, "we want the plant ; we want you to agree
to haul our material at one-half rate ; if you won't haul our material
for half rate from St. Louis we will go to Chicago and buy there."
You make your dealing with the manufacturer, and the manufacturer
in St. Louis makes his dealings with the railroad, and you build up a
92
factory; I say it is perfectly legitimate, not only legitimate, it is com¬
mendable for the railroad to give yon special rates in order to encour¬
age that new industry. There is no question about the advisability of
encouraging these new enterprises, and railroads do that wherever they
can. I say that is right; it they can afford to do it for nothing at all?
they ought to do it.
Mr. Kelly : I would like to ask Judge Trimble whether if all the-
stock buyers, for instance, in any district or county should combine to^^
pay a certain price for stock, and say that no person should buy under
it under any circumstances, whether it would be beneficial to the peo¬
ple that raise stock ?
A. It might not be beneficial to those who raise the stock. Sup¬
pose the men that raised the stock say they won't sell except at a cer¬
tain price, that would be legitimate.
Mr. Kelly: I will ask you whether this pooling system is not con¬
demned by the people in every other business as well as in railroading ?
A, No, sir; I don't think it is condemned anywhere in business
circles ; ail merchants pool ; doctors pool ; lawyers pool ; grocers pool ;
saloons pool, everybody pools. If a man goes into a saloon and gets a
drink of whiskey, he pays the same price ; he gets a shave at the same
price, or gets a cup of cofiee at the same price, that is all trade.
Mr. Kelly: Is not the allowing of pooling against the interests of
the public ?
A. No, I don't think it is, taking the whole public together. Farm¬
ers pool.
Mr. Booth : I will ask if this universal pooling which you speak
of should prevail, what room would there be left for competition ta
perform any office at all ?
A. Pooling does not cut off competition.
Mr. Booth ; Do you allow pooling in the labor question ?
A. I don't object to it. Laborers have a right to pool, but not la
deny the right of others to work. When labor comes to the door of
the factory with a club and says nobody shall work for less wages, that
is a different proposition. We object to that; if they say ''we are go¬
ing to have more wages," and they are told ''you can quit," if thejr
will quit that is all right; if they stand at the door with a club and say
no other men shall come in there and take their places, that is a very
different proposition.
Mr. Miller : I want to ask if there is not a very material difier-
ence in pooling as it is ordinarily understood, and an agreement be¬
tween merchants and farmers about prices ?
A. When I spoke about pooling I didn't talk of pooling in the-
railroad parlance ; I have no doubt you are right about that; I don't
93
mean a division of rates and paying penalties for a violation or any¬
thing of that kind; I mean the ordinary general assent which must
exist between business men, especially if they expect to live,
Mr. Miller : I will ask whether the strife which prevails over the
eountry by reason oí that general assent is not, after all, a regulation
or principle of competition which you say is eliminated from pooling?
Mr. Booth : No, he denies that pooling eliminates competition.
A. I don't think pooling affects rates very much competition is
very far reaching. Take Kansas City as an illustration. There is the
Ohicago & Alton, Wabash, Missouri Pacific and some other lines that
run into Kansas City. The Hannibal & St. Joe runs to Chicago, St.
Louis, and Kansas City ; until very recently there was no road running
into St. Joe except the C. B. & Q. system, the Hannibal & St. Joe, be¬
ing part of this system runs into Kansas City. They get a pool in
K ansas City by which they raise rates. I don't see how the St. Joe
would get away with the trade if they don't make some kind of an
agreement with another road. The C. & A. runs a line into Kansas
City, and it does not run aline anywhere else, it has got to protect it¬
self by helping the town ; it has got to stand by the town and help
it. It cannot consent to a pool that would drive trade to St. Joe or
Leavenworth or any.other competing town ; there is more competition
oí towns with each other than of individuals with each other ; that is a
far-reaching power, competition ; they cannot make a pool at Kansas
City that would drive the trade to St. Joe, because that would ruin every
road that went into Kansas City, not ruin them, but hurt them ; they
make a pool that will have a far-reaching influence and one which is
not only to their own interest, bat to Kansas City's interest.
Mr. Miller : I want to ask if competition under such circumstan¬
ces is the same as competition between merchants and farmers ; does
it go to the same extent ?
A. It is very different from what it is among farmers and mer¬
chants ; it is the same principle, but much more extensive and oper¬
ates under so many different conditions and influences ; it is pretty hard
to answer such questions.
Mr. Miller : If pooling does not eliminate competition, what pur¬
pose does it serve ?
A. It simply prevents a rate war.
Mr. Babcock: I wish to ask this: The roads at the present time
are not used to their full capacity ; suppose we establish a maximum
rate that would pay a percentage upon the cost of the road, so as to
allow them to earn just compensation or interest for the bondholders or
stockholders, as profit; then if two roads have a pool don't you have to
make that rate just so much higher for the purpose of earning interest
94
on the two roads; suppose that two or four or more roads have a pool,«
ain't vou worse off than before ?
4/
A. I don't believe we will be able for a great many years to fix
any rate so as to earn interest on all this property. Ultimately the
roads ought to get on a basis that they can earn interest. Nearly all
the roads in Missouri and the West are living for the future. I suppose
the Missouri Pacific and the O. & A. earn some money; most of the
roads are living for the future. I have no doubt that the people in the
United States started out wrong in their system of building railroads.
The doctrine of the English is that every road shouM be built with a
special charter, and should have so much territory given it ; then the
Government says that territory shall not be invaded by any other rail¬
road, but at the same time it says: " We won't allow you to make
more than an interest on your investment of say four or five per cent.'^
We have gone too far for that now. How is it going to work in the
future? I don't know. Take two lines that are parallel, so close that
they invade each other's territory, if they make a pool, they may make
money enough te live on ; that will be the result in the future—or both
must die ; it would have been better to have had only one. We made
amistarke in our theory of building railroads ; we let everyone build
if they could get upa corporation and raise money.
Senator Ball : I want to ask, pooling can only exist at competing
points, can it ?
A. Competing points? What do you mean by competing points f
that is a very indefinite term. We have not a road running in Mis¬
souri that is not competing.
Senator Ball : Then if roads are prevented from pooling and have
to make a fight for business, and virtually carry freights from some
points for nothing, won't they to the intermediate stations along the line
.of the road have to charge to the full extent of the law to make that
up ?
A. That would be the effect if they expected to make a living,.
Under this long and short haul provision—which is in your Constitu¬
tion, and probably will be in any law you pass, that could not be done.
Senator Ball : One more question : Does not this long and short
haul proposition virtually and in fact bust up the pooling business ?
A. I think it renders pooling unavailable to some extent; not
altogether. When I speak about pooling I don't mean technical pool¬
ing, that has been so often engaged in by railroads where they divide
the earnings on a certain basis, and attach penalties for violation of
agreements ; I mean either a tacit or express agreement by which rates
are maintained, by which uniform rates are agreed to and maintained;
that is what I mean by pooling. The word " pooling," as used in all I
95
have said, has reference to the assent found in almost every business
community—an express or implied agreement whereby the people
maintain uniform rates.
Senator Simrall : I understand the railroads don't object to any
section against pooling ?
A. No, sir. .
Senator Simrall : I understand they don't object to a law against
unjust discrimination ?
A. No, sir.
Senator Simrall : Or to a law against extortion ?
A. Not against extortion.
Senator Simrall : So there is no objection on the part of the rail¬
roads to laws on those questions ?
A. No, sir.
Senator Simrall : You have two objections to ''293;" you object
to the commissioners making a schedule of these maximum rates?
A. Yes; that is one.
Senator Simrall : You also object to the manner of enforcing the
law ?
A. Yes, sir.
Senator Simrall : Those are the only objections?
A. No, sir ; there are others.
Senator Simrall : What others?
A. Well, there was a section known as the retail clause ; I don't
think the railroads cared so much about that ; it wouldn't help the
business.
Senator Simrall : The railroads, however, don't object to that, I
understand ?
A. I think they did, for they thought it was not a right basis.
Senator Simrall : That is a fight, a quarrell between these whole¬
sale men and milling men ?
A. Yes, sir ; I know the railroads like to be on the right side, on
business principles, so they objected to that section.
Senator Simrall Mr. Ripley stated they had no objection to it.
A. Perhaps he didn't express himself quite as fully as he should
have done. The fact is, there is a business objection to it amongst rail¬
road people ; that is this : Suppose, now, to illustrate, the Missouri Pa¬
cific would get a; train load of cars at St. Louis to haul to Kansas
City, to go right through, then get another return load of stock to haul
back to St. Louis, can't it afford to haul that cheaper if it don't have to
pick up another one at the next town ? if they make up a whole train
to go to Kansas City it is a business proposition that they ought to be
allowed to charge less than if they picked up cars along the line.
96
Senator Simrall : Are not empty cars continually being taken
from Kansas City to St. Louis, and from St Louis to Kansas City?
A. Empty cars, I presume so. The same doctrine applies whether
you had to return empty or not. A railroad company can take a train
of cars from St. Louis to Kansas City, or vice versa^ for less money
than they can pick up cars at intermediate stations, and they should
be allowed to charge less for that.
Mr. Brown : You don't agree with Mr. Ripley ?
A. Not if he said that. I didn't understand him to say that ; that
was not my understanding.
Senator Parcher: If there is an impression made upon this legis¬
lature, I hope it will be a right impression. Judge Trimble don't pro"
fess to be an expert upon the questions that are being propounded to
him ?
A. You are right.
Senator Parcher : Mr. Ripley came here yesterday as an expert,
and is so recognized by everybody wherever the name "Ripley" is
known. There is no uncertain sound in his answers to the questions.
He didn't run below a car load ; he set a car load as a unit of rate—one
car load. It appears from the testimony of some forty witnesses, culled
out of the testimony before the interstate committee, that the differ¬
ence in the cost between hauling twenty-ffve cars for one man and
hauling them for twenty-five men is not noticeable—business men
don't take any note of it. The way freight is run up and down one of
these roads—take a small road, they run but one train each way a
day—freight, a little mail and a little passenger, and it is their busi¬
ness to pick up a single car load ; those trains run on a very liberal
time schedule. That additional cost, according to the testimony, is not
noticeable, and is not noted by the railroad men in making their cal¬
culations. Now, then, I desire to ask Judge Trimble, admitting for a
moment that there may be a little difference in the cost, and that that
can be estimated, wouldn't it yet be a fact that they discriminate
against the great mass of our people in that matter, doing them con¬
tinual wrong, and is it right and proper or admissible for the State,
through its legislature, to legalize that wrong, simply because it works
a little hardship on the railroad men, whether or not it being the fact
that they can haul a single train load cheaper for one man, the rate
should not be governed by the single car, and in the legislation we
place upon the statute book, we should not allow discrimination
against the great mass of the citizens in one county because it is a
little hardship to the railroad men ; you can figure that out.
A Senator : I object to that as an argument and not a question.
The Chairman: It is too late.
97
Judge Trimble : The Senator's speech would require some time to
answer. Of course, I assume that the railroads should do the people
no wrong. If the railroads can haul twenty five c^r loads from a given
point, deliverable to another given point, cheaper than they can pick
them up along the railroad, I don't know why they should not be
allowed to charge less for it. I don't know that the difference in the
expense of hauling and picking up cars along the road is very great ; if
it is not, they ought not to charge any more than the difference ; the
Senator and I donH disagree about that; if there is any difference, the
railroad ought to be allowed to charge for it ; if not, they ought not to be
allowed ; if it is small, it should be a small charge. It may be true,
as the Senator says, that the difference is so small that it is not taken
into account ; I don't think any freight man would say that is true in
ever}^ case ; perhaps ordinarily that might be so. If you get five cars
at a place and at the next place only one, and the next jthree, I suppose
the difference between stopping for five and stopping for one would
not be hardly enough to notice; I don't suppose it would be just to
charge less for getting the fifth une. If you get a train load at a city
like St. Louis, say to haul to Kansas City, there would be some differ¬
ence between that and picking up a train between St. Louis and Kan¬
sas City ; one can be hauled in twelve hours ; the other will take
twenty-four. Every engine is worth twenty dollars a day; it takes
four or five men to run a train ; it takes a great deal more fuel ; just
whatever the difference is in cost it would be just to charge ; if little,
charge little ; if much, charge more ; if nothing, charge nothing.
Senator Parcher : I will state that I believe in giving the commis¬
sioners power to watch the railroads two years. The railroads object
to granting power to the commissioners to name a rate or to regulate
rates within the maximum during the interval of the sessions of the
legislature. Mr. Ripley's testimony was that for ten years the ten¬
dency had been uniformly downward, and that they had occasion at no
time during those ten years to increase rates; but it had been con¬
stantly tending downward. Now, then, you object to the commis¬
sioners having this power on account of the outside pressure that you
think would be brought to bear on them; but if you were liable to
suffer in that direction, it is a fact that any rate the commissioners
might command you to give would be nothing more than prima facie
reasonable ?
A. That is true.
Senator Parcher: If you object that it will be unjust to you,
wrong to you, it will be open for you to go to court, and the court would
R M—7
98
finally settle whether it is reasonable ; if not it will set it aside. Then
I ask, would not that be a sufficient protection from the probable
danger of malice o^ prejudice at the hands of the board of railroad
commissioners ?
A. I believe the Senator is not a lawyer.
Senator Farcher : No.
A. I am sorry he is not, for if he were, I could make my meaning
clearer to him. I don't think any lawyer in the country would regard
that kind of a remedy as of any value whatever to railroad companies,
that is the opportunity to go into a court of justice on the supposition
or theory that a rate fixed by the commissioners is unreasonably low.
That would be a task that Daniel Webster would be afraid to tackle if
living; that kind of a proposition is so exceedingly involved; you
would never get before a jury in less than six months time, and you
would never get a jury to comprehend that question whether a rate on
a given article, hogs or cattle, is unreasonably low; it is so compli¬
cated, entering into the matter of shipment of freight, not only on that
particular road, but every road in America. Talking about the matter
of cost and value, no jury on earth, and no judge on earth, could ever
understand it unless it might be an extreme case where it would not
need evidence ; if the railroad commissioners should say a railroad
company should carry a load of hogs from Jefierson City to St. Louis
for ten cents anybody would say that was unreasonable ; but you might
get it so low that a railroad would commence starving to death; it
might take ten years for it to die, yet it would finally die, without hav¬
ing any jury pass on such important questions.
Senator Farcher: You refer to the question of reasonableness ;
that could be settled under the common law without a statutory en¬
actment, could it not ?
A. Yes, sir.
Senator Farcher : By a court and jury ?
A. Where you have a perfectly patent case.
Senator Hazel : If the General Assembly would enact, establish
maximum rates, I would ask if Judge Trimble takes the position that
the railways would charge up to the maximum rate for hauling freight?
A. No, I do not think that they would ; they would in some cases,
of course. There are a great many influences stronger than statutes.
They might get the maximum so low they would be bound to charge
it, and yet would not make money.
Senator Hazel : I understood you to say that were there reason¬
able maximum rates, you thought special rates would be given to in¬
dustries ?
A. No ; what I said was this : I thought in certain cases a road
99
ought to be allowed to discriminate in favor of certain industries ; that
might be left to the discretion of the commissioners to say whether it
should be done.
Senator Hazel: How could they do it without discriminating?
A. It would be a discrimination, but it would be a just discrimi¬
nation.
Senator Hazel: Under your theory, that the legislature establish
maximum rates, where could we lodge the authority'to allow this dis¬
crimination ?
A. There are two ways you might do that. Of course, the railroad
would not be bound to charge the maximum rate, perhaps would not
in one case in a dozen. If there were no long and short haul clause,
they could regulate that themselves if they wanted to encourage,
build up a factory; otherwise you would have to leave it to the com¬
missioners to settle it, or somebody else.
Senator Hazel: If that were so, you would also empower the
commissioners to regulate the rates ?
A. That is a very different thing. If a railroad could go to the
commissioners and say to them, ''This, law—long and short haul
clause—forbids us to charge less for a long than a shorter haul, but
the General Assembly have given you power to suspend that." That
is a very different thing from saying the commissioners shall fix the
rates ; all the power they would have, would be to suspend the law.
Senator Hazel : If they only had power to suspend the 'law,
would they have authority to give to the railroads the privilege to give
special rates ?
A. The law itself would settle the question of making special
rates; if you saw proper to give the commissioners power to suspend
it, they don't fix the rates, they would simply suspend the law ; that is
a very different thing; they would do that at the instance of the rail¬
road company. I don't speak of the question of the power ol the com¬
missioners ; I am speaking of the policy. I say it is a wise policy to
favor these industries; that can be done by suspending the long and
short haul; that is in the interstate law. Mr. Reagan says, that it was
not the intention of the law to make that general ; it was only intended
to suspend it in special cases. I think it would be a wise thing in any
long and short haul provision that you made, if you can, under the
Constitution, give the railfbads such power ; I don't think you can un¬
der the Constitution ; I have not thought about that.
Senator Hazel : Are not the provisions of the Constitution man¬
datory upon the legislature ?
A. I suppose all lawyers concede they are ; if they purport to be
mandatory, of course they are.
100
Senator Házel : If that is true, then the General Assembly should
enact a law carrying into effect the provisions of the constitution to
correct abuses and fix reasonable maximum rates ?
A. I have no question about that.
Mr. Brown : Supposing there was not anything in the constitution
to empower the legislature to do so, would not the legislature still
possess the inherent right to establish a rule of evidence by providing
that the railroad commissioners should fixa rate which would be prima
facie evidence of its reasonableness ?
A. I think it is understood amongst lawyers that the rule of con¬
struction of the State Constitution is just the reverse of the Federal
Constitution. The State law makers are supposed to have all power
not denied expressly, and the Federal law makers have only the power
that is expressly given to them or necessarily implied. Where the con¬
stitution has provided in terms that the General Assembly itself shall
exercise a given power, then by implication they must exercise that
power, and cannot delegate it to another, unless the terms of the con¬
stitution authorize an inference that they may do that. In other words,
where an express provision is given a positive provision is given that
excludes the idea that they can do anything else.
Mr. Brown : I don't think they have any right to delegate it to
make rates; wouldn't they have a right to establish a rule of evideoce
that the railroad commissioners should fix a schedule of rates which
should be prima facie evidence of its reasonableness, aside from the
constitutional provision ?
A. That is possible; if you had the power to delegate to the com¬
missioners the making of reasonable maximum rates I don't think they
would have the power to make a rule of evidence ; I think the General
Assembly would give the railroad companies the right within those
prescribed limits, from day to day to regulate their own freights, of
course subject to these other limitations, such as discrimination and
long and short haul. I don't mean when I talk about flexible rates
that the railroad could flex them in defiance of the other limitations,
such as long and short haul, and the section on discrimination. These
other limitations are just as binding. Outside of these limitations
which the constitution has fixed, I think the railroad companies should
have the right to regulate their own affairs from day to day.
Senator Oastleman: Judge Trimble has just touched upon a mat¬
ter I want to inquire about : Do you consider sections 12 and 14 of
article 12 of the Constitution a grant of power, or a mandate upon the
legislature ?
A. I don't know them by numbers.
Senator Castleman : They are the two sections that all these mat-
101
ters have risen upon that we are talking about. Section 12 is the long
and short haul provision of our Constitution. They are simply manda¬
tory provisions of the Constitution ?
A. Yes, sir.
Senator Castleman : They are not grants of power?
A. I regard them as merely mandatory.
Senator Castleman: They are not grants of power, are they,
Judge ?
A. No, I think the General Assembly would have the power, if
there was not anything said about it; I agree with you about that.
Senator Castleman: In discussing the power of the legislature—I
won't call it delegating, I don't believe it is delegating, to authorize the
railroad commissioners to fix the rates—you have presented it here
sometimes upon Constitutional grounds, and sometimes upon the
ground of public policy ?
A. I did not intend to argue the Constitutional question; I was
called out by questions ; I intended to present the other view.
Senator Castleman: Have I understood you to deny the validity
of such authority under the provisions of our Constitution ?
A. Senator, I have already told you that is a question which is
mooted so much in court, and on which there is so much difference of
opinion, I think it exceedingly doubtful what your court might say.
Senator Castleman : 1.don't ask you what our court might say ; I
was asking for your opinion ?
A. My own personal opinion as a lawyer ?
Senator Castleman : Yes?
A. My private opinion as a lawyer is the Constitution makers
meant to empower the General Assembly, to make it their duty rath¬
er, to fix reasonable maximum rates by law, and meant to leave the
railroad companies the right within those limits to regulate their own
affairs subject to other limitations found in the Constitution.
Senator Castleman : That does not answer my question. I ask
you if it was a grant of power ? you just denied it was a grant of power ?
A. I don't deny it is a grant of power ; it is'mandatory.
Senator Castleman: I understood you it was not a grant of power
but mandatory. What is your opinion on the question ?
A. It might be both ; it might be a grant of power and it might be
merely mandatory. I think the Constitution makers meant to empower
the General Assembly to fix reasonable maximum rates, and then
proceeded to make it mandatory by saying they should do it.
Senator Castleman : There is no grant of power in the constitu¬
tion except a general grant, is there ? ,
A You mean relating to this particular subject ?
102
Senator Castleman: Any matter?
A. There is a grant of power ; you would not exist if the people,
hy the Constitution, had not created the power; there is a grant of
power.
Senator Castleman : Is there any grant of power in this Constitu¬
tion except the general grant in the beginning of it ?
A. I don't know what you refer to as the general grant in the be¬
ginning.
Senator Castleman : Section 1, article 4 of the Constitution reads :
''Thelegislative power, subject to the limitations herein contained, shall
be vested in a senate and house of representatives, to be styled ' The
General Assembly of the State of Missouri.' " Will you tell me whether
there is any other grant of power than that in that constitution to the
legislature ?
A. I suppose there are a great many ; I have not looked as to
that particular question. I am willing to waive all discussion on these
abstract questions by saying I understand the general rule of interpre¬
tation of State Constitutions is that the General Assembly can pass any
laws not forbidden, unless it is contrary to public policy, the principles
of natural law or the Constitution of the United States, or some treaty
or federal law.
Senator Castleman : That is sound democratic doctrine ; that is
the doctrine announced by Justice Waite in the Munn case probably
more strongly than in any other decision?
A. I understand that to be the rule.
Senator Castleman : What I want to ask you is, does, in your
opinion, this mandate, as you have called it, upon the part of the Con¬
stitution, directed to the legislature, does that exclude the exercise by
the legislature of any power which is legitimate und^r the general
grant ?
A. If that particular clause should say that the General Assem¬
bly shall by law establish reasonable maximum rates, it shall not
make any law further than that, you will admit they could not make
any law further than ¿o establish reasonable maximum rates.
Senator Castleman : I beg your pardon, I deny it?
A. 1 don't think there is any ground for argument between you
and me. Undoubtedly the Constitution makers had the power to give
the General Assembly of the State just such authority within certain
limits. I think they might do it under a general grant or under a spe¬
cific grant. I think when there is a clause in the constitution making
it the duty of the General Assembly to do a certain thing that by im¬
plication means they shall not do that thing some other way. If it
103
says they shall establish reasonable maximum rates by law, that by
fair implication means they shall not establish them in another way.
Senator Oastleman: That leads to the doctrine, Judge Trimble,
that there are limitations upon the power, of the legislature which are
not contained in the Constitution?
A» I think that would be contained in the Constitution; that is
the way I construe it, simply a question of construction.
Senator Castleman : That is a denial of the doctrine which you
stated just now ?
A. Not at all.
Senator Castleman : That the legislature had all power which was
not expressly denied?
A. I didn't say that.
Senator Castleman : Didn't say that ?
A. No.
Senator Castleman : I misunderstood you, then?
A. I said I understood the rule was the General Assembly was
presumed to have power to enact all laws that were not denied it by
the constitution ; I didn't say expressly denied ; that might be denied
by implication. All democrats understand that where a power is nec¬
essarily implied or the implication is necessary, that may be good pow¬
er. The power might be implied by implication and it might be de¬
nied. I say by implication when the Constitution says that the General
Assembly shall do certain things in a certain way, that it shall establish
reasoQable maximum rates and it shall do so by law, by fair implica¬
tion, that means it shall not do it in another way.
Senator Castleman : Suppose the legislature were to pass such a
law, that law would control the commission, by it would they control
the railroads of this State ?
A. If it was in the Constitution it would.
Senator Castleman : The commission could not go beyond the
limits placed by the legislature. Now do I understand you to mean
that the legislature has no power to do anything in regard to this mat¬
ter except to fix these rates ?
A. You mean about rates ?
Senator Castleman : Yes.
A. I have no doubt they can adopt the long and short haul clause.
Senator Castleman : I am talking about the special matter of
rates.
A. Adopt a provision on the subject of discrimination, pooling—
Senator Castleman : I am not talking about those. Do I under¬
stand you to say that you deny that the legislature has power to give
104
the commissioners any authority oyer these rates, that it has to fix
them ?
A. That depends on what is meant by over the rates. I don't be¬
lieve the legislature would have power to delegate to them—could not
delegate to them power to regulate, to change the rates ; it might give
them power to do many things in connection with it.
¡Senator Oastleman: They could not change the rates at all ?
A. I am giving you my private opinion that by fair implication
the power, the duty of fixing reasonable maximum rates is imposed
upon the General Assembly; it is to be done in a certain way pre¬
scribed by that section ; it is to be done by law, not by a commission ;
by legal enactment ; you can not establish them by law and authorize
somebody else to change them afterwards. That is the way I interpret
that section. Of course you can authorize the commissioners to do a
great many other things, but not to change them.
Senator Oastleman : I am only talking about that special matter.
Now, then, the legislature having fixed the rates I understand you
that it is your opinion as a lawyer that they could not give any author¬
ity to. anybody to change those rates ?
A. That is my impression.
Senator Oastleman : Didn't you draw a bill. Senate bill No. 1 ?
A. Yes ; no, I could not say I drew that. Perhaps that needs an
explanation. Everything in that bill was drawn up, got together in
the shape of material by Senator Downing and other Senators whose
names he gave—if necessary I could give them—who were members
of this House; some are here to day, members of the Senate. He
came to me with these matters, said he wanted me to help him to
get up a bill, to put these matters in the bill ; I got up that bill just as
he directed ; that was his idea of what should go in the bill, classifica¬
tion and the entire thing. I acted precisely as a lawyer who would be
asked to draw up a contract between two gentlemen and was told
what to put in it.
Senator Oastleman : Do you mean that you were employed by
Senator Downing to do that work?
A. Senator Downing came to me and told me two others he was
in correspondence with
Senator Parcher : I rise to a point of order ; I don't thipk that
pertinent to this inquiry.
The Chairman : It is not for me to decide how far it shall go ; that
is for the committee.
Judge Trimble: Senator Ball was one of the men who assisted in
furnishing matter to go into the bill.
105
Senator Oastleman: Then you drafted the bill ?
A. No, I helped.
Senator Oastleman : Put in form the matter which they had fur¬
nished ?
A. That is it ; I helped.
Senator Oastleman : Look at section 12 and tell me as a lawyer if
that presents your present views of the constitutional power of the
legislature in regard to the authority of the legislature to authorize the
commissioners to raise rates which have been fixed by you in that
bill ?
A. That is a very different proposition.
Senator Oastleman: Now, that is why I want you to explain it.
A. That merely means classification.
Senator Oastleman : Oan you tell me whether section 12 author¬
izes the change of classification or change of rates ?
A. It authorizes them to change their classification, that is all.
Senator Oastleman : Does it authorize them expressly to change
the rates?
A. It talks about the percentage, not about rates, in the sense of
regulating rates ; it talks about percentage.
Senator Oastlefnan : Let me read the provision : ""Section 12.
The tariff of rates, fares and charges specified in the preceding section
áhall apply to the three classes of railroads hereinbefore named : pro¬
vided, however, that the railroad commissioners of chis State shall
have power, upon application of any common carrier operating any
line included in class B, to authorize such common carrier to increase
its tariff of rates, fares and charges not exceeding twelve and one-half
per cent, higher that the reasonable maximum rates specified in the
preceding section."
A. Yes, I understand exactly what is in it.
Senator Oastleman : Do you construe that to mean that the com¬
missioners are authorized to change the classification or to raise the
rates ?
A. That was the way it was understood.
Mr. Bridges: I would like to ask a question. I „will ask if the
law authorizes the raising of rates by twelve and one-half per cent.,
isn't that establishing those rates as the highest maximum, by the law
itself ?
Senator Oastleman : You ask me that ?
Mr. Bridges : Yes.
Senator Oastleman: If they say reasonable rates shall be twenty
cents in all cases except class B, and that they may go twelve and one-
106
half cents above,* is not that as much a change of rates in class B, as
in any other class?
Mr. Bridges : By no manner of means, for it expressly clothes the
commissioners with that power. The legislature only establishes the
maximum, they also give the commissioners the power of adding
twelve and one-half cents to the maximum of that class; isn't that
declaring it the maximum of that class ?
Senator Castleman : I think not.
Mr. Bridges : We diifer.
Senator Castleman (to Judge Trimble): That is the only explana¬
tion you have of that matter ?
A. I beg your pardon, 1 have not said that.
Senator Castleman : I would be glad to hear you.
Senator Parcher: I move Judge Trimble be excused, he has been
speaking four hours and a half.
The motion was seconded.
A. I woula like to answer. Now that very question was dis¬
cussed by Senator Downing and myself. I made the very objection
that the Senator here does, as Senator Downing will say and other
Senators who talked about the matter. But Senator Downing claimed
—and he is quite a good lawyer himself—he said that was in nearly all
the bills, he didn't suppose there would be any objection in regard to
that ; he didn't regard that as giving the commissioners any power, he
didn't think they had the power to fix rates or to regulate them, but it
was merely in fact referring to the classification ; I said ''you have the
thing drawn to suit yourself;" I put it in ; it was not my suggestion ;
even if it had been my own I should be perfectly willing to stand by
it ; I take the same view Mr. Bridges does ; I don't think there is any
trDuble about it ; it is laying down a rule by the General Assembly for
the establishment of maximum rates.
Mr. Bridges : A boundary ?
A. Simply a boundary.
Mr. Bridges : As to class B, it is twelve and a half cents higher.
A. I suggest to Senator Downing, "you had better say that class
C shall have the right to charge twenty-five cents more than class B,
that was twelve and a half cents more ; that will remove any objection
captious men—for I suppose there are some—might have about the
Constitutional question." He said: No, we will leave it that way,
that was the way all the bills introduced were, they had that power and
if any objection was made to it it could be amended—I put it in as his
classification ; I agreed with Mr. Bridges that is the correct interpre¬
tation of that power in No. 1 ; I suggested to Senator Downing, I said,
"hadn't we better put it in absolutely ; say class C shall have the
107
right to charge 25 cents, class B twelve and one-half cents more," he
said: No, I want to leave it that way so as to have a little flexi¬
bility; I told him to do as he pleased about it; he said put it in ; if
any gentleman thought it was a violation of the Constitution he could
put it the other was.
The chairman : I have a telegram from Mr. Newan saying that
he can be here next Monday.
Senator Castleman : We are to have a delegation from the St.
Louis Merchants' Exchange on Monday: I move we fix Tuesday as
the time for hearing Mr. Newman.
A. I didn^t understand whether Mr. Castleman asked me as a
lawyer, I helped to draw up that bill. (To Senator Castleman) It has
been suggested to me you asked me the question whether I helped
Senator Downing, as a lawyer, to draw up that bill ?
Senator Castleman : 1 asked you whether you acted as his at¬
torney ?
A. That amounts to the same thing; I did not; I was asked by
one of the Senator's right hand men, one of the most prominent men
in the State, to get up a bill and submit it to him; I told him I
would not do it; I told Senator Downing that this gentleman had
asked me. When Senator Downing had got up his matter, after con¬
ference with Senator Ball and other gentlemen, he came to me and
reminded me of what this gentleman has asked me, and said : want
you to help me formulate this bill." I did so, partly.
Senator Castleman : I have no objection to your giving the gen¬
tleman's name ?
A. If I had his consent I would be willing to do so ; he is a very
nice gentleman.
Senator Castleman : No reflection on him?
A. No, sir.
The committee decided to hear Mr. Newman and'other railroad
men on next Tuesday, May 31.
On motion the committee adjourned.
May 27, 1887.
The committee met at 9 a. m., and took into consideration a Sub¬
stitute to Senate bill No. 10, which was offered by Senator Mansfield,
and which was agreed to. A motion to report favorably on the same
was carried.
108
Senate bill No. 11 was called up by Senator Gideon, and a motion
to report favorably upon the same was agreed to.
No one appearing before the committee to speak or give evidence
on the railroad question, on motion of Senator Hazell the committee
adjourned until two o'clock the same day.
The committee reassembled at 2 p. m.
No one appearing to speak upon the railroad question the commit¬
tee adjourned until 9 o'clock to-morrow morning.
May 28, 1887.
The committee held morning and afternoon sessions, remaining in
session sometime each time, for the purpose of hearing any one who
might wish to give his views upon the railroad question. No one ap¬
pearing for that purpose, the committee adjourned to 9 a. m., Monday,
May 30, 1887.
Monday, May 30th, 1887.
Committee met pursuant to adjournment. Senator Johnson in the
chair, when the following proceedings were had :
The roll was called, after which, upon motion of Mr. Gideon, the
chairman appointed a committee consisting of Senators Gideon and
Hazell to wait upon those desiring to appear before the committee and
inform them that the committee was in session and ready to hear them.
Upon their return, the chairman said :
Gentlemen : I now desire to introduce to you Älr. Jacob Furth,
President of the Associated Wholsale Grocers of St. Louis.
109
Mr. Furth: Mr Chairman and Gentlemen: Together with my
colleagues, I appear before you representing the Associated Wholesale
Grocers of St. Louis, an organization comprising almost all of the whole¬
sale grocers that do business in St. Louis. It is an organization formed
on the broad platform of having for its main object the furtherance of
all that would advance the interests of the grocery business ; and, for
your further information, I would state that the members of that organ¬
ization control trade and commerce aggregating perhaps seventy-five
or more millions per annum—such trade and commerce and such mer¬
chandise as is distributed from St. Louis as a wholesale market in con¬
tradistinction to organizations that exist in St. Louis whose main ob¬
ject it is. to watch the interests of trade tending towards St. Louis—a
diiferent class oí merchandise and a distinctive business of its own. I
desire to state further, gentlemen, that although we appear before you
here as grocers representing a branch of trade which by reason of its
being sold per pound has more interest, perhaps in railroad legislation
than that trade which handles goods that is not sold'per pound—while
we are here as grocers, and while we hail from St. Louis, we desire to
state to you, gentlemen, that we are not here to further any particular
bill, any particular measure, or to stand up here specifically for what
would inure to the benefit of St. Louis alone to the detriment of any
other city or any other portion of the State of Missouri; but we come
here in consequence of the action that you have taken inviting the cit¬
izens and merchants of this great State of Missouri to come here and
meet the lawgivers—the committee who are now, as we think—and I
think we are right—shaping legislation. We come here now at this stage
of your proceedings because we think it our duty to tell you what ex¬
perience and practice in every day business has taught us, what we
know in a practical manner. We are come here to give you that infor¬
mation for which some of us, in fact all of us, have paid very dearly in
the course of our commercial careers, and then, if we can convince you
that there are certain measures which should be fostered and advo¬
cated, and that there are others which should be excluded from railroad
legislation, then we will think we will not have come here in vain. The
idea which underlies our visit, as I have stated, is not a purely selfish
one although we must admit that all business is nlore or less selfish or
mercenary in its foundation. We all do business for money. Yet at
the same time we are not so narrow minded as to ask anything from the
legislature of the State of Missouri for the benefit of the St. Louis mer-
♦
chants or for the benefit of St. Louis grocers. But what we do want is
broad and liberal legislation such as will not hurt in any way the rail¬
roads nor in any way materially hurt the business interests of the State
of Missouri.
110
Now we have been tolerably well informed of ail the measures
that have been presented in the legislature, in the House and in the
Senate, and of the various bills that have been referred ^to your com¬
mittee and whilst we do not wish to go into detail, while we do not wish
to burden you with details, we have thought of several points which
we think of vital importance to the State of Missouri, and those we
would like to present to you. There are many minor matters with
which we do not desire to connect ourselves in one way or another^
which we do not desire to advocate nor to antagonize, leaving them to
the judgment of the committee and the legislature. But we think^
above all, that there is one grand question underlying the railroad leg¬
islation of this State, and that, question is whether the railroad corn-
missioners here in the State of Missouri should be men clothed with
power, whether they should be what their name implies, railroad com¬
missioners in fact, or whether they should only be so on paper? In
other wmrds, if the citizen, the merchant of the State of Missouri, feels
himself aggrieved at certain actions of the railroad, whether he can
with confidence go before a board that our laws provide for, submit his
case to theih and if they find he has a case, whether they shall then
have the power to stand up and defend the right of the individual
against the giant corporations known as The Kailroads ; or whether
this body of men shall be simply figures that shall be there to listen
to our complaints, perhaps pat us on the back and say "your complaint
is well founded but we can't do anything for you except you go and
bring suit and foot the bill and stand yourself up against the railroad
corporations of the State." We advocate, gentlemen, that the great
State of Missouri should vest in the railroad commissioners the power
to do this. We advocate a bill by which the railroad commissioners, as
a body, shall stand between the railroads on the one side and the peo¬
ple on the other side. That they should have the right to investigate
complaints of all the various natures that do constantly come up, and if
they in their wisdom find that the case which is presented before them is
a case well grounded, that it has merits and should be looked into, that
the State should give them the power and the right and the duty to
take up that case for the citizen. We all know, and you all know, of
course, that it is a matter almost impractical and entirely out of the
usual practice for a merchant, if he finds himself aggrieved, to stand up
and fight a railroad company that employs attorneys by the year and
that can wear and wory a merchant to such an extent that it is abso
lately impossible for him to stand up for them except at a terrible sac¬
rifice, a sacrifice involving a much larger amount of money than per¬
haps the grievance whereof he originally complained.
Now while we advocate that the railroad commissioners of this
Ill
state should be vested'with these powers, we do not wish to be under¬
stood as standing here to antagonize railroads. We know that some
of the railroad magnates, some of the railroad managers, fully agree
with us in the stand that we take on this subject. There is only a ques¬
tion arising in their minds and in the minds of the merchants as to
whether under the existing state of affairs, under the existing law,
which makes the office of railroad commissioner elective, and whether
uoder the present statutes which makes it an office of minor import¬
ance so far as financial remuneration is concerned, it is only a ques¬
tion whether the elective feature of it and the small remuneration at¬
tached to it would make it possible for railroad companies or commit¬
tees to get men to accept the office of railroad commissioner who
would be thoroughly qualified to perform that very important duty.
That, of course, we do not enter into now. That is a question which
will sooner or later present itself and which will be solved by the wis
dom of our law givers; but we are here to advocate a law which will
give certain powers to the railroad commissioners and place it within
their hands and within their means to stand up for the shipper who is
now practically helpless.
We desire to draw the attention of your committee and of the
legislature to the fact that notwithstanding all the good laws that we
have on the statute books, notwithstanding that our Constitution and
our statutes provide for a great deal of assistance and protection for
the shipper, the merchant citizen; yet, owing to the existing state of
affairs, owing to the great power, money-power and influence at the
back and at the hand of the railroad corporations, these laws and these
statutes are simply there on paper without accomplishing that for
which they were originally intended. That, I believe, is the first prop¬
osition that we desire to advocate before your committee.
There are others which, to us, as shippers, are of equal importance.
There are some wherein we fully agree with the railroad people, and I
desire to reiterate, and I cannot state it too strongly, that we are not
here in any way antagonizing the railroad interests, nor are we here in
connection with them. We are'here on our independent footing as cit¬
izens of the State of Missouri coming here by invitation of a commit¬
tee of the legislature who ask us to come here and present not only
our views but our experience, and we give it as our experience that cer¬
tain features which have been introduced here and which are before
you now by reference we think should not be taken up by the State but
shold be left to the railroad people as mattersfof business exclusively ;
and by this I mean the mat ter of classification. We fully agree with the
railroad people, and I think that you will agree with us if you will fol¬
low our argument, that a fixed classification in a railroad bill would.
112
of necessity, be hurtful to our interests as merchants because it would
be a law so stringent as to make it possible for merchants outside
of our State to come in here and do the business which we should do, be¬
cause of a stringent non-elastic law which you might pass and which
could not be changed from one session of the legislature to the other,
and we think that competing cities with St. Louis, competing cities
with Kansas City, with St. Joseph—competing cities would take ad¬
vantage of that and so frame their tariffs as to make it impossible
for us to do our business in the territory which, geographically and le¬
gitimately, belongs to St. Louis, Kansas City, St. Joseph and the va¬
rious distributing centres.
Without going into details and leaving that to some of my col¬
leagues who will address you, 1 desire to state as a second proposition
that we favor a law which would leave out a fixed classification, but
^ y
rather leave that to the commercial situations and conditions that
may arise and which change from time to time and which change so
suddenly, so abruptly and so frequently as to make it absolutely neces¬
sary that some freedom should be left to the railroads in the matter
of classification.
There are other matters, for instance, such as the question of the
long and short haul, which we think is partially provided for and by
reason of the interstate law and its operations, perhaps not as impor¬
tant in the legislation of the State of Missouri as it might have been
had it not been for the interstate law. However, that will also be
touched upon by other members of our committee.
There is one feature, however, which we come here to advocate
and advocate most strenuously. It is a very plain proposition. I have
been told this morning that it is now on the statutes of Missouri,
although I do not know whether this is the case or not. However, if
it is, it is a dead letter. It is the plain, simple business proposition,
and one in equity, too, that railroads who carry the business of the
merchants of the State of Missouri should charge them no more for
doing that business than they are now charging corporations outside of
the State of Missouri. For instance, if a through rate of freight is
made from Chicago to a town in Missouri or a town in Kansas by the
time that that freight reaches the eastern boundary of one of thé Mis-
suri roads, no matter which, they get a certain proportion out of this
through rate, and that proportion of freight is their remuneration for
carrying that freight, and it is less than that charged to the St. Louis
merchant for doing a similar business, or to the Hannibal merchant, or
the merchant that is doing business at that point where this freight
reaches them. We claim as a matter of right, we claim as a matter of
justice and equity, that any railroad company that does business for a
113
corporation connecting with it on the east shall charge us no more for
that same business than they charge to that competing line. That
proposition we are prepared to advocate, not only here before you, gen¬
tlemen of the legislature, but we are prepared to advocate that before
the Interstate Commission, and we have brought formal charges, formal
complaints against a railroad company now doing business in the State
of Missouri. We have filed these charges before the Interstate Com¬
mission, and we are prepared to stand on that as a matter of right.
I will repeat it so I shall be plainly understood. We claim that a
railroad company shall not and should not charge us any more than
they charge for the same service to any other corporation, whether in
or outside of the State (but those corporations are all outside of the
State). All this talk of discrimination, if you reduce it, all of it put
together, does not amount practically to as much as the simple propo¬
sition that I have made to you. And in the daily course of our busi¬
ness we find it to operate against us more than anything in the way of
discrimination as I am aware of. As merchants of the city of St. Louis,
and especially as grocers who sell goods by the pound, every eighth
and every sixteenth of a cent per pound, or every twelve and a half
cents or five cents a hundred, makes a rate either one that permits us
to do our business in a certain locality, or it makes it a prohibitory rate,
and by a prohibitory rate I mean a rate which would prevent us from
doing business in a certain section of the country, simply because of a
discrimination practiced against us as merchants of the city of St.
Louis.
Since the organization of the Associated Wholesale Grocers we
have been trying to have remedied a great deal of the arbitrary dis¬
crimination which has been practiced against the city of St. Louis, and
in the course of our efforts we have appeared before representative
bodies and legislative bodies of railroad men. I presume you are
aware that all the railroad business that originates in Chicago and in
East Louis and ends on the Missouri river comes under the terms of
what is called the Southwestern Association. This Southwestern As¬
sociation mepts from time to time in committees, classification commit¬
tees, general freight agents, general managers, etc., and we, as grocers
of the city of St. Louis, have appeared before them from time to time
with but very little success. At first, when we organized and asked to
be heard, sometimes permission was given us and sometimes the right
was denied to us. But we were persistent and we appeared not only
at their doors when they met in St. Louis, but we took the trouble to
follow them to St. Paul, Minn., to Chicago, and we persisted in bring¬
ing these matters to their notice. At last, after a very hard fight and
R M—8
114
struggle, in which we were assisted subsequently or latterly by one by
whose death we all lament, the late Mr. Hoxie, the monopolies recog¬
nized the right and justice of the claims that had been put forward by
the St. Louis merchants, and stood up for us at the meeting of the gen¬
eral managers in the cities of St. Louis and Chicago, and they graci¬
ously assented to do something for us although it practically amounted
to nothing. And as quick as the interstate law went into effect it was
simply wiped out and we are to-day as far from receiving justice, as we
understand it, and as it was even admitted by the railroad people to be
justice, leaving it at the hands of the railroad people, as we ever were.
And since the turn in the affairs of railroad legislation, since it has
been demonstrated that railroad property, unlike other property, does
come and should come under the control of the legislative powers of
the country, whether State or National, since, then, we think that we
will get this justice both at the hands of the interstate commission, be¬
fore whom, as I have stated, we have petitioned, and at the hands of
the Missouri legislature. We think that we appear before you on the
broad platform of justice and equity, and that justice and equity should
prevail regardless of consequences. We contend, and have been told
time again by the railroad people, " the claim that you make is a just
one, you are right, but suppose we remedied it, what effect would it
have on our business elsewhere? Suppose we antagonized this road
in this place, what would they do here in another town to make up for
it? " By following this line of argument, gentlemen, you will readily
see that that cannot be justice. ' Justice cannot be guided by policy.
It is an eternal principle which must prevail and should prevail, and
no matter what the consequences are, and no matter where the shoe
may pinch, as the saying is. Now we come before you, gentlemen, as
a representative body of our citizens, and with a case which we think
is so strong that everybody must admit its correctness, and we ask you
to consider it in the bill, and in the legislation which you are going to
enact in the State of Missouri.
As a further point of very great importance, and particularly to
grocers, is the great question of the carload. It is that principle which
the railroads, for want of a better name, call the wholesale and the re¬
tail principle. And we propose to show to you before we leave you
here that the present practice is not based on what is right, it is not
based on what is just. A differential rate is made between the car
load and the less than car load, which has not been figured on account
of a certain excess of cost on one, or a decrease of cost on the other,
but it originated simply with a purpose of bulling up certain localities
at-the expense of other localities. The railroad people admit to us
that there is no reason in the world why they should charge for one
115
article seventy cents a hundred when shipped in less than car loads and
thirty five cents a hundred, or an advance of one hundred per cent., or
rather a decrease of a hundred per cent., when shipped in less than car
loads. But they admit and must admit to us that it is done in order to
•give some person or some locality a chance to sell those goods in pref¬
erence to allowing the whole world to sell them in competition with
them or with that locality.
We think it is the rankest injustice that has ever been practiced
upon a mercantile community, and the greatest case of discriminction
that could possibly be piacticed by a railroad man, when a railroad
man says to me, here, you can sell your goods, and there you dare
not sell your goods." We can show you instances, and Í am not going
into detail, as I do not wish to take up too much of your time, where fruit,
perishable goods, which is shipped at owner's risk, where the railroad
company has absolutely no risk at all in carrying it, where at a certain
portion of the year the charges must either be prepaid or guaranteed,
which does away with every possible contingency or risk, they charge
just double for carrying a quantity of less than a car load what they
¿arry a car load for. If there are any reasons advanced why a railroad
company should carry a car load of goods for less rates than they carry
less than a car load, we are willing if the reasons be fair, and if the
differential be fair, to listen to them. But if they cannot show us a
reason why on an article where there is absolutely no risk, no matter
'what ^happens to it, if the fruit all decays or perishes. If it all goes to
pieces, the railroads have either collected their freight in advance or
have a sufficient guaranty at the point of shipment, we cannot see why
they should charge one man 35 cents and the other 70. We are ready
to be informed, and to listen, and be convinced. And we are ready to
give them both if they can do it.
Triore is one other matter of very grave importance to the shippers
of the State of Missouri, and one which I think has not been touched
in any of the bills that have thus far been presented to the Senate or
the House. It was touched upon incidentall}^ by one of the committee
meetings, and I do not know why it has been overlooked by the large
fraternity of shippers, and that is the question of the settlement of
overcharges.
Now, in the city of St. Louis, if we receive a shipment from the
east, we get a notice from the railroad company, a certain quantity
of goods has arrived for .you at a certain station, and you will please
remove it. Charges, say, $100." We take out our bill of lading and
our invoice, and we figure over what should be the contract price for
the freight. We know that the charge is so much per hundred pounds,
and that the goods weigh so much, and it does not take a great deal of
116
mathematicB to figure out how much they are entitled to, and instead
of the hundred dollars which they ask us to pay, we find that that bill
amounts to $78. We go to this railroad agent and tell him, my dear,
sir, there is a mistake on this, this bill cannot amount to $100. Hero
are the goods, you can weigh them, here is a bill of lading contract,,
which binds you to carry the goods for a certain price ; you have got
an over-charge on here of $22." The railroad agent will very blandly
tell you, well, it may be, but you can't get those goods except you
pay the freight. You pay the hundred dollars and bring in your bill
for the diíFerence, and if it is correct, we will refund." We bring in.
these bills, gentlemen, and in a very large majority of cases, this is the
last we ever hear of them. If the amount is sufficiently large, we fol¬
low it up, and trace it, and if we are fortunate in the course of months,
and sometimes, I am free to say, years, we get this money refunded-
But in the large majority of instances we get nothing, and hundreds of
thousands of dollars annually go somewhere, we don't know where,
except that they go where they should not go and are taken from the*
honest shipper from whom they should not be taken.
If you will give this matter attention, gentlemen, and if in youjr
wisdom, you can frame a law by which you will make it imperative*
upon a railroad company to accept the proper amount of charges, all
that they are entitled to, if proffered to them, just as we would go and
profiter the payment of a just bill, you would take from the shipper
this terrible inconvenience and this great loss, you would be conferring:
«
a benefit upon the mercantile community of Missouri, the weight and
importance of which you can hardly estimate, unless you yourselves
are practical shippers.
There are other propositions before you, as I stated in the outset,
wherein we fully agree with the railroad people. No w, there seems to
be a popular idea that mileage should in all instances prevail. The
railroad people do not concede this, and we think that they wiil, per¬
haps, be able to prove to you that a regular system of mileage, or
charges based on mileage should not prevail, because they will show
you that it costs them more money to do business on some divisions of
their line than it does on other divisions of their line, and if that be
true, we presume you will admit that they are entitled to more money
since they earn it. If it costs them more to do that business.
In the matter of mileage, we agree with the railroad people. In
the matter of maximum rates we do not care to express ourselves, be¬
cause we think it is a matter of minor importance practically, but the
main thing that we do desire to draw your attention to, are these
points, that powers should be granted to the commissions, that there
should be done away with this terrible differential between car loads-
117
and less than car-loads, that discrimination should not be practiced
against the citizens of Missouri in favor of foreign corporations, and
that a railroad company should be obliged to settle and adjust claims
just as any other citizen or any other corporation of the State of Mis¬
souri is obliged to settle them. On these various points I have no doubt
that some of my colleagues of the committee will enlighten you as to
details. These are the general grounds that we take, and 1 repeat,
again, we are not here to advance any one bill, we are not here to an¬
tagonize any bill, but we are here to answer any q^uestions that this
committee may see fit to put to us, to go into details if you desire to
find out the practical operations of our business as we are all practical
business men. We are ready to be questioned, and we will answer to
the best of our ability.
Senator Gideon : I desire to ask the gentleman a question. You
say you don't want a fixed classification by law ?
A. That is our position.
Senator Gideon : What do you mean by that?
A. I mean that my attention was drawn to a bill which was in¬
troduced here which fixes permanently a classification which I think
is almost a verbatim copy of the existing southwestern classification,
and I mean to state that if you made this binding on the railroad com¬
panies of the State of Missouri—and it would certainly be so until the
next session of the legislature—then Chicago or Bloomington, or Mem¬
phis could so change rates as to make it an impossibility for the Mis¬
souri Pacific, or the Frisco or the Wabash to meet them, and as trade
naturally seeks that center from which goods can be laid down cheap¬
est, it would pass St. Louis or.Kansas City and go to Memphis or
Bloomington, because the provisions of the interstate law would not
prevent those roads from making certain rates from certain localities.
Senator Gideon : You do not mean to say that you have no ob¬
jection to maximum rates?
A. No, sir ; we do not particularly pare for maximum rates. If
you will permit me I would like to introduce to the committee a mem¬
ber of our association who has given this very question a good deal of
attention, and who can enlighten you a great deal better than I can—
Mr. Hayward, of St. Louis.
mr. hayward.
Mr. Chairman and Gentlemen of the Committee: I feel that
the chairman of our association, Mr. Furth, has, in a general way,
given you exactly the position that we occupy, and it is a little diffi¬
cult to follow him without repeating perhaps to some extent what he
has said. As an association, our Associated Wholesale Grocers of St.
118
Louis have for a good many years past given attention to the matter of
freights, and to the matter of the policies of railroad corporations,,
both within and without this State, because the margin of profits that
are possible in our business may be diminished or increased by a very
great per cent, by reason of tarifis that are fair or, in our opinion, un¬
fair. In the pursuit of investigation, we have been brought into con¬
tact with the railroad corporations, and have endeavored from time to-
time to get what we asked as justice.
I think that none of them will dispute the fact that we never went
before them to advocate any policy that they could attack as unfair, as
unreasonable, or as discriminative against any other place or any other
persons in the State. We have rarely succeeded in getting what we-
asked for, and it seems to me, if what we have asked for could not be
attacked on the ground of its fairness and reasonableness, there must
have been a policy pursued by the railroad companies that was itself
open to the objection of being unfair and unreasonable towards us-
And I think therein lies the whole difficulty at the present time with
regard to the railroads of this and perhaps of other States.
They have no feeling against us, they have no feeling for us. They
do not care whether a man engaged in business in St. Louis, St. Joe,.
Kansas City, or any other place in the State, is or is not making money,,
except, possibly, they may have some officers who have personal inter¬
ests in the business, which it has been stated from time to time is the-
truth. They simply claimed the right to adopt, such policy as they see
fit, and make their own business prosperous without reference to whether
it helps or hurts anybody else. I think that is an unfair position for them,
to take, and it seems to us that what we have asked in the past from
the railroad companies, which they have refused to grant because it
did not coincide with their policy, we may fairly ask for at the hands
of the legislators of the State. There are some railroad men who
seem to be very much in advance of others with regard to the broad
and underlying questions of railroad legislation at all. The broad-
minded ones concede the fact that there is and always must be rail¬
road legislation, changing from time to time, more and more, toward
restricting the powers of the railroad corporations in such directions
as that they will not bear unjustly upon any portion of the community^,
more and more towards the fact that there shall be penalties for vio¬
lating the law, more and more towards the fact that railroad corpora¬
tions should not be left to manage their property as they please, but
that they must manage it for the good of the whole people.
Looking at it in that light, we believe, as Mr, Furth has explained^
that there should be railroad commissioners; that they should be given
powers to enforce the law, and that they should in all cases act aa
119
arbitrators. Now I think the railroads of the State have no greater
friends than the Associated Wholesale Grocers of St. Louis. I believe,
in fact, that our body as a whole are more friendly to the interests of
the railroads of the States than the majority of the railroad managers
and officials are themselves ; that, if the policy we ask for should be
finally adopted, it would inure to the benefit of the railroad company
to fully as great an extent as they are now benefited by their own
policy, while at the same time it would bear hardly upon no individual
»shipper of the State.
Unless such laws as may be passed can be enforced, and easily en¬
forced, we are aware of the very great drawback that there would be to
the shippers. Out past experience tells us that. It has not been very long,
gentlemen, since we had an interview with a railroad manager, and he
said to us, Gentlemen, you may have such laws passed as you please,
wherever they confiict with the policy of our road, we shall simply have
to violate the law and take our chances." A very remarkable statement,
it seemed to me, for a railroad official to make. He would violate the
law if it interfered with his policy. Very good. Then, if the laws of
the State be^respected, which we all believe they should be, it seems
to us that there should be such provision for enforcing those laws that
no railroad manager would dare to take such a position as that. Their
policy, of course, is of great moment to them, but we have discovered
this fact : That whenever the necessities of railroad transportation
demand it, they can Change their policy very quickly, and in a manner
not to be any detriment to themselves. To illustrate : Here is a point
♦
that is local to the line of one road. They have a certain tariff there
which they say is fair, that is an honest and reasonable charge, gentle¬
men, for that service. We cannot afford to take it for any less." Per¬
haps our argument may have been that some other point on the rail¬
road, not very far distant, was receiving a very much less rate of freight
and that customers in that town could very readily compete with cus¬
tomers to this point on their line that was local to them, and could
draw trade from territory that was perhaps nearer the unfavored town.
The reply has always been,''We fix our tariffs on what we think is
right and just, and we cannot lower them ; they are as small as we can
afford to do the business for at that point. In the process of time that
point becomes a crossing for some other road^ and the rates drop from
twenty-five to fifty per cent. They accommodate themselves to their
circumstances and change their policy, and find that they could afford
•
to do business for that town for a great deal less money than they
thought they could. And you will find that to be true in almost every
instance in the State where a town from a local town comes to be a
crossing or competing town.
120
That was true always until the matter of pooling came up, and
when the railroads pooled then they would fix a rate that perhaps was
higher than they found before they had pooled that they could afford
to do the business for.
So we think that it cannot be urged too strongly that there should
be commissioners with powers such as my colleague has already
expressed our preference for so strongly, and because of which I shall
not deem it necessary to elaborate that point any-further.
With reference to the long and short haul clause?
That of course is a question that is now agitating the whole country.
Railroad men themselves do not agree with reference to the matter,
and when it is scrutinized carefully, it may be seen that there are some
diflOiculties that stand in the way of determining just what is right and
fair. But it is awfully hard to persuade anybody that a railroad cor¬
poration can carry a car load of freight two hundred miles for less
money than it can carry it one hundred.
They perhaps may be able to show that on certain classes and cer¬
tain quantities of freight they can, so far as the actual cost of trans¬
portation is concerned, transport it a greater distance foî* less money
than they can a lesser distance, all things being considered. For be it
known, as it is doubtless to almost every one, that the bare trans¬
portation cost itself, that is to say, the bare hauling, is only one of the
items that enter into the cost of what we call transportation, and it is
really not so great an item as many people are inclined to think. I
have in my hand a pamphlet that I have only seen this morning, which
seems to be pretty carefully collated and argued out, and I find that
the author of that pamphlet comes to the conclusion, taking into con¬
sideration all the elements of cost that go to makeup transportation
on a line of railway, the agent's expenses, the terminal expenses, the
maintenance of way, all the various items that he has collected
together, that the bare cost of transportation is only about one half of
the total cost of all. So that it might be quite possible for a railroad
company to haul goods a hundred miles as cheaply as it could fifty,
taking into consideration terminal expenses and all that.
I think, however, that every one would be satisfied with the justice
of a proposition that there should be no differences, so far as the charge
for the long and short haul was concerned, that should be unfavorable
to the short haul. Such a proposition has entered into the interstate
commerce law, and as that covers a very much wider range of railroads,
circumstances and conditions than can possibly be found in a single
State like Missouri, I see no reason why it should not be a great deal
fairer in this State than it would be in the United States on the whole.
121
But there is perhaps a danger in over weighting, in any law, in get¬
ting too much into the law, and not only because it may be found in a
short time to work a hardship to shippers, but to work a hardship to the
railroad. Now I take it that no gentleman here, certainly no one of
our association, but what would agree at the outset that the railroad
companies are just as much entitled to your protection as the shippers,
that they are perfectly justified in conducting their business in such a
way as to make money, in just the same way that we, as free American
citizens are entitled to free speech and the liberty of the press. But it
must at all times be subject to those conditions that will recognize the
same right on the part of our fellow citizens, and must be conducted by
all of us in such a way as will not do injury or violence to them.
So the railroad companies should be protected in that same way, not
in order that they may have any advantages over the shipper, not in
order that they may, by arbitrary rules and regulations discriminate
unjustly between persons and places, but they should be guided in a
.general way by a policy that shall be laid down by the State saying,
-first, ^'Gentlemen, there shall be no unjust discrimination between per¬
sons and places in the State ; and second, you must not show any pret-
oreaceto corporations, railroad or otherwise, outside the State that you
are not prepared to show the citizens of the State that gave your corpo¬
ration its right and birth. Then I think if the pc/wers of the commission¬
ers to that extent should be granted, that there should be such penal¬
ties lor violating the law as that no railroad oflBcial should dare to take
the position I have stated one of them did in our presence. They say
^'we do not want any commissioners with powers to enforce the law, and
to infiict any penalties for violating the law, the courts of the land are
broad enough for all that. We do not want to be harrassed with vex"
atious lawsuits and annoyed with petty complaints." Supposing one of
us should say that we do not like as business men to be vexed with
petty complaints, the answer would be, ''if you conduct your business
in a way that is fair and honorable to your customers and satisfactory
to them, do you mean to say they are going of their own voUtion to
bring up complaints against you?" By no means. So I say let the
railroads do justice to the people in your rates and settlements and
classifications and they will not be harrassed by the people, because the
people have not time to go out of their way to do that unless you have
first given them cause to. Conduct yourselves properly and that is all
that is needed, and they might discharge half their force that they have
to attend their cases to-day. If they would do justice to the people they
would have no cases to attend to in the courts.
One of the greatest matters of injustice, one that the railroads have
themselves in times past conceded to us, is this differential between
122
the car loads and less than the car loads rates. We have asked'' why do
you make any difference?'' that is, onthe class of goods we deal in, there^
is no difference. We recognized the fact that on certain classes of
goods undoubtedly from the nature of them, and of their loading and
unloading, they can only be properly taken in car loads, but we are
speaking of the ordinary commodities of merchants, such as dry goods,,
boots and shoes, canned fruit, etc., and we say "why do you make any
difference ?"
We never have had but two answers. One was that there was a
difference in the cost of doing business. Well, we followed that up for
a year or two and took testimony about it from every quarter, and we
are prepared to defy to day any proof that there is, all things consid¬
ered, any difference in the cost to the railroad company whatever be¬
tween taking goods in car loads and less than car loads. And it shall
be very strange if we cannot prove that, all things considered, it is
more to their advantage to take it in the ordinary lots as bought and
sold every day than in car load lots.
We have always contended that unless it could be shown that there
was a difference in the cost it was unreasonable and unfair that they
should make any difference.
The only other reason that has ever been given to us that had any
weight to it was that the railroad company found it convenient in con¬
ducting their business to see to it that all the distributing business did
not come from one point; they wanted to have various points along their
line—and, mind you, by along their line they do not mean along their
line in the State of Missouri—but if they happened to be an Illinois cor¬
poration along the line in Kansas, Ilinois or Nebraska, establishing
these points from place to place so that they could use them against
their railroad competitors- And of course in their policy it is right and
fair that they should take that into consideration. Bat how does that
act on a citizen in this State ? If they haul car loads of frieght to a large
dealer, that makes a distributive point th.ere, and we cannot ship with
the small margin existing in our business, and the railroad comî)anies
undertake to say "you shall distribute so far, you cannot distribute any
farther, no matter what stock it is, what your facilities are for doing
business, we will chop your trade off' there and let it go to some other
locality." We contend that that is unfair, and is discriminating between
persons and places which, under the United States law, they have no
right to do, nor possibly under this law.
I understand that in chapter 21, article 2, section 121 of the statutes
of the State of Missouri, the railroad companies are prohibited from
charging individuals who make shipments in the State any greater sum
123
for the conduct of their business than they charge to corporations..
The article prohibits their making any discrimination at all.
Now we will concede a point for the railroads right here. And it
shall be shown if it is untrue. The interstate law takes that into con¬
sideration. You will find nowhere in the interstate commerce law a
provision or a prohibition for making any discrimination which recog¬
nizes the fact, as all railroad men and all those who have studied the
law know must be a fact, that there must be discrimination. It is an
absolute impossibility to make a tariff rate; it is an absolute impossi¬
bility to make a classification to conduct that portion of the transpor¬
tation business of any railroad without making a distinction, and very
many, that are just and proper. We would none of us say that the rail¬
road companies should charge the same price for hauling a car load off
coal as for hauling a car load of boots and shoes; and yet could any¬
body tell me why it costs them anymore for hauling one than the
other? It cannot be done. Throwing out the item of insurance, which
is a very small feature, throwing out the item that boots and shoes are*
• easily loaded by the railroad company, the bare transportation to a
railro ad company costs no more for a car load of coal than for boot
and shoes, and yet there is a difference, although we say it is a just
on .
Now, wherever there is any discrimination, the railroad companies
should be put on their defense that they are just ones, and we claim
that the law should prohibit them from making any unjust discrimi¬
nations. Now some of the bills that have been presented here them¬
selves make discriminations which we think we could show are unjust,,
and we feel for that reason it is very dangerous for any bill to go into-
particularities—to name rates and classifications.
We have frequently had occasion to go before railroads, and some¬
times with success in the minor parts with reference to the classifica¬
tion. The whys and wherefores of their classification sheet are not
thoroughly to be understood as the sheet stands, and in addition to that,,
circumstances are constantly changing so as to make it fair both to the
railroads and shippers that there should be changes. Now if the rail¬
road companies ¿ire prohibited from making any unjust or unreasonable
charges, any unjust or unreasonable discrimination, and the matter is
placed in such shape that those who have charge of the complaint may
easily have them investigated, and the railroad companies know that
there is a severe penalty for violating the law, the cases where there
will be such unjust charges will perhaps be few and far between.
But there is one difficulty with reference to elaborate bills. The rail¬
road companies will, and I do not say but naturally, go over that bill
carefully and all its features that will inure to their advantage they
124
will take advantage of to the fullest extent, construing everything
that has any chance of a double construction upon it in their own
favor, as for instance it would be very possible to put maximum rates
or mileage rates that would be unjust, and they would say that is
the law," and they would only change them by reason of competition
of other lines of railroad, when they would be obliged to do so. That
oompetion is a great bugbear with them; they say, we know what
you say is so, but competition forces us to do it." Now let them come
into competition with the law a little bit and let the law force them
to do what is right and just.
With reference to pooling we have no objection to a clause that
shall prohibit it, but we are of the impression that if the long and
short haul clause is introduced into the bill and penalties for unjust
and unreasonable charges and improper discriminations are made,
very stringent measures of the law, that there will be no necessity
for an anti-pooling bill. The railroad companies will not dare to violate
that provision of the law that pooling was by them intended to pro¬
tect. When a railroad runs to a point and it is the easy way to get
there, and here is some round about road that wants business at that
point, and they can't do it because they are not entitled to it by reason
of their haul, which may be twice as much, the length of time is a
bar to their getting business at that point. But throwing out the long
It
and short haul clause, they could make such a terribly low rate to that
point that the other road meeting it is losing money, and when they
get through with that rate war then they will patch up a condition
whereby the first road that proposed it will get a percentage in the
pool. But if the first road is prohibited from charging any more for
the lesser distance than the longer distance, they would think twice
before they would make such a low rate. They couldn't afford to do
it, as it Would aflect their business all along the line. 8till, as it is a fair
proposition that there should be no pooling for the purpose of making
the business of the country open and free, it may be proper perhaps
to put it in there.
There is one thing that has always seemed strange to me, that the
Tailroad corporations have not, of their own volition, considered the
people about, because on the whole it would not be a very great thing;
it would not involve them in very great expense; it would not subject
them to the out-lay of a great many thousands of dollars a year in the
aggregate ; it would save the people a great many thousands of dollars
a year in the aggregate, and at the same time it would relieve the peo¬
ple of one of those burdens that is as annoying as gnats, and fiys and
mosquitoes in the su nmer time. My colleague touched partially on
125
thai when he referred to the question of overcharges and the adjust¬
ment of claims. I will go still further and say, that probably the cases
of losses and damages to freight are much greater and occur much
more frequently, and are much more difficult to adjust, and much more
annoying to the shipper than the question of overcharges. Because, as
a rule, the question of overcharges is perfectly plain. There is a bill of
lading with a certain rate, and here is an expense bill from the rail-
laad, or freight bill, that shows that something greater than that has
been collected, and it is a very easy matter to prove such a claim as
that, and not so difficult always to collect it.
But the question of loss and damage is : Railroad companies by
their servants do not always handle their freight so carefully as they
should. It is possible that they should be made to do so, and that
they would do so without any doubt if they knew that in every in¬
stance where they delivered the freight with any loss or damage at¬
tached to it they should have to settle just as quickly as the freight bill
itself was settled. Such cases as that would then rarely occur. But
as business men, we all of us almost every day receive our goods in bad
order ; a coffee sack.torn open, or a barrel leaking, or this, that and the
other. What must I do to get redress ? There is only one thing according
to the railroad rules. You have got to keep your part of the contract
with them. Their contract with you says that for and in consideration
of a certain amount you to them pay, they have received your goods in
good order, and will deliver them to you in like good order. But they
break the contract and say you must pay your bill and leave us to ad¬
just our portion of it at the proper time. We have a certain routine
that we must go through before that can be done ; it has got to go
through the various offices, and here is the way the thing works. I will
give you an instance: A man reports to me got all my goods except
one box of pepper that didn't seem to be delivered. That was not de¬
livered and I don't propose to pay you for it. You must see that the
Railroad company settles for it." We go and look over our order book,
over a thousand items, and that one box of pepper, what does it amount
to ? 20 pounds, 12^ cents ajpound, $3.50, not a very great sum, of course,
but still it is worth looking after. We find that the railroad company
receipted forthat and we make out our claim, and we say to the man
who should have received it ^'send us in your freight bill aifd have your
agent mark across the face of it the fact that the goods were received
one box oí pepper short." And mind you, it is the duty of these rail¬
road agents every day to report to the general office the condition of
all freight that comes to their station, whether short or over, as to its
condition if it is out of condition and so on, so that the railroad offi¬
cials may know before we know ourselves that that package is short.
126
Well, we get the bill, and attach it to the original bill of lading, be¬
cause we always send the duplicate to the shipper now, knowing that
there may possibly be a loss, and that he may lose the original, and if
it comes to a question of settlement we will have it. We get from him
the expense bill and attach to the bill of lading, and make out the
claim of the individual and send it to the company.
In the course of time that comes back to us with a proposition that
we shall go before a Notary Public and swear that we actually did ship
as the bill of lading attached shows that particular box of pepper. Not
of course that they distrust us at all, but so many cases have come to
their knowledge where by oversight, the shipment has b3en made
short. Now in the first place, it is a difficult thing to do. Our books
show we did ship it, and our porter says ''there is my check marks that
show I delivered it on the wagon," and there is no reason to suppose it
was, but we can not say that it was not allowed to fall off on the street,
and that the railroad company checked it in as all right. So that as
the case is a very small one, and you don't feel that it is a very fiagrant
matter, rather than swear to something that is not within your per¬
sonal knowledge, you let it go, and that is just what they want you to
do. But if we can conscientiously state to the best of our knowledge
and belief that we are convinced that the box of pepper actually was
delivered at the depot, we go before a Notary Public and pay him his
fee, and make the affidavit and again send the papers off. In the mean¬
time they come back and say that they must have the affidavit of the
man to whom the goods were shipped that he actually did not receive
them for fear that the agent at his end may have overlooked them and
delivered them to him without knowing it. This is not an uncommon
case I am giving you; it is a case that actually occurred in my own
business. I had to send to that man and ask him to have his affidavit
of the fact made and sent back to me. He was in a little bit of quan¬
dary himseli then for he lived four or five miles from the railroad. The
young man that he sent after the goods to receive them, the agent told
him the goods were short, and he receipted for them short on the agent's
book, but this man didn't know it of his own knowledge. However,
he finally concluded that is good enough evidence, and he makes the
affidavit. All this has taken a good deal of time and book-keeping, and
we finally get the papers all complete, in the case I am giving you ; two
or three days after all these papers were filed and sent in to the gen¬
eral office, the agent came to me and says "your box of pepper has
been found. What do you want done with it?" (Laughter.)
Now, there the man had his invoice all right; it was perfectly
competent to show he had a receipt from the railroad company, and
that should have settled it right there, and if they found it afterwards,
127
after settling for it, they could have done as they pleased with it. I
don't see why there should not be a provision in the law that when a
railroad company enters into a contract with the shipper, all parts of
that contract should be settled at the same time with the other parts,
either through their travelling men, whom they could have for the
purpose, or their agents, and in that way one thing would be saved to
patrons, that is a great annoyance to the shipper, and if they would
have the law so framed as to be carried out, 1 think there would be no
complaint on either side.
I feel a little diffident about explaining these matters, because I
do not know but that they may be just as well known to you as they
are to myself, and for fear of recapitulating too much, and of seeking
to give information that may be something on the chestnut order, I
would very much prefer that you would ask any questions that may
occur to you, and so far as we are able to answer those questions out of
our experience, or out of those matters we have made a study of, we
will do so candidly.
We have no special ends, we have nothing to conceal, we ask no
preferences over any other locality. All we ask is that we shall have
fair treatment, and the railroads have fair treatment, we feel that with
those two things accomplished, the State of Missouri should take rank
first among all Western States as she should by reason of her resources,
and by reason of her people, and by reason of everything that goes to
make a State great. But if the railroads of this State are allowed,
and the interests that they may have, by their officials or promoters, or
Eastern owners, away off in far off States, if they are permitted to
shape their policy to the benefit of those other States, we know it is
g;oing to be very detrimental to us. They should be compelled to
submit to the State laws, such laws at least as will give the State of
their birth and origin at least an equal show with any other State.
Senator Johnson of Madison: You say that you wish no maxi¬
mum rates, I would like to know how we, as legislators, can avoid
making maximum rates ?
Mr. Ha^ward: When it comes to questions of a legal or constitu¬
tional nature, those we cannot answer at all. If the Constitution re¬
quires that there should be such, undoubtedly you will have to do so.
The only point I sought to make was, that in making them you might
unwittingly give the railroads a great advantage. You might in one
clause in your bill say that they should not charge any unjust or ex¬
tortionate rate, and in another clause fix a maximum rate that would
be an unjust charge.
Senator Johnson : The point I want to get was this: where do
128
you want the question of fixing rates to rest^ anywhere, or with the*
railroad companies ?
A. Well, as in the interstate commerce bill, competition will fix
their rate to terminal points, if they are not permitted to charge more
for a long than a short haul—more for a long than a short haul—that
will to a certain extent regulate their charge in that direction, and if it
should be put in the bill as it is in the interstate commerce bill, that
nothing in the law will permit them to charge as much for a short as
for a long haul, that would at all times put them on their defense as
to making proper and just charges.
Senator Johnson : Then your understanding is that the mercantile
community would be better protectedz-by leaving the question of rates
and classification both with the railroads, subject only to these restric¬
tions thrown around them in the laws against unreasonable charges
and discrimination?
A. I think so, most certainly ; more especially if they are plainly
prohibited in the law from charging citizens in this State any more
than those outside of the State. The railroads fix up their tariffs to
give them their proportion of that through tariff.
Senator Johnson : Then I do not understand you as advocating
placing in the hands of the railroad commissioners the power to make
rates or classifications ?
A. No, sir; except that they should be empowered to decide,
whenever those questions come up, as to what would be fair and rea¬
sonable.
The Chairman : Do you propose to make them a court to deter¬
mine these matters ?
A. I think they should be, yes. sir. Whenever any one felt him¬
self aggrieved linder the law, he should have an easy, a simple and an
economical way of testing the question.
The Chairman : The Constitution has conferred these powers on
the court.
A. Yes, so I suppose ; the Constitution of the land gives the ulti¬
mate decision of all these matters, but if the commissioners first make
«
a ruling on a certain subject, a railroad company could not go into
court with very clean hands.
•Of course we are none of us lawyers, but we had an idea that the
commissioners might be given such power that their ruling might have
the effect, at least, of a temporary injunction to restrain the railroads
from doing that which they ought not until such time as the higher
courts could determine the matter. If the roads simply had the right
to violate the ruling of the commissioners until the final courts could
decide it, they might keep the matters there so long as that it would be
129
unjust, and if the efl'ect of the temporär}^ injunction was that the rail¬
road companies were not satisfied, they would at least have to be gov¬
erned by the ruling of the commissioners until the higher courts de¬
cided that the commissioners were wrong. We don't know whether that
is legal or constitutional, or can be done, but it seems to us what would
be a simple matter and that it would accomplish the desired result.
Senator Johnson, of Madison : Do you not know that maximum
rates fixed reasonably low, and then laws against unreasonable or un¬
just discriminations, would protect your interests just as fully and
thoroughly as without maximum rates ?
A. We do not think so, and for this reason : That there is a great
deal of misappiehension as to what railroad companies can afibrd to do,
and the danger is that if you undertake to do for them you will give
them advantages in some respects and perhaps in some respects place
disadvantages upon them, although you should not be subjected to
them. For instance, take the mileage system. You will see that is
not a proper basis on which to make up rates. Taking all the consid¬
erations together. Say that it costs a railroad more to haul twenty
miles than it does ten, and that they should have more forthat twenty
miles and so on, with a gradual ascending scale. We can show you
that a railroad company can better afford, all things being equal, to
haul a lot of freight through a division than they can stop and deliver
it to points intermediate. Then, it may be trae, that some portions of
their road are hilly and have steep grades, so that they can carry but
from twelve to fifteen cars, and other portions of their line are so level
that they can carry, with just as little expense, forty or fifty on that
basis, it would be unfair to put that on a mileage basis.
Mr. Knowles: Where you have competing lines and maximum
rates are not fixed, what would fix the reasonable rates?
A. The railroad companies will, m any event, construe this law
as they have construed the interstate, commerce law. It seems to me
necessary that they should construe it at the first instance. They are
put upon their defense from the time they know very well if they un¬
dertake to do anything that is unfair, or to interpose any features into
the railroad policy that would be unfair and unreasonable, different
from policies that were fair and reasonable, that have gone be¬
fore, that they would have to show it was reasonable, and if
they construe the law at the outset they would inevitably be guided
by it and make their rates reasonable, or at least make them to appear
to be so, otherwise they would be likely to be brought before the com¬
missioners lor violation of the law.
R M—9
130
Mr. Knowles : Wouldn't that place the power entirely in the hands
of the railroad company ot saying what are reasonable rates ?
A. To a very great extent, and I presume that they are more com¬
petent to do so than anybody else. They know nearer than any one
' else. There is nobody that knows what it costs to transport freight.
It is a problem that has not been solved. You may say it costs difíer-
ent on different roads, and they can tell you at the end of the year what
the average cost per ton per mile was, or the average cost per any other
unit has been for that year, but they can not say what will be the
cost for any other year ; they cannot say it will be the same for any other
year. You cannot so carefully subdivide all the different charges
for maintaining the railroad among the different classes of freight
as that you can say it costs so much to haul a ton of coal and
so much to haul a ton of boots and shoes a mile. It is impossible for
anybody to say what it costs to do a transportation business, and there
is where I say the difficulty comes in if you undertake to fix a price
that pre supposes what the cost will be, and that never varies. You
may have in some instances made that too much and in some instan¬
ces too little, and if it is fixed in the law they will have the law to fall
back on, and say, ^^Those prices are made by the law, and, whether
they are right or wrong, we have no right to change them.
Senator Johnson, of Madison : Do you think that question ol cost
of transportation, in any direction over any particular section of the
road, would enter into the question as to the reasonable rates on the
road as a whole ?
A. I don't know what the basis would be for making a charge ex¬
cept the cost.
Senator Johnson, of Madison: Wouldn't it be necessary to take
the whole matter into consideration and then to apportion it from that ?
A. If you could do that without making any discrimination, well
and good.
Senator Moran : lam not quite certain that I understood your
position with regard to differentials, as to less than car loads. As a
matter of fact, don't you very often engage a certain number of cars
and load them yourselves, none of the labor being left with the com¬
pany, while in these smaller shipments, where a car load is necessarily
made up of goods furnished by a dozen or twenty different shippers,
the handling is done entirely by the railroad company, and the cost of
storage and handling and loading, and receiving and delivering and
unloading is much greater to the company than where the cars are fur¬
nished and loaded by the shippers? And then again, isnT it true that
the company can haul a car load nearly as cheap as they can half a car
load, and isn't it rather a loss to a company to have to haul a car with
131
only half its tonnage, so that isn't it just for the company to charge
more for these small shipments ?
A. That brings up a very important question, and I will show you
what conclusion we have come to from investigations we have made
right on that point. In the first place, I think the clearest answer to
the proposition is : that the railroad companies themselves come about
as near knowing what is most advantgaeous to them in the way of re¬
ceiving their freight as any theory of ours could possibly show. If
there is any difference of cost in the matter it would be very easy to
charge it in every instance. Doesn't that seem a fair proposition ? That
they will always charge it is, there is a difference. And if there is it
must be a fixed one, it cannot be fluctuated. It must be a fixed differ¬
ence, and I would show you, if I had the papers with me, but it is a
fact that cannot be disproved, that tariffs exist in this State to-day,
made up by railroad companies, where the difference between the car¬
load charge and the less than car-load charge on commodities that we
deal in, at the point nearest the point of shipment, that is to say, their
first charge is a half a cent a hundred, I think in the tariff that I was
looking at on Saturday the smallest rate for the least distance was
something in the neighborhood of ten or eleven cents a hundred. The
car-load charge was a half a cent a hundred less than that. Now it seems
to me that that is the plain argument that the railroad company taxes
us a half a cent more to do that in less than car loads than in car loads.
But whatever that difference of cost is, it cannot be different at differ¬
ent stations, and increasing and widening that difference the farther
you go away from the shipping point does not indicate that it is. As a
matter of fact, they do not claim that it is.
I said to a railroad official the other day, a gentleman whom I pre¬
sume you will hear before many days, as I understand, ''you know our
argument upon the car load question ? " This was with reference to
the interstate commerce bill, " what we have been demanding for the
last two or three years of your classification committee. What earthly
argument have you got in support of the present rates you are makin.g ?
We brought you down from nine to ten cents differential between the
car load and less than car load by our arguments at Denver, St. Louis,
Minneapolis and Chicago ; we brought you down to a differential of
3| cents and at the same time you admitted to us that there practically
was no differece at all. You brought it down from 9 to 3^. Now you
have put it up again ; what is the reason for it? " " When it comes
right down to that," he says, " we haven't got a leg to stand on." And
they have not got a leg to stand on. The first answer to your question
was that the railroads themselves made the smallest difference of one
half a cent, and we do not complain of that difference; we can stand
132
that, but it is the diíFerential of 25 and 40 and 50 per cent, that knocks
our trade from under us entirely, and prohibits us from competing in
various localities.
Now it is undoubtedly true that many cars are loaded and unloaded
by the owner, and to that extent the railroad companies are relieved
from expense, but even then any railroad man will tell jou that it ci)sts
more to switch in and out on tracks than it does to handle freight
through their house. Any railroad man will tell you this, that they
have a maximum car load weight, that has been the same for a great
many years back, of 20,000 pounds ; that their cars have been getting
heavier all the time, so that they will hold 25 and 30 and 40,000 pounds, ^
and yet your maximum car load weight of 20,000 pounds prevails. Now
it is more likly that a car that is loaded and unloaded by the owner is
going half loaded than a car that is loaded in the house with goods
made up from everybody, and that are loaded up by trained men who
know how to use the available space. One man told me, and he is dead
now, " Hayward, I would rather take freight through the house at the
same rate than to have the shippers themselves load it on the cars. It
is under my control, and I can stuif those cars as full as they will hold,
both as to capacity and weight; I will load heavy goods on the bottom
of the car, and when it comes on top I will put light goods there and
make eight cars in the house do the service of ten loaded and unloaded
by the owner." So we claim at least 20 per cent, less cars will do the
same service loaded through the house than loaded by the owners of
the freight. So in that respect there is a saving to them, and in all
other respects. They don't take up so much of their cars. The roads
have always claimed that they could attend to one large shipper, but
if they had a thousand small ones running after them they never could
satisfy them, and consequently it was their policy to make rates to put
the business into the hands of the large shippers, but at the same time
it seems to me they shbuld not discriminate in that way. Justice to
everybody is what we ask for, and we think that a careful scrutiny will
show that the railroad companies save in car service and in cost of
handling to so great an extent that practically the two classes would
be on a par, and that a loss in one direction is a gain in another, and
that their own tariffs show only one-half a cent difference in one in¬
stance.
Senator Moran : Do I understand you to say that a rigid enforce¬
ment of the long and short haul would be beneficial to your city ?
A. I am not asking for anything that is beneficial to the city I
represent. If all the propositions that we have made cannot be shown
to be equally advantageous to every city and every shipper in the
State, we do not advocate them. We are too broad-minded, we think,
183
to come here and ask for something that is for the special advantage
of St. Louis. Taking the long and short haul principle, I am inclined
to think that the rigid enforcement of it will completely change the
policy of the railroads, but in such a way as to come nearer making
them do justice to all the shippers in the State than under some policy
not so regulated.
Mr. Moran : I believe now that the wholesale merchants of St.
Louis are enjoying a rate over the Missouri Pacific, up say to Omaha,
that you have to Kansas City, or that St. Louis gets the same rate to
Omaha, and that northwestern trade that Kansas City can obtain.
Now, by a rigid enforcement of the long and short haul principle,
wouldn't that entirely shut your city out of any trade in that northwest
territory ?
Mr. Furth : That question of the gentleman brings to mind a matter
that I overlooked in my address to you, and I am very glad that the oppor¬
tunity presents itself to make the statement to you. In the interviews
that we have had from time to time with railroad managers, we have
found one principle to prevail—and I beg to be understood as not in
any way reflecting on what the gentleman said, but I am stating this
as an abstract proposition, and one in which my colleagues will bear
me out—whenever we have approached a railroad manager and asked
him in the interests of the business which we represented for certain
things, and show them that certain matters were a detriment to us and
toward our city, they invariably showed us how they were favoring St.
Louis by making an extremely low rate, say from Galveston, and an
extremely low rate from Nebraska, and by conceding to us a great
many things for which we do not care. These concessions were held
out to us to show the liberal policy of the railroads towards St. Louis,
but they were tantamount to nothing. The very low rates which we
get to Omaha and above there benefit us nothing. That is not the sec¬
tion of the country in which we seek a trade. The very low rates they
are making from Galveston amount to nothing. What we want is a
tangible, practical fairness and justice in that territory where we
solicit trade, and where we do not we don't care what rate thev make*
Whether the long or short haul would be a benefit or not amounts to
nothing in that territory, when we do not solicit trade there, and where
the trade does not properly belong to us.
In this connection I desire to state further in reference to the car
load business. We take it^for granted that the experience and knowl¬
edge and science of railroading finds its home in the East; finds its
home On the trunk line territory ; that is, the trunk lines leading from
New York tb Chicago and East St. Louis, and I presume none of you
will deny the fact that there is not a gentleman in the United States
134
whose reputation as a railroad man stands higher than that of Mr.
Fink, who was the pool commissioner of these trunk lines. Now, if car
load rates were a benefit to the railroads, if they were proper and just
to the citizens, wouldn't car load rates prevail on the trunk lines?
A Senator : I understand you to endorse Mr. Fink very highly ?
Mr. Furth : Yes, sir.
A Senator : Have you read what he has said in reference to the
bills pending before this body and the interstate commerce bill ?
Mr. Furth : No, sir; but I will state this,that the trunk lines do not
recognize car loads except in a very limited extent, and on some matters
after a very great deal of influence has been brought to bear on Mr.
Fink. After a great many interviews and a great deal of talk, he con¬
sented in one instance to reduce the classification from first class to
second class, and on the joint southwestern classification, that same
class of goods ii 15 per cent, less than third class. Now when the in¬
terstate bill went into eJïact, in order to. adjust matters on the long
and short haul policy, they attempted to inaugurate a car load system
from New York. How long was it in existence? On a great many
articles it was discontinued almost as quickly as it was adopted as im¬
practicable. But there is one point I desire to draw your attention to,
and that is this : Of course, you will have railroad men to appear be¬
fore you and they will blandly and nicely show you the extreme liber¬
ality with which they handle the trade and commerce of the various
cities of this State, especially St. Louis. We cannot pretend to
equal either in persuasive powers or oratory and eloquence these gen¬
tlemen who are taken out from among thousands for their varied
powers of diplomacy and finesse. We are simply plain merchants
who come before you with a plain, unvarnished tale, but they will
show you in a beautiful manner; and unless I did draw your attention
to it, 1 think perhaps the great degree of liberality which they would
display would show that we are overestimating the points we try to
make—the points which we have made before you.
Now we want you particularly to pay attention to that which hurts
us, and not to be blinded by those statements which are true as far as
they go, but which do not go far enough.
Senator Moran: With reference to the trade up in the Northwest, that
trade up there, being largely a grain and stock trade, I want to know if it
is not of very great interest to those people to be allowed the benefit of
competition with the two systems, to Chicago by running over the Chica¬
go lines, and to St. Louis by running over the Missouri Pacific? If it is
not a very great benefit ? And also let me understand your position
with reference to maximum rates. I understood you to say that your
merchants do not care to have a schedule of maximum rates enacted
135
in the bill itself, but you would leave that to the railroad companies or
ft
somewhere else. How would it do to authorize the commissioners to
fix a schedule of maximum rates for each différent road doing business
in the State involving extortion or discrimination for any quantity of
goods, to have that schedule be a prima facie rule of evidence, thus
throwing the burden of proof on the company if they charge a rate in
excess of the rate charged therein, and if that rate was only a reason-
ble and just one—the rate fixed by the commissioners. And also let
me suggest this, that the gentleman who was on the fioor, Mr. Hay-
ward, I understood him to say he would give the commissioners the
power to enjoin a company until such time as the matter in contro¬
versy could be finally adjudicated on by a court of trial jurisdiction.
Now inordinary actions of injunction the petitioner must give a bond
in order to obtain a temporary injunction, and would be liable for an
action on it if the defendant's cause was found to be a meritorious one.
Would it not be injustice to the railroad companies to enjoin them from
doing business, especially if, upon the final adjudication of the matter,
it was found that the rate they were charging was only reasonable and
just, and the petition be dismissed, and the company be left without
remedy, there being no bond given
Mr. Furth : I don't know how it would be gotten at, but my idea
of fairness was this : For instance we come before a grand jury, andt
that grand jury determines whether a certain man should be put on
trial for a certain offense. In the case of the grand iury it is a secret
investigation, it is true, and opinions differ very much as to whether or
not it is proper that any one should be investigated in secret, but if
powers somewhat similar to those of a grand jury were given to a board
of commissioners, if the complainant could come before them and state
his case, and if they, after hearing him deemed that he has a case, that
would \>Q prima facie evidence, first of all, that it was not a malicious
prosecution or persecution, and then that the man in the opinion of the
Board of Kailroad Commissioners had a case worthy to be adjudicated
upon by the court. In other words, that would be a body intermediate be¬
tween the shipper and the railroad, and would stand there as a safeguard
to the railroad companies to protect them from all these petty on¬
slaughts that could be brought against them by malicious or merce¬
nary motives. That was my idea of the nature of a board and their
powers. Whether it can be incorporated into a law I know not, be¬
cause I am not a lawyer.
I desire, further, to state, as I stated at the outset, that we repre¬
sent a certain industry, a certain branch of the commerce of St. Louis,
and that that branch is contra-distinguished from those which tend to
bring trade to St. Louis. And you will find before you to-day, I think
136
epresentative gentlemen, who will stand for that portion of the trade
and commence of St. Louis with which we are not connected and of
which we cannot speak, for the reason of the want of experience and
knowledge. They will speak for themselves. But as legislators we
think that you should take into consideration and hear from all parties
interested. We ask no special legislation for grocers, the other gen¬
tlemen will ask none for themselves I presume, but we are all here to
give you our experience, to tell you things as they affect us, and to ask
from you such legislation as will remove obstacles to our prosperity
and make it possible for us to extend the trade and commerce of the
State of Missouri. I will draw your attention to another matter.
In the great system of railroads throughout these United States
the territory is divided as I have intimated; the trunk line ter¬
ritory extends from the sea-board to Chicago and East St. Louis.
From there it touches the limits of the Southwestern Asso¬
ciation and goes out to the Missouri river. Now the long and short
haul that you have referred to in the matter of Omaha, practically is
not a good illustration,because rates are always low to all the Missouri
river towns. It does not matter that Omaha is a great deal farther
than Kansas City from St. Louis, for Kansas City, Leavenworth, St.
Joseph, Atchison, Omaha, are all enjoying the same rate of freight by
reason of the classification of the Southwestern association. Now, in
apportioning out this territory, there has been a system of pools, which
by reason of the interstate law has been in a measure abolished,
although the effect remains just the same. The rates are the same,
there is no pooling, there is no division of money, or of tonnage, but
the rates are the same. Now, they make their rates from New York
to Chicago as the unit. The rates from there on all the various classes
from first to special. Then then the trunk line people say St. Louis is
farther from New York than Chicago is, and consequentlj» we must
charge you more money. You see the mileage principle prevails there.
For a long while they made an arbitrary charge of twenty-three per
cent. They made by some table of distances, St. Louis twenty-three
per cent, farther from New York than Chicago. After years of hard
work, and after a great deal of labor, and especially due to the efforts
of one of the gentlemen here to-day representing the Merchants' Ex¬
change, we have demonstrated that that condition of affairs has changed,
that time and distance are being annihilated by the introduction of
modern conveniences, and to such an extent was it true that we had
come nearer to New York, so as to make the difference only sixteen
per cent. After going to see these gentlemen in New York and ham¬
mering away at them for a long while, we got the answer Yes," one
of the lines said, We know it, you are only sixteen per cent, further,
137
but we are going to charge you twenty-three per cent, more, all the
same." By force of argument, however, of this sort, we kept at them
until a year or two ago—we demonstrated it to them that sixteen per
cent., or nineteen per cent, was the only difference, and we are to-day
paying sixteen per cent, more to St. Louis than to Chicago. Now,
looking at the table from Chicago westward, they make a differential
there. They say, You pay five cents a hundred more from New York
to St. Louis than we ; we will make the rate from St. Louis to Kansas City
five cents less. That will equalize your rate." And with that state¬
ment every railroad man will come before you. But how does it operate
in fact ? It is one of those statements which I will compare to that
made by one of the witches to Macbeth, that he should be king. He
was king, but how did it end ? and how does our matter end ?
They take it for granted that there is a differential of five cents
between St. Louis and Chicago, but the fact is that Chicago for nine
months in the year does not need the railroad and lays the goods down
at Chicago for considerably less money by lake. Now we do not
enter with the Chicago merchants on a theoretical competition, but on
a practical competition, and if a man has a rate to Chicago, whether
by reason of the geographical location or any other reason, if the differ¬
ential is greater than five cents, we suffer just that much, notwith¬
standing all the figures they will show you on paper and their equal¬
ization. Gentlemen, their equalization don't equalize, that is the
trouble, and that is what I want to draw your attention to.
Senator Ball: That is not the fault of the railroads, is it ?
Mr. Furth : Yes ; but we don't ask them to equalize ; we ask them to
let us take care of ourselves ; we don't want their protection ; they force
it on us, and it is no protection any way. It puts us at the mercy of
our competitors every time, and when we handle such goods, where
our profit is not as great as it is in other things; we are simply shut
out from competition by reason of the protection which we enjoy from
the railroads.
Now, in regard to the car load diflFerentials, my colleague has
shown you that in certain localities they make a difference of half a
cent a hundred On some items they make a difference of thirty five
cents a hundred, or seventy cents on a car. They cannot certainly show
that there is a difference of seventy dollars between the rate for a car
load of an article, and the rate for less than a car load ; it is impossible.
Senator Moran : I wanted to ask you this question : whether you
are in favor of a law prohibiting rebates or drawbacks to individual
shippers ?
Mr. Furth : Yes, sir.
138
Mr. Hay ward : I think it must be taken for granted from what we
have said that we are in favor of nothing that shall show any discrimina¬
tion between places or persons ; that all rates made by the railroad com¬
panies should be rates that ail business corporations and shippers may
take and have ; that they will be published and made so plain that any
one who cares to inquire the rate shall ascertain ; that there should be
nothing in the way of rebates or drawbacks ; and it is perfectly proper
that that should be embraced in the law. Now,- if I may be permit¬
ted, I would like to answer the question in my own way that was asked
by Senator Moran, and if I shall say anything difíerent in any slight
degree from my colleague it will be because we do not claim to be a
unit on all subjects ; but as to the question of business between St.
Louis and Omaha being aifected, it is true, as Mr. Furth has said,
whenever we have been to the traffic managers of the various lines and
asked them for certain things, we were met with statements, not that
they were unjust and unfair, but with the statement, '*If you succeed
in gaining the point you are driving at, you will rue the day, because
you are enjoying certain advantages over other people in other por¬
tions of the State and other localities." Now, we recognize this tact
very prominently, that we, the grocers oí St. Louis, are not here the
entire business men of St. Louis with all their interests there. While
we may not be interested in the Omaha business, while we may not be
interested in the Galveston business, we say this to the railroad com¬
panies in answer to their proposition, don't care to enquire as to a
fair treatment, a fair disposition on your part in making rates, as to
where it would help us and where it would hurt us ; we are simply on
the broad ground that you must make your rates reasonable and fair
and just to every one. We do not ask that you discriminate in favor of
ourselves ; we ask that you would simply take your hands off us and
let us alone, and if we have not got capital and stock and energy and
enterprise enough to compete with the whole United States, we will
step into the back-ground and allow those who have, who are more
largely endowed in those respects, to take the business from us. If
that leads us into a pit or slough, all right, we will go there, but we rely
upon this, that the railroads themselves are just exactly as much inter¬
ested in this matter as we are, and that if anyone cannot ship to those
places named the railroad companies do not haul the business. Now,
it is for their interest to adopt the policy that will give us the business
and give them the business, and we say it is perfectly possible for
them to do it.
Senator Brown : Even with a long and short haul limitation, un¬
less schedules of rates were fixed in some way, either by the commis¬
sioners or by the legislature, wouldn't the railroads be enabled toprac-
139
tically qualify the lon^ and short haul limitation by charging a very
few cents more for a long haul than for a short haul ?
A. It is possible, sir, that that might be the case, and it is possi¬
ble and extremely probable that a good, smart railroad man would be
able to show to your satisfaction and that of every fair minded man
that he could, as a matter of abstract right and principle, afford to haul
goods a hundred miles fully as cheap, and perhaps cheaper, than fifty
miles, taking into consideration all advantages involved in the ques¬
tion.
For instance, the Missouri Pacific has a division, I think, that ends
at Chamois. I think that any railroad man would tell you, if he had a
car load of freight in St. Louis and put into a train, he would rather
haul that train right straight through to Chamois than to stop at the va¬
rious stations and set off a car load at one station and another car at an¬
other station. Ele would say that the wear and tear of the track would
be less to haul it through ; that he could handle the train with so many
less brakemen and that it would be a matter of economy in all re¬
spects for him to deliver that car at Chamois rather than to leave
it off.
We all know that freight trains occupy an entire day in going over
a division. There is more cost in the train service of a way-freight
than a through freight. I don't think they make over half the distance
in the same time, and they have to take force enough to load and un¬
load the car so that they can go through in day-light. I think I can tell
you that any railroad man can show you that it costs more to haul the
freight along from station to station and deliver it than tó haul it over
the entire division ; and that, too, for another reason, that where
freight has not got to be loaded and unloaded in that way the cars can
be loaded to their full capacity, whereas when they have, they have to
leave room so that they can handle the goods when they get to a sta¬
tion. If they were loaded permanently with stays and braces to
carry it through, they would have to be broken at every station ; but
they can't do that and they have to load the cars so that they can be
quickly unloaded, so that a car will perhaps be loaded only to one-
half or two-thirds its capacity.
Therefore, I think it can be shown that it certainly costs more, or
fully as much, to do that local business as to do the through business ;
and if they are limited in their charge to the through rate, it is always
a competitive one, and more especially if they are limited in their
charges to us who live on the border of the State, to the proportion
that they could get out of any through business, and that is what I under¬
stand the State to mean when it savs there shall be no discrimination.
I think that is unfair to the railroad, and the law should say, that there
140
should be no discrimination as between persons and corporations, and
I take that to mean, that the proportion that the Missouri Pacific gets
as its proportioîx ot the through rate from New York or St. Louis to
any point in this State, is the maximum" that they may charge to us or
any shipper on the boàer of the State, and it seems to me it is fair that
such a charge should be made. For, if they can afford to haul for the
Cincinnati merchants for 15 cents a hundred they should not charge
me 25 ; and the only reason they have given is this : ''We charge you
only such rate as is just and fair." How do we know that? And if
we find in competition that it is necessary for us to take the business
from some outsider at a price that is less than just and fair, we think we
havie a right to complain. They quote to ns the scriptural passage,
" where the laborers were employed at different hours of the day, and
all paid the same price, and give that as a reason why we should not
complain. They say that he paid the man who worked 12 hours a pen¬
ny, and that we should not complain. But we think we have a right to
complain. They seem to forget that we are competing with the very
parties they are favoring. They say it is necessary in competition with
a railroad for you to suffer under such a rule, but we come to you and
tell you that it is not fair in competition that one should have one rate
and another another. And when we tell them that, they then say we
don't recognize your competition, it is only our own competition we
have in view, and now we want a law, to say to them, " you have got to
recognize the position of other people, and their rights, as well as your
own." We shall prohibit you from charging St. Louis men 25 cents
who are conipeting with Cicinnati, may be for the same class of goods
who pays 15, allowing Cincinnati merchants to sell goods in St. Joe, for
instance, that St. Louis merchants cannot sell, making the merchants
of the State, both in the interior and on the border, pay rates that the
outside merchant does not.
We do not ask any favor for St. Louis; that is not equally appli¬
cable to merchants engaged in all other parts of the State.
Senator Moran: Do I understand that the merchants, say at In-
dianopolis, are getting cheaper rates than St. Louis ?
A. They are in this way : Supposing merchants have to buy their
goods in various places, as is the case where certain lines of goods are
manufactured at certain places, there are certain goods that come from
Baltimore—when we buy manufactured goods in interior parts of Illi¬
nois, or Ohio and in Chicago—now the point we make is this : Suppos¬
ing we are buying a manufactured article in Indianopolis. The rate
from Indianopolis to East St. Louis is so much. That costs us so much
delivered at our door. That Indianopolis firm may go out in the west¬
ern borders of our State, or to some point beyond our State, and com-
141
pete with western citiesj or with us, and ^et a through rate, that in¬
stead of being the sum of the locals, will be a great deal less. It would
be a rate made in competition of that railroad with some other rail¬
road, so that possibly the railroad that hauls his goods there from the
border of our State to their destination, may take from him an amount
which is their proportion of the through rate, which is 15 cents, while
we have got to pay 25, or we pay more, that is from Indianopolis to our
store, and from there to the man you want to sell it to, so much more
than they^ave to pay, so that the difference in the freight wipes out
all our profits, and compels us to sell it at a loss or abandon the
trade.
Senator Sheldon ; In speaking of that shipment from Indianopolis,
where the through rate from there will be less than tliQ rate to St. Louis
and from there on, 1 understood you to say, that if the through amount,
would amount to a lesser sum than the sum of the locals, it would dis¬
criminate against the St. Louis merchants.
A. Yes, sir.
Senator Sheldon: Suppose a party in Springfield is buying, and is
not permitted to make a through rate, is not your gain Springfield's
loss ?
A. Very possibly it may be, but I would like to know what right,
by the laws of the State of Missouri there can be to make a discrimi¬
nation in favor of Springfield as against St. Louis. That is the argu¬
ment the railroad companies use. They say, it is true we are mak¬
ing a discriminating rate, but it works in favor of Springfield." We
say, " why should you discriminate against us ? We only ask you to
pass such laws as will not discriminate, and will not allow the railroad
companies to discriminate against us. That is all we ask, that we be
put on the same basis as anybody else. Of course, it may be a very
agreeable thing, that we, as business men, should be discriminated in
favor of, but is it fair ? We do not ask that it should be done. We simply
say, do not discriminate against us."
Senator Ball: Can we, in your opinion, draft a bill that would
conform to the railroad system or laws of other States that would work
exact justice to all business?
A. Possibly you might, possibly that might have to be a matter of
consideration. I understand that railroad companies take the position
^hat they would like to do fairly what you want done, but you must
remember that there are railroads in the States all around us, and if
they do what you want, you shut them off from competing with other
railroads.
Senator Ball : You complained a moment ago of Indianapolis be-
142
ing able to go to Springfield to your detriment. ^ Is it not also true
that your merchants can go into Indiana on the roads there, cheaper
than Indianapolis can reach her farther points in her State ?
A. I don't know whether it is true as a fact ; but supposing it
were true ?
Senator Ball : Doesn't it equalize it, then ?
A. No, we don't think it does. We don't see how you can
make an unjust Jaw, and say it is ail right, because it is equalized
by something else.
■\
Senator Ball : I grant you that we can only legislate as regards
this State. What objection have you to a bill fixing maximum rates#
A. I have no very serious objections, except that by undertaking
to make a maximum rate a railroad company, not perhaps a great
trunk line, but some other railroad, would be able to take advantage of
that and charge a greater rate than they would otherwise be able to show
was just and fair. If they were left to make their rates, based upon a
law which says there shall be no unjust rates, based on the long and
short haul clause, and that they should not be permitted to discrim¬
inate, they then have got to make rates themselves which shall stand
the light of reàson, and withstand the charge that they are extor¬
tionate.
Senator Ball : Would not the same result ensue in all probability
if the maximum rate was fixed by the railroad commissioners?
A. Yes; but they are fixed in that way; they are changed from
time to time as people come before them and show that they ought to
be changed, and if they are left to the commissioners in that way, they
are changed generally whenever it can be shown by the railroad com¬
pany or the people that they ought to be changed.
Senator Ball: Do you think the railroad commissioners should
have the authority, at any time they saw proper, to change the sched¬
ule of rates?
A. My impression is that the railroads should have the same
privileges in regard to a law which infiuences them that other people
have. If they feel that the rate is unfair; that they can enter their
complaint; that if they do not like the rates that are made, let them
come in here and complain about them.
Senator Ball : You are complaining because you are not getting
the rates you think you are entitled to in the territory in which yoif
are doing business, and you say the roads hold out to you the fact of
their giving you these cheap rates to Omaha and Galveston where you
don't want them. Now, I say, that if there is some one who is inter¬
ested in the trade of those places, would it be right for these complaints
143
to be all submitted to the railroad commissioners, and for them to un¬
dertake to do them justice, and in the meantime root others out of
existence
Mr. Hayward (interrupting): I felt compelled, when I answered
the question of Senator Moran on that subject to think somewhat dif¬
ferently from my colleague who answered the question first ; he says
we have no interest in the business of those points, consequently it is
not of advantage to us that we have those rates, but I- take the posi¬
tion that while we, as merchants, have no especial interest in that, we
know that another class of merchants have a very great interest there.
Mr. Furth : That is what I stated.
Mr. Hayward : But we take this position : you cannot argue that,
because you are violating the law that prohibits unjust discrimination
in favor of certain localities; that that is any reason why you should
violate the law where it worked against us. We are perfectly well pre¬
pared to believe that if the railroad companies do justice in their own
State, that the business policy of the railroads themselves will see to it
that we are gettiog justice of the State. Why is it that they give us
that discrimination so far as Omaha is concerned ? Is it for the pur¬
pose of satisfying us with being unjustly treated in our own State ? It
is simply because it agrees with their policy that they should do so
to get the business from that place. Don't you suppose they are still
going to continue to do it? We say, do justice everywhere though the
heavens fall, and we will stand by the results thereof.
Senator Ball: If you prepare a bill with a long and short haul
clause, with a section prohibiting discriminations between persons and
places ?
A. I think that in every law that takes into it the word ^'discrim¬
ination," the word ^'unjust" should be used.
Senator Ball : We will put that in. If we prepare a bill, with a
long and short haul clause, unjust discrimination and extortion, and
then provide against pooling, fix maximum rates, give your commis¬
sioners authority to prosecute any violation of these measures so far as
this State is concerned, is not that a fair measure, and would it not
equalize and be to the interest of the people of-the entire State ?
A. Then I think there should be additional features in the law
compelling railroad companies to recognize their contracts, so that
they will settle in toto with you when they undertake to settle at all.
Senator Ball : And just where a complaint is made, the railroad
commissioners step in, they visit your locality, pass upon the matter,
if they find it against the railroad company, the railroad company pays,
and if they do not pay, let the railroad commissioners be authorized to
prosecute your suit, to institute suit for you and get it ?
144
A. That is it ; because a man is not prepared to subject himself to
any great degree of loss. My theory would be for it to be prima facie
case against the railroad company, let it be obligatory upon either them
or the agent or some traveling agent to go at once to that station, and
make themselves a prompt settlement of that man's account where he
makes a claim of an overcharge, or for damage, as they would expect
him to make of their bills, and let it be settled then and there. I know
that is the law. I had a test of thaf case four or five years ago. I en¬
tered into a controversy on that subject and I took the ground that,
after a certain day we got notice from them of their rates and that on
and after the first of June this office will not pay any overcharges on
freight that you deliver, any freight for us that you take from any con¬
necting line, you must first be satisfied that you will certainly carry
out the contract. They informed us that that would be entirely sub¬
versive of all railroad business. We wrote to them that we were not
changing the policy of the railroads, it was a fair proposition and we
should see it was carried out. Well, they brought the matter to a test,
and the result was the first lot of goods they brought to us that were
overcharged, we said we will replevin those goods, or settle that under
our contract. They wired back and forth awhile and let us have them.
Not long afterwards there came along another case of overcharge. They
attempted to say that wa must pay the freight bill before we took the
goods from the depot. I went to an attorney and I said, 'J can show that
certain goods belong to me ; I have my bill of lading to show that they
are mine and I want you to replevin them ; the railroad company have
made a contract with me and I propose to make them carry it out." I
never could get to the point of getting the goods replevined, though.
Every time they would finally let us have them, and they finally con¬
ceded us the point, and said, '^we won't make you any overcharges any
more." In our case it worked very nicely, and I have never paid an
overcharge since, from that day to this, and why should not every citi¬
zen have the same right ?
Senator Ball: The point I was trying to make was this: While
you are amply able to fight the railroad corporations, you must under¬
stand that there are a great number of people who are small shippers
and who cannot take that course. Now, would it not be right to throw
the railroad commissioners in the breach and say to them *'you adjudi¬
cate this matter," and if the railroad company does not settle it imme¬
diately let them say to the prosecuting attorney to prosecute it for
them?
A. The justices courts have competent authority to take hold of
cases of that kind, but what I complain of is, that these small mer¬
chants will not take the trouble of that method of settlement. It is
145
fair that the railroad company should have just exactly such a tariff as
1 have said, that they should settle all loss and damage, close and sat¬
isfy all customers ; I would have a lot of men along the railroad that
would be so satisfied with the rights that they could-get, that every
business conducted on the line of the road would prosper, and that the
Toad would prosper. 1 think the railroad companies should have by
law, and as a matter of business policy to themselves, such traveling
agent as would have competent authority to inquire into a claim and
examine it as to loss and damage and overcharges and settle it at once,
and then the people would be satisfied. They would never get it so
long as it has to be brought before the commissioners in that way.
Senator Ball : I wouldn't make those commissioners the only au¬
thoritative way by which you could get your goods, but Í would leave
the case open for such as you who wish to prosecute the matter, but
for smaller merchants leave it for the railroad commissioners them¬
selves to take care of?
A. if you will petmit me I will say this: that all (he arguments
that I have made on that subject have been entirely in the interest of
the small shippers throughout the State. 1 have not paid an overcharge
on fre.'ght for years; we are not troubled in that direction. It is very
seldom that merchants who are at large points like St. Louis and Kan¬
sas City have these troubles. It is at the local points. It is our custo¬
mers who complain to us ; that is where we get the information as re¬
gards the matter, and it is in their interest entirely, it would be no
benefit to us at all, as we don't pay them.
Senator Sebree : You spoke a while ago, and I quite agree with
you on account of the smallness of the damage incurred by a shipper,
he don't sue as a rule. What have you to say about simply adding to
to the small damages a punitive damage?
A. My idea is this: If you put a feature into a bill that
shall compel a railroad company to make these settlements within
a given time which shall be reasonable, if they don't do it, they vio¬
late the law. If you have penalties in that law it would prevent their
violating it.
Senator Sebree : Would you make that a nroceeding to inflict
punitive damages on him if he didn't settle it in a given time?
A. You expect to pay your freight bill as soon as you get the
stufl".
Senator Sebree : Howls it going to be determined as to the over¬
charge?
A. How are you going to determine it ? There are the
goods, they show for themselves, and there is the freight bill. It is
R M—10
146
the easiest matter in the v/orld to adjust that and fix it up right then ;
and some lines are doing it now. But if a railroad company can fig¬
ure out that by reason of not settling that account in all cases they are
ahead $20 000 or $30,000 a year by making it just as difficult for a man
to get damages as possible, they are going to do it, but if the railroad
companies are compelled by law to make a settlement within a reason¬
able time, everybody will be satisfied. Here we hold the papers, they
are here, that claim will be settled, and if the railroad companies don't
do it, then they are violating the law and are subject to the penalty.
Senator Sebree : Very frequently, shippers are not skilled in
railroad management, and of course they would have a very great ad¬
vantage over him, and the consequence would be that an attempted
settlement between the shipper ordinarily, and the railroad company
would amount to nothing. Now how could that be obviated, but by
giving these commissioners the authority of the law to make the in¬
vestigation for him ?
A. I should have to contradict your premises at the outset.
I should say that a man does not have to be expert in railroad
matters to know whether the caséis good, or to know whether or not
his merchandise is damaged to such an extent that they are not worth
what he has paid for them. They know just as much as anybody, if
they have billed to him a barrel of sugar that holds 300 pounds by put¬
ting it on the scales whether it is 50 pounds short or not, and he has
got an invoice to show how much it was a pound, it is simple
arithmetic.
Senator Sebree : Your example is very simple, indeed, and a man
of ordinary intelligence could of course effect a settlement, but there
are so many different regulation in railroads that it would be a little
difficult, I imagine, in some cases.
A. The only question that I think could arise, is where
there would be a différence of opinion, such as that the article
is damaged, but how much is it damaged ? There are a dozen tubs and
the hoops are off some, the handles pulled off' others, paint is scratched
off others, so that they are not in first-class order. Now how much is
the damage? Where it is the actual shortage of one tub out of twelve,,
or one pail out of six, or 50 pounds of sugar, that can be determined,,
but where it is that other kind of damage, how are you going to get at
it ? The rule among railroad companies is, if the case is damaged, you
are not obliged to take that at all, unless they can agree with you as to
the amount of damage. They are obliged to take it into their own pos¬
session and sell it or do what they please with it and allow you the full
cost of it. Taking these two points, one is on a certain class oí claim
easily determined upon, the other you can't agree upon.
147
Senator Sebree : I understand you to advance the legal proposi-
/
tion that title to damaged goods becomes vested in the railroad com¬
pany when they can't agree upon a basis ?
A. It would practically amount to that. The railroad agrees
to deliver it to you in good order, they deliver it to you in bad
order, and they can't agree with you as to the amount of damage, and
the custom is, that they take the goods themselves, and sell them for
what they would bring and pay you the full amount. .The only reason
that they should not agree with you is where they believe that those
goods can be sold for more than you want to allow for them. If they
can take them and sell them, they do it, not because it is a legal prop¬
osition, but because it is to their pecuniary interest to do so, very likely
they may get fooled, but that is the reason they do it.
Senator Johnson, of Madison : I move that this committee do now
adjourn until 7 o'clock, p. m.
Senator Castleman : I hope the gentleman will withdraw that mo¬
tion, as I think these gentlemen have only one other member of their
party who wants to say something to the committee. Am I not right,
Col. Hayward ?
Mr. Hayward : Yes, sir, I wanted to say, that în my experience as
a merchant—
Senator Castleman : Excuse me, but I am asking as to there be¬
ing another member who has yet to say something ?
A. I am getting at that. In discussing these questions with rail¬
road men it is very rare, indeed, to find one who is broad enough in his
views to agree with the merchants and shippers who are not distinctly
railroad men. Very much of the knowledge that I possess that has not
been gained by experience I have gotten from the teaching of my
father, who is not a merchant, but who is, and has been all his life, a
t
railroad man. He has come up with us, but not to represent particu¬
larly the merchants, and I take pleasure in introducing him as a rail¬
road man who is fair in all his views, who thinks that Railroads should
be run for the benfit of the people.
Senator Castleman : I did not want to have time taken up by this
very unnecessary statement. My object was to try to save time.
The Senator from Madison amended his motion to adjourn to two
o'clock, and upon its being passed the committee took a recess uncil
that time.
148
2 p. M., Monday, May 30, 1887.
Senator Hazell : I understood Mr. Hay ward to state, this morn¬
ing, that he is in favor of a law against discrimination, as to persons
and places, and in that connection he was asked with reference to dis¬
crimination in rates to Omaha and Galveston. I want to ask him if
those discriminations were not made by the railway companies in their
own interest to make their own property valuable"?
A. I have no doubt that they are entirel}^ made for that purpose,
not for any friendship that they bear to St. Louis merchants. I hold
that it is a clear principle of railroad management, that wherever any
policy is adopted that may seem to favor one person or community over
another, it is intended for the benefit of the railroads themselves, be¬
cause they think that policy is more to their advantage than another
would be. I think that may be trusted in all matters in the way of
making rates where they discriminate in favor of some one, that the
benefits may accrue to them alone—we believe it is only for their own
benefit that they do so.
Senator Hazell:^ What disadvantage to a bill do you think, from
your practical knowledge of the subject, would there be to invest the
railroad commissioners with the power to regulate the rates within a
maximum rate?
A. It would be just this: that the railroad companies know very
well that if the courts are the only places where those who have com¬
plaints against them can get justice, that they are not nearly so liable to
be brought to justice as they would be if cases could be decided by the
rulings of the commission, whose entire duty it was to examine into
matters of this kind. They would much prefer that cases should be
taken before the courts, knowing that they have other business besides
this kind of business, and that they could hamper and delay us greatly,
and give them an opportunity to improperly conduct their affairs, that
is to say, unlawfully, and it would not give the shippers the same op¬
portunity.
Here is a commission who is appointed to take into consideration
matters only pertaining to transportation, and it is their business to
inform themselves, and they have nothing else to occupy their minds
with. But if the railroad companies can take a case into court, if there
is no intermediary that the people can appeal to, they stand a great
chance of doing, as I said this morning, violating the law and taking
their chances. They could not do that so readily if the commissioners
have power.
Senator Ryors : I desire to ask if I understood your answer to the
149
question that the main reason why the commission should take charge,
was because the courts were too busy ?
A. That would be one reason.
*
Senator Rvors : Was not that the main reason ?
A. Well, it might be considered the main reason, that courts
would not act so promptly on any one question.
Senator Ryors: Because they were so pushed ^
A. It would be easier to make delays in a court than it would be¬
fore a commission, for the reason that the commission has no other bus-
ness to attend to.
Senator Ryors : If you have any reason except that, I fail to
catch it ?
A. I think there are other reasons, sir.
Senator Ryors : Were there any others you advanced ?
A. I think I advanced another one.
Senator Ryors : What was it?
A. That the business of the commissioners was to keep them¬
selves fully informed with reference to all matters of rates and charges
that might arise, and that they would be able to give much better and
prompter rulings than any court which had not made it its special bus¬
iness.
Senator Ryors: Is it necessary under the law, that every person
who is a railroad commissioner should be a lawyer?
A. I don't understand it is, no, sir. That is asking a question I
have no information about.
The Chairman : Would the commissioners have any advantage in
making the ruling elastic ?
A. I think the better they are informed with reference to
transportation matters, the more weight their opinion would be with
the railroads and the shippers. It is a special branch of study, and if a
man's special line of study is not in that direction, of course it is more
difläcult to come to a correct decision. Very many of these questions
may not pertain entirely to legal questions, but simply as to what is
right and fair, and what is honest, straightforward policy.
Mr. Furth : We have made it evident here, I think, that when the
railroad company charges to another corporation a less rate than they
charge the merchant in St. Louis or Hannibal, or any other distribut¬
ing city on the eastern border yf the State, it is fair to say that by so
doing some other locality in some other distributing center of the State
might perhaps thereby be benefited. Now while I know I speak for
all our delegation, and the citizens of St. Louis in general when I say
that they have the fullest confidence in all the legislature does in this
matter, yet we know that some times we are inclined to think that the
150
localities which we represent mi^^ht be benefited somewhat by certain
lines of action and conduct. Now I want to state to the gentleman
here that the very small benefit which might accrue to any of the
other cities of the State of Missouri by reason of reaping the advan¬
tage of discrimination practiced against other cities would not nearly
be so great as, and would be counterbalanced to a very great extent
by the advantages which cities outside of the State of Missouri farther
west would thereby gain, and trade and commercé would be take from
your State and be placed in the hands of merchants doing business in
Kansas or States farther west. There could be no advantage gained
for the State of Missouri if discrimination were practiced against the
eastern border cities as tending to benefit the interior or the western
or southwestern cities in our State. I would like the gentleman to
consider that question carefully. I will take occasion to thank the
gentlemen of the committee for the courtesy extended to us and
patience in listening to our remarks; and as far as the Associated
Wholesale Grocers is concerned, we thank you, one and all, for your
courtesy But as stated by Mr. Hayward, we have with us a gentle¬
man who, although not a grocer, represents the great minority among
railroad men, which sides with the views advocated by the grocers,
Col. Hayward.
The Chairman : Gentlemen of the Committee : I beg leave to in¬
troduce to you Col. Hayward, who is an old railroad man, the original
projector, I understand, of the Hannibal & St. Joe, and who is now
engaged in building the Missouri Central from Alton up the Missouri
river.
Col. Hayward : Gentlemen of the Committee : I do not know but
what I ought to apologize, really, for appearing before you this after¬
noon, as I am a little more than one of the great body of the citizens
of the State of Missouri, and yet 1 have been long connected with
railroad interests. I have been a resident of your noble State for more
than thirty years, had a somewhat prominent part to act in its affairs
from time to time, and from my acquaintance with railroad and com¬
mercial matters might perhaps speak intelligently with regard to some
points in the case which is before you. Then, again, as has been intimated
by your chairman, I am at present engaged in building a new line of
railway across your State, one that I have the weakness, possibly from
my connection with it, to believe will be second in importance to none
of the great lines now crossing the State of Missouri in its influence
upon our prosperity.
I know that capitalists who are looking to investments in the State
of Missouri at the present time in railroad property are watching your
151
movements here in JeiFerson City with a great deal of interest, and
you all know the timidity of capital. You all know how easy it is to
divert capital from one channel into another, and I would bespeak in
that interest, in the interest of new enterprises, in the interest of the
development of the great State of Missouri, that you should carefully
consider your action and allow no bill to pass that could fairly be con¬
strued as prejudicial to real railroad interests. There are interests
represented here in the question which is before you,-which affect not
only the citizens of this great State, directly, but they have to do with
those foreign residents who have invested their capital here on the in¬
vitation of our people, and they have greatly to do with those non¬
residents of the State who are purposing to invest their capital here.
Now I recognize this fact, I have recognized it for years, that the
time was coming, and I believe it has fully come, when these great cor¬
porations that controlled the transportation of our State, not only re¬
quired to be regulated by law, Mr. Chairman, but it devolves upon this
assembly to provide efficient means to make the regulation regulate.
I believe it, and I think I have seen both sides and know whereof I
affirm. I know that there are laws upon our statute books to-day, that
in my judgment are violated with the utmost impunity; wholesome
regulations, and yet no railroad man appears to pay any earthly atten¬
tion to them, and it is not to the interest, probably, of individuals to
commence suit in court to establish, or maintain, or secure their rights.
These corporations have been brought into being, and clothed with im¬
mense powers ; they have been entrusted with interests which go to
the root and center of our prosperity as a State and as a people. I
kiDOw very well, years ago, when I was perhaps more actively engaged
in controlling railroad property than I am at the present time, it was
the common feeling among railroad men, that we had put our prop¬
erty into these great institutions that belonged to us, and it was for us
to manage them in our own interest, and that alone.
I believe that is the feeling to-day very largely among railroad
men. I would not say that it was the feeling among the more intelli¬
gent, for our courts have gradually, year by year, and as case by case
has come up, decided that instead of their being a private institution,
to be controlled as one's private interests are, they are made public
highways, that they are brought into being by the exercise of the
power of eminent domain of the State, which laid hold on individual
property and made it subservient to the public use, and that it could
only be done in the interest of the public and for public purposes, and
railroad law has been interpreted by our courts in that aspect of the
subject. So that there is no point better established to-day than the
power and right of the legislators and legislatures to control, by law,
152
reasonable and wholesome legislation, these great corporations which^
they have brought into being. And I want to say here, Mr. Chairman
and gentlemen, that whatever may be true in theory as a legal propo¬
sition, as a matter of practical fact, if you do not put it into play those
agencies which can bring these corporations subject to the control of
such laws as are upon our statute books, it cannot be done. Individ¬
uals cannot, in the great majority of cases, afford to do it. It is a power
which your legislature has created ; it is the plainest proposition in the
world to my mind, that it is a power which the legislature should take
means to properly control. There is no doubt about it ; it is the only
way to do.
The history of railroad legislation, so far as I am familiar with it, up
to the present time, points to the course which has been measurably pur-
sued in this State, the appointment of railroad commissioners ; nearly all
of the States have made such appointment or election, have clothed them
with greater or less power—some of very full and ample powers, ta
forbear the whole power of the State and secure obedience to the law,,
while others, like the present board of commissioners of the State of
Missouri, if they are good for anything, they are merely worth what tha
advice is that they may see fit to give ; they possess no power ; the law
says they may do certain things ; if the railroads do not see fit to regard
their action I know of no power that they possess to enforce it ; I be¬
lieve it has not been assumed—I do not think they have any sucli<
authority.
I say, then, the time, the moment, has fully come when a commis¬
sion should be formed, empowered to see that the laws upon the stat¬
ute book of the great State of Missouri, are properly enforced. This«
need not interfere with the right of individuals to go before the courts
in their own names and for their own purposes, but it should be cumu¬
lative, and in addition to this private right which applies to the citi¬
zen, that the commissioner should be empowered to act. Of course,,
when you dote a commission with powers like that there will be danger
that you go to an excess—to an extreme. I would ^ say, in my judg-
' ment, it would be wise to come short in the outset, of all that m ight be
desirable, than to go so far as to injure and harm great interests which
are being developed within your State. It is safer in .such a matter,
and safer because the whole subject of railroad transportation and man¬
agement is one of great complication—to grasp it, fathom it, to under¬
stand it fully, requires the brightest minds that the country possesses?-
and they are the men ready to assure you that it has heights and depths
which they have not been able to grasp. It is one of great magnitude ;
it is one not only of great breadth, but it runs into all the ramifications
of business, and affects all. "And while, it seems to me, to be the part
153
of wisdom for the legislatures, in view of these responsibilities, to go
slowly, not to run to extremes, it at the same time demands that they
should take hold of the matter with a firm hand, with a firm grasp, and
take at least a large step in advance of the present position in Missouri
in the matter.
I do not propose to worry you, gentlemen, this afternoon, with
these general statements, and I wish to call your attention to two or
three points that seem to me ought to be developed in' the bill which
may be presented by your committee and which will probably become
the law of the State.
Now, I have looked over several of the bills that have been pre¬
sented. They all aim, in the first place, to see that unjust discrimina¬
tion shall not be made, that all charges shall be fair and reasonable,,
and some such general provisions. Then a good many of them pro-
porse, nearly all undertake—I believe the Constitution requires it, if I
remember aright, that you should have maximum rates. And the Con¬
stitution of the State demands that the legislature should fix maximum
rates. But some of these bills say that the maximum rates fixed by
the legislature or by the commission shall not be construed as pre¬
venting a railroad being considered as extortionate, even though they
may charge less than the maximum rates.
Now, you can all see, as practical men, that when a law says you
shall not be extortionate, that you shall be ''reasonable," is a matter
of opinion ; there is no given standard that you can bring that to and
measure it and know just where justice ends and where extortion be¬
gins, and how is a railroad man going to know exactly when he passes
the line ? He may be very anxious for the interest of his company to
get clear off the line. Now, it is desirable that if you are going to make
anything a crime in that regard, or punishable with fine, or—I believe
some of the bills go so far—with imprisonment, that you should make
the offense clear, so that a man knows when he is committing the of¬
fense and when he is not ; and if you do not do that, so that a man only
breaks the law when he wilfnlly and perversély breaks it, it seems to
me there ought to be in the penalty a good deal of leniency allowed
within the discretion of the court or jury, or whoever decides the mat¬
ter. I should certainly be loath, as a railroad man, to conduct import¬
ant interests of that kind under a requirement that I should do justice-
and have no measure of what was or was not justice placed in the bill,,
and thus be liable to be mulcted in heavy damages and possibly im¬
prisonment, if in my judgement I went a little further than somebody
else in their judgement thought was right. If you are going to make
an act criminal or subject to fine or fine and imprisonment, you want
to designate the point at which it becomes ß crime and make that point
154
very specific, and if you do not do that and use general terms, you
ought to leave the greatest discretion to the courts and juries who are
to try the case*
Now, with reference to railroad legislation, I know the feeling of
many railroad men, not merely in the State, but out of the State, east¬
ern men, and men who propose to put money into your railroads in
the future, and I know that they woni Î feel it was a very serious em¬
barrassment and that it was an unkind cut towards the railroad com¬
panies to undertake to pass a law to make things criminal where the
line was not sharply drawn. You will see the force of that, gentle¬
men, I think, each one of you. The point ought either be well defined
or else there should be discretion given when the question came up;
otherwise a man might very inadvertently become a criminal under
the decision, possibly of courts or your juries.
Now, it has been the purpose of some of them who have framed
bills to make the penalty very severe. I have not a word to say against
severe penalties to those who wilfully, persistently and maliciously
break the law, but 1 do ask, in the interest of justice and common fair¬
ness that such bills as you may draw, shall discriminate between such
and those who may inadvertently, accidentally, possibly ignorantly,
break the law. Now, when you stop to consider a moment, a railroad
company that has its ramifications all through your State, has a great
many agents and employes that are not all possessed of the wisdom of
X)aniel, a great many of them at small stations where their compensa¬
tion is not large, are not men composed oí the largest calibre, and it is
inevitable that a corporation might, in good faith and honesty, trying
to do justice by everybody, yet have some persons ignorantly break
your law for the corporation, and the individual should not be too se¬
verely dealt with under such circumstances. But where it was mali¬
cious and for a purpose, and persisted in, I haven't anythingto say.
Personally, 1 have no objection to your piling it on as steep as in your
judgment you see fit to pile it, and let the penalty be measured by
'the magnitude of the oflense.
Now, I understand that in a bill we would contemplate that com¬
plaints brought before your railroad commissioners would be first ex¬
amined by them. If they found that the complaint was well ibunded
they would make up an award. I presume no bill would be presented
by this body that did not substantially come to that result ; that is,
providing for the commission to examine a case and make up a state¬
ment of their conclusions. Now, it seems to me common fairness,
wherefore, that when that point is reached and this is provided for,
(and I believe it is in som« of your bills) the railroad company, if they
155
are found at fault, should be notified and have an opportunity to re¬
dress the wrong, and doing so that should end and settle it. That is
fair, isn't it ? No eastern man ought to object to that—:-not to object to
it as a reason why he should not invest his money here. If they have
done a wrong to any citizen and it is investigated and the commission¬
ers say it is wrong and you owe him so much damages and all that, pay
it and settle it and do right next time. That's fair. But before any
appeal should be taken to the courts or any expense incurred beyond
the investigation in the first place, it seems to me any bill should pro¬
vide that it might be adjusted in that way and settled amicably, and
the courts and their paraphernalia appealed to, with the expenses at¬
tending them, onh^ when justice could not be reached in any other
way.
Now, one of the very strong safeguards, I think you will find one
of the strongest safeguards against injustice, against discrimination,
against unfairness, will be the requiring that these rates shall be estab¬
lished by every railroad company, the public rates of freight and pas¬
sengers shall be put up in their depots, and they shall have no right to
oharge either more nor less than provided for in them. The publica¬
tion of those rates—I do not know but that it is the law to day—but it
is a law, I think, that is universally broken if it is. There has been
such a law in this State with regard to some roads, I know, but the
publication of those rates in itself is going to be a great safeguard. It
is3going¡to be a safeguard to the railroads themselves; if they have
published rates that they are obliged to adhere to it would be a safe¬
guard to the railroad companies as between themselves and a safe¬
guard to the public.
Now there are one or two other items which I would like to call
your attention to, and the first isa case like this: Your law today
undertakes to fix rates that shall apply so much for so many miles, and
so much for so many more miles, maximum rates, and so on, by the
terms of the law, and I have not any doubt it was the intention of the
law makers to have it apply from point of shipment, no matter where
it is in the State to the point to which it is shipped within the State, no
matter how many roads it goes over. So far as I know, that law has
been disregarded by the railroads of this State until it is almost univer¬
sally disregarded, and there is one diflSculty about carrying it out. You
oan see it is one of the most natural things in the world, if a through
rate is made from St. Louis, we will say to St. Joseph, if you please—
that would not, perhaps, meet our case, because there are some two or
three lines that run to St. Joseph—but there does not a case exactly
occur to me at this moment. However, you might suppose a case : Say
it went from St. Louis to Hannibal and to Macon, and from Macón it
156
went up to Glenwood, in the northern part of the State. That would!
^o over three different lines of railway, and the maximum rate, accord¬
ing to the present law would be figured on the distance from Glenwood
to St. Louis. Now the question is, how shall that be divided between
the roads? You can see it is the easiest thing in the world that the
roads might disagree about it; they might honestly disagree. It seems
to me it is only fair that you should make some provision in your law
for all such cases, where the transportation goes over two or more lines
or parts of railways belonging to different railway corporations. If the
parties themselves cannot agree your commission should step in and
fix the divisions.
Some of the bills that have been laid before you, I think, attempt
to provide for that ; if I remember rightly, in looking over them hastily
within a day or two, I saw that in one or two of them. In my judg¬
ment it is a very important and practical provision. If you make that
the duty of the railroads, throw no obstacles whatever in the way of
continued shipments from one point to another. Now, if you are going:
to let each road charge fora short distance, the shipper pays pretty
heavily by the time he gets through. I take it the policy of your law
will be intended to secure this result, that for practical purposes and
for the benefit and accommodation of the public, the railroads of the^
State of Missouri will be looked upon as one great railroad system, as
though owned by one concern; that the maximum rates for certaim
distances will apply from the point of shipment to the point of deliv¬
ery, regardless of the number of roads it goes over, and then you must
make some division of that through rate, gentlemen, and that is one
point I wish you would make a note of, as I think it is a matter of
great practical importance.
Nowq there is another thing, and that is with regard to terminal
matters. Kailroads are public highways ; they are open to everybody ;
they are to be treated alike, and it is only applying where the scale is
smaller the same principle I have been speaking of. Suppose that I
am running a road and I come to the borders of St. Louis and I connect
there with another road, if you please. It is their business, under the
law of the State to-day, to receive all freight from my patrons and
without discrimination or delay transport it to the end of their line, the
same as their own freight, but what shall they have the right to charge
tor it? That is the question? That is one of those things that has
never been provided for in the laws of this State. It is perfectly clear
that a mileage basis is not right. They have been at great expense,,
probably, for rights of way, for structures, to get terminal accommo¬
dations, and it would be very unjust to them to put it on a mileage
basis. But if the parties cannot agree, who shall step in and deter-
157
mine in the interest of all concerned, and in the interest of the public?
I take it the public demands it shall be served by the best possible
accommodations that the railroads can give it, the same as if it were
one great corporation ; that 1 take it is what you are all aiming at, and
that I take it to be really right. Then I ask you, in the interest oí the
public and of the shippers, that you make some suitable provision to
determine these points, if the parties cannot agree, whether it be longer
or shorter, that the services rendered over one road for business
brought to it by another ; if they cannot agree at which rate that serv¬
ice shall be rendered, the commissioners, or some power that you may
afQrm, probably the commissioners, shall go in and determine what is
fair and right to the parties, and let that settle it.
Now, a cast iron rule, no matter what it is, with regard to railroad
matters, never works very well. The complications of railroad manage¬
ment and the change of circumstances and conditions that are very
frequently arising are such that it seems to me any bill to work for the
interests of the people and of the roads, and to work justice to all
parties, must be so arranged as to have some elasticity.
I do not know how that can well be done, unless you give author¬
ity to your board of commissioners to exercise some control on both
with regard to matters of that kind. To be sure, if you only inaugurate
maximum rates, the railroad companies may have very material ground
in which to play within the maximum rates, and possibly that may give
them all the elasticity that is needed, but the rule should not be a cast
iron one. Changing circumstances will make it necessary, in the in¬
terest of the public and in the interest of justice, that there should be
some opportunity for variation. But hold to no strict rules, always
keeping in view the right of justice and equality between shippers.
Now, gentlemen, I have, as briefly as I might, tried to present to
you some of these practical points which have occurred to me. The
great principles, I apprehend, none of you object co. It is high time
that the corporations were regulated by wholesome law, and that that
law should be enforced by the great State of Missouri. The people
have created these great powers, and they owe it to them and they owe
it to the railroad corporations themselves to see that they are properly
regulated by the laws of the State, and in doing this, having careful
regard to the interests of all concerned, that nobody be iiijured and
that justice be maintained by all.
Now, gentlemen, if any one wishes to ask me any question, I will
endeavor to answer it.
Senator Sebree : I was going to ask you a while ago if that was
not one of the principal objections, and a very serious one to a bill,
because the railroad company might not be guilty of an unjust charge.
158
not knowing what an unjust charge was; I understood from you a
while ago, that that would be the case in not fixing any rule by which
the railroad could tell whether it was violating the law or not?
Ool. Hayward : It would, in my judgment, be a very serious ob^
jection to any bill that left it in that shape.
Senator Sebree: As to its depending upon the whims and caprice»
of a jury, you think that is an objection ?
A. I think it is a verv serious objection.
Senator Sebree : I was going to ask you something about the rail¬
roads in transporting over different lines, but it has escaped my recol¬
lection now.
A. I spoke of one thing, a provision that J think the present law
contemplates, that the rate thould be fixed from the point of shipment
in the State to the point of delivery in the State, and the line over
which it goes is to be treated as an entire route under the maximum
rates, not allowing each one to charge a maximum rate in proportion
to the distance that they haul it, but the maximum rate is to be fixed
by the through route. I think that has been generally disregarded, so
far as I know heretofore. '
Senator Sebree : It is very desirable on the part of the railroads
and the public to have not only a just rate, but a permanent rate, is it
not?
A. T think that permanency is a very desirable thing all around.
Senator Sebree : Stability in rates, that is?
A. Stability in rates, yes, sir.
Senator Sebree: How can you maintain stability of rates in rail¬
road management and have that fiaxibility which you seem to think is
so necessary for the successful operation of the roads, and which will
probably give the best satisfaction to the public ; how can you recon¬
cile those two propositions?
A. If by stability of rates was meant a perfectly unvarying rate,,
that never should change at all, which might be a cast iron rate, there
would be no occasion ior ffexibility.
Senator Sebree : In other words, what you mean by a cast iron
rate, is one fixed by law ?
A. A rate fixed by law. If the rate was to be made, for instance,,
by the legislature, or by any power created by them, and then to be
changeable, like the laws of the Medes and Persians, it would be a cast
iron rate, and if that was the policy there woald be no occassion for
any flexibility.
Senator Sebree : Is it not a leap in the dark for a legislative body
to undertake to fix a just rate unless they do it with reference to
allowing the railroad companies to make a certain percentage on it»
159
capital invested ; if there is a rate that will yield you that sura, how
can you do it unless you do it with reference to that point as a kind of
a central figure from which to legislate ?
A. 1 think there are a good many roads in the State that if the
legislature would fix a rate that would make them remunerative,
would be very glad to have you adopt it. (Laughter.)
Senator Sebree : Well, it is not to the interest of the public or of
the railroads either one that they should be transporting property for
nothing?
A. I don't think there is any business man in the State that de¬
sires the railroads should work without a juwst equivalent or compensa¬
tion for their services; I am very sure the business men have no such
desire.
Senator Sebree; Do you know of any roads in the State to-day
that are transporting property for less than the point I have alluded to
—I mean that are losing money ? I do not mean isolated cases, I mean
any road ?
A. Ido not know that I know of any such cases. I have known
of cases where I supposed they were doing it, but I do not know that
there are any such cases now.
Senator Sebree : You spoke of putting up the rates in the depots,
and not allowing the roads to charge exceeding that, nor any lower
rate ?
A. My idea is that it is desirable that they should advertise their
rates, and when they have advertised them that they should remain
permanent until public notice is given of a change. I think in that re¬
spect the interstate law has made a very wise provision, and that it
will go a long ways towards curing the irregularities which have gone
into railroad management.
Senator Sebree : You are, then, in favor of the establishment of a
minimum rate, as well as a maximum rate ?
A. Well, no, sir; the maximum rate is established by the legis¬
lature, in the interest of the public, to prevent extortion ; the mini¬
mum rate it is safe to leave to the railroad company, if you require
them to give notice of a change. The notice should be given in the
interest of the shippers and in the interest of the other roads.
Senator Sebree : If you put the rate up and say they shall not for
the time being go beyond or below¡it, that is fixing a minimum rate as
well as a maximum rate?
A. That fixes it, yes, sir.
Senator Sebree : Is not that just exactly the same thing as pool¬
ing—and lam asking it as being in favor of pooling—is not that the
160
same thing, and is not that to your interest and to the public, in order
to maintain permanency of rates ?
A. If you make the law in the way that I have suggested :
require notice to be given, and it cannot be changed without notice, it
almost inevitably results in the railroads agreeing between themselves
on a uniform rate.
Senator Sebree : That is equivalent to pooling ?
A. Well, that part is true of pooling, but then there are other
things true with regard to pooling. If all the railroad companies between
i
Kansas City and St. Louis agree upon the rate, and there is no agree¬
ment as to the division of the earnings, the one that renders the best
service for the public is apt to get the lion's share of the business, and
I think that is putting it about where the public wants it.
Senator Sebree : Well, of course, by this arrangement it would
not be pooling to that extent ; that is putting the earnings in a com¬
mon pot and dividing them up ?
A. That is what I understand by pooling.
Senator Sebree : But that is not the other proposition accompany¬
ing this thing called pooling, that they quit fighting and agree on
rates ?
A. That is part of the arrangement of pooling.
Senator Sebree : But the other is the pooling part ? Does not
the establishment of an agreement upon a uniform rate result in pool¬
ing in the end ?
A. That is one of the incidents of pooling, yes, sir.
Senator Sebree : So your proposition to put up the rates in the
depot, and not allow them to go above or below it, has the same result
as a pooling agreement?
A If those rates are published and then they make any rates
they please, that leads to discrimination, and that as I under¬
stand it is the great complaint that comes up as one mighty voice from
all over the State. That is what, more than anything else; as I under¬
stand it, calls you together.
Senator Sebree : When there is no minimum rate fixed, as well as
a maximum rate, and Ihe railroad companies are allowed to turn them¬
selves loose and engage in battle, that necessarily results in discrimi¬
nation ?
A. That necessarily results in discrimination. It is not in the
interest of the railroads or of the people.
Senator Sebree: And it leads to the bankruptcy of the roads?
A. Very likely.
Senator Sebree : So it is important to have a uniform minimum
161
rate, whether established by law or by the railroad commission, or
what not, as it is to have a maximum rate ?
A. I think that it is important that the rate, whatever it, is should
be an open and known to the public rate, and that the rest will take
care of itself.
Senator Sebree : What do you think of the right of the consignor
to select the route over which his freight shall go, in cases where there
are different lines ?
A. Ido not suppose there is any question of the legal right of any
shipper to send his freight over any line he chooses.
^ Senator Sebree : That is frequently not done, I understand ?
A. I understand that has been one of the objections to the ar¬
rangement of pooling, but the railroads have never been willing to have
it carried into court.
Senator Sebree : Tou think it is right that the shipper should have
the right to select his line ?
A. I don't think there is any question about it.
Senator Hazell : I understand that you are engaged in building:
the Missouri Central ?
A. The Central Missouri, yes, sir.
Senator Hazell : I want to know if a good, reasonable bill will'
interfere with the construction of the Central Missouri Railway in
any way ?
A. I do not think that any bill that will promote justness and fair¬
ness between the railroads and the public that they serve would have'
any tendency to cripple railroad interests. Indeed, my own judgment
is that a proper bill may be framed and passed which will promote all
railroad interests, and other interests in the State. I most heartily
would desire to see such a bill.
Senator Hazell: Have you read Bill No. 293?
A. I believe I read it a month ago, but I am not familiar enough
with it to speak of it.
Senator Hazell : Would the enactment of that bill into a law have
prevented the building of the railway by your company ?
A. I would not like to spèak with regard to any particular bill
that was not so fresh in my recollection as to enable me to speak un-^
derstandingly. I read it, I think, about the time it was presented to the
last session, and my head has been pretty full of other things since. If
I remember right there are some few features in the bill that I did not
think were wise and just, but the general provisions of the bill were
merely in a line with the provisions of the Constitution.
R M—11
162
Senator Oastleman : I understand that you have been engaged for
some time past in building the Central Missouri ?
A. Yes, not a great while in building it, but in preparing to build
it I have been at work a good while«
Senator Oastleman : How long ?
A. Six or seven years.
Senator Oastleman : How long since actual operations of build¬
ing that road begun ? .
A. About thirty days.
Senator Oastleman : You were, then, during last winter and last
fall, maturing the financial arrangement by which that road was to be
erected ?
A. Yes, sir.
Senator Oastleman: You are familiar with the general history of
the attempt to enact a railroad bill here last fall ?
A. I have some little idea with regard to it, sir.
Senator Oastleman : You were actually at that time interested in
t/
the construction of a new road in this State ?
A. Yes.
Senator Oastleman : Had you personally any connection with
making the financial arrangements by which that road was expected
to be built ?
A. Well, I had pretty much all to do with it, yes, sir.
Senator Oastleman : Now I want to ask you if you found that
pending legislation here during the winter had any embarrassing efiect
upon your efforts in that direction?
A. Well, it was frequently spoken of in connection with my
negotiations in New York. The general impression was that the State
certainly would not be unwise enough to pass unfavorable legislation.
I know that the feeling was such that if what they deemed unfavorable
legislation should have been passed or they believed that it would have
been passed, it would have crippled and very likely prevented the
negotiations.
Senator Oastleman : But the fact is that the legislation which was
contemplated here, did not, in fact, embarrass you, did it ?
A. I do not know that I could exactly answer that question. I
will say this, that there are some bills that were presented and some
f
features in bills that were adopted by either one house or the other
here that would have utterly prevented, I have no doubt, the building
of the road.
Senator Oastleman : Now, what features were they ?
A. Well, one, if I recollect, was requiring that all transportation
should be done on a mileage basis.
163
Senator Oastleman : Are you aware of the fact that there was no
such provision in the bill that was adopted by either house ?
A. I think that that was reported to me as having been adopted
in the one house or the other at one time ; I may be mistaken about
it, but that it was afterwards rescinded or revoked.
Senator Castleman : You think that a bill which regulated trans-
• portation on a strictly mileage basis would be detrimental ?
A. I do not think any new road could be built, and that every
road in the State that was required to do business in that way would
wish they had their money back.
Senator Castleman: Now, do you remember any other objections
"being made to the bill besides that?
A. I do not know that I can recall any ; my impression is that
there were several, with amendments adopted at different times, that
were afterwards rescinded, that were seriously objectionable, but I
cannot recall them now.
Senator Castleman : There were, however, no objections so far as
you found to a bill which sought to have the railroad commissioners to
control and regulate the rates of freight in the State ?
A. Oh, I do not think that any fair bill that has that as its featuie
will be objectionable.
Senator Castleman : You do not think that a bill which will pre¬
vent discrimination would have the effect of embarrassing negotiations
for capital to build new roads?
A. I do not, and I think such a bill ought to be passed.
Senator Castleman : You do not think that a bill forbiding ex¬
tortion would ?
A. No, sir.
Senator Castleman : And you think that giving reasonable powers
to railroad commissioners with regard to the regulations, either origin¬
ally fixing, or changing aftei they were made, schedules of rates, would
so embarrass negotiations ?
A. I do not think it would, sir.
Senator Castleman : That is your actual experience, is it not, Mr.
Ray ward ?
A. That is the result of my experience, which is quite considerable.
I think any fair, reasonable bill would not interfere, but I think there
were some propositions made—may be I am mistaken about their hav¬
ing been adapted—which were very seriously objectionable.
Senator Castleman : Now please explain to us, if you can, about
the mileage rate, that is what you designated, I believe, as especially
objectionable?
164
A. If I recollect, there was presented here, and my recollection is
that it passed one branch of the legislature, a provision which required
that all transportation should be put upon the same rate per mile,
without any reference to distance.
Senator Castleman : Now that provision you think would be ob¬
jectionable ?
A. I think that would be ruinous to all railroad interests and the
public too.
Senator Castleman: Now, Mr. Hay ward, do you not think that
if the legislature should deem it wise to fix a schedule of maximum
rates that it would embarrass the roads in this State, or would embar-
/
rass those parties who are attempting to negotiate loans for the purpose
of establishing new roads in the State, that the commissioners should
be authorized to change those rates when they find that they are im¬
proper ?
A. vV^ell, no, sir ; I do not think it would.
Senator Castleman: Now, as a practical matter, let me ask you
whether you would consider it wiser for the legislature to authorize the
commissioners to fix originally schedules of rates for each of the various
roads in the State, and to change them from time to time; of whether
if the legislature was to establish maximum rates, it would be wiser to
allow the railroads to fix originally their own schedule of rates with
power in the commissioners to change them as the occasion might arise
and require ?
A. I think this, gentlemen : If you are to virtually to clothe the
board of commissioners to fix the rates for which business would be
done in the State, it would be looked upon with great disfavor, and
would seriously interfere with negotiations, because it is not to be sup¬
posed that the board of commissioners could be made, created under
the laws of this State, that would be competent to cover all that ground.
No, I don't think men have ever been found big enough yet to take
into account so extensive a question and do it justice. They might fix
maximum rates and all that, perhaps, but to go down to the actual de¬
tail of the rates that should exist over all the roads in the State, it is
too big a thing to throw into the hands of three commissioners. The
parties who control the roads subject to certain restrictions and limi¬
tations, it seems to me clearly should have the right to do that ; but I
think to ttirow it into the hands of the commissioners entirely, so that
they virtually control the busiuess of the roads, you coiild not get any
capital to come in here.
Senator Castleman : Suppose the roads fix their own schedules
witliin the maximum rate, fixed by the statute, and the commissioners
are to be authorized upon complaint to change specific rates, do you
not think that would have the effect of embarrassing negotiations ?
165
A. I do not know about that, I think the commissioners might,
with propriety, be given power to reduce the maximum rates. JMow,
with your permission, I will say right here, a maximum rate, of neces¬
sity, would be higher than a proper rate in a great many cases, but it
would fix a guard against extortion. Now while it is a very nice mat¬
ter to fix the line between justice and extortion, it is easy enough
to say over there is extortion, and over there is justice, but just where
it divides it is hard to tell. Now, if in the interest of all concerned and
the protection of the public, it is very proper for the legislature or com¬
mission to say, over there is extortion, that is as far as you can go. But
it seems to me there must be a margin, or you get what I call cast iron ;
there must be a margin, elasticity which the judgment and experience
of to-day would warrant the managers of railroads to exercise in the in¬
terest of all concerned, and you are still open to the general question
of whether it is extortion or whether it is just, and you must give some
play. You cannot meet the exigencies of the case, in my judgment,
without giving some chance for play.
Senator Sebree : You don't make yourself very clear. Do you
think it well to empower the commissioners to fix a rate lower than
the maximum rate established by law, if in their opinion the maximum
rate should be unjust? I don't exactly understand you on that ques¬
tion, and that is a very important matter in this legislature ?
A. Well, I think from what I said—I supposed I ought to be un¬
derstood—there is a very material difference between fixing a maxi¬
mum rate and saying what shall be the uniform established rate.
Senator Sebree: Now who is to fix that established rate?
A. Now, if the legislature fix the maximum rate and see fit to
clothe the commissioners with power to reduce that maximum rate in
certain cases, that would be seriously objectionable, for if you are go¬
ing to throw into (he commissioners' hands the power to fix the rates
of all the roads, I don't think you can get a dollar of capital in New
York to build any new roads.
Senator Sebree: To empower the commissioners to lower this
maximum rate established by law on any given article that they might
see proper, if they thought the maximum rate established by law v/as
unjust?
A. Well, I have said twice, and I will say it again, that the com¬
mission might be empowered to reduce the maximum rate within what
to them might seem reasonable limits, but to give them power to fix the
actual rates at which railroads should do their business, I don't think
that would bring any capitafiinto^this State. You understand the maxi¬
mumrate must be the highest point at which anybody should be author-
166
ized to do their work; it assumed that a just rate in a great many
cases would be below that point.
Senator Sebree : I want to ask you if you remember that there is
already a section of the statute, passed in 1875, empowering the com¬
missioners to lower this rate in accordance with your view?
A. I know that, and I know they have done it sometimes.
Senator Sebree : Is there any necessity of changing that law ; it
is well enough as it is, ain't it ?
A. I don't remember the exact features of the law; I am under
the impression that that particular feature of the present law is well
enough, perhaps, as it is. And I want to say right here, in that con¬
nection, that the trouble about that is that that has been done probably
in the interest of justice and of the people, and the railroads, as I
¥
understand it, have totally disregarded it—refused to pay any attention
to it, and there is no power to make them, that I know of.
Senator Sebree : Are you not aware that there is a penalty for any
railroad disregarding that law ?
A. Who is going to enforce it ?
Senator Sebree : Can't anybody go before the grand jury and say,
''here is a railroad company that has violated the law, and is guilty of
misdemeanor."
A. I do not say that there is not a theoretical power to enforce it,
but I think practically it never has been attempted, and I presume
every gentleman knows here that one great dependence upon railroad
companies to do just as they please with regard to the law is that it is
expensive for an individual to commence suit against them.
The Chairman : There is no way of getting service against a rail¬
road company for a misdemeanor in this State, is there ?
A. Yes, and I know very well that they rely on the inability of
the people to do it.
Mr. Hinton : I would be glad to hear Mr. Hayward explain his
system of rates—not maximum rates; would he have so much per
mile; would he have so much per twenty-five miles, and so much for
a certain distance with a terminal charge, and I would like to have
his views as to the long a short haul. I would like to hear him talk
on that point and to have him give us his system of making rates, leav¬
ing out all account of maximum rates, we will suppose that they are
established ?
A. Well, there are so many questions in getting at the matter of
making proper rates, that it would be very hard to go over the whole
ground. Now, as a matter of fact, I would rather take a train of cars,
where all grades were uniform, for a hundred miles and haul them all
right straight through that hundred miles than to leave any part of
167
them off. You can do it cheaper and for less money ; that is my
opinion.
Mr. HintoD : Wouldn't you have to stop and get out of the way
for freight trains and meeting passenger trains, etc., in doing which
you could drop off or take on cars ?
A. You might, or might not. If the switches were properly ar¬
ranged you would simply run through them, but 'you are losing time
in setting off cars, and it will cost you more money by the time you
get off* a division than it would to haul them all through, and yet you
cannot very well charge as much for ten miles as you would for a hun¬
dred ; although I would rather haul it through and see it out.
Mr. Hinton : When you reach the end of the division you would
have to set all your cars out then, wouldn't you ?
A. You have got to do that if you haul a train, but generally
when you get to the end of the division you run onto a track and put
a new engine on, or that train is made up over again, I don't know.
But I am talking about that as an engine and crew generally run over
a division ; they generally go in the neighborhood of a hundred miles.
That is considered a day's service for a crew, and there is more expense
in making up your trains and wear and tear, putting on your brakes,
and haying the men in the train getting a little rictious, so that they
don't care a blank and run the train together and break a draw head
or two or pull one out, and it is everything of that kind that make your
expenses grow up in the way they do; and when you are running at
regular speed the wear and tear is very light in that regard ; especially
since the introduction of steel rails it is comparatively small, very
much smaller than it used to be.
Mr. Bodine: I wish to ask you another question with reference
to the long and short haul. I notice that in the various schedules pre¬
pared by the railroad companies they have what is called a local mile¬
age schedule, and then they have a schedule showing the rate charged
from the terminus, say from St. Louis to \arious stations on the road.
I notice they have a distance of 40 miles from St. Louis a rate about 25
to 50 per cent, less than for a distance of 40 miles between two local
stations ; is that right ?
A. If I understand you right, you say they charge less from St.
Louis out forty miles, than they do from that forty miles on forty miles
further?
Mr. Bodine: Yes?
A. Well, I can't say, under ordinary circumstances, why the dif¬
ference should be very material. Undoubtedly the hauling probably
wouldn't be. Well, there is one reason perhaps why on the Missouri
Pacific that might be true. They would have, forty miles perhaps is
168
short of Gray's Summit, I believe, where the Frisco runs off is about
forty miles, isn't it ? any they may not have to haul their cars over
Gray's Summit, and that is a very heavy grade.
Mr. Bodine : Suppose that there are five stations. The first one
ten miles from St. Louis, and each of the other ten miles apart ; that
would make sixty miles. Now is it right for a railroad company to
charge'more for forty miles from St. Louis to any one of these stations
than it is for forty miles from the first station in the same direction.
A. Well, I don't know that I should want to answer that broad
question m that way exactly. I want to say this, that the business
that you do at small local stations costs you a great deal more to do it
than where you have it concentrated at a point where there is a good
deal to do. Now take it in St. Louis. I suppose all the freight that they
handle is handled there for probably from fifteen to eighteen cents a
ton, as the cost of handling it will, if you have to get the men to do
that work at your local stations—it is altogether out of proportion, the
%
work you have to do, and you divide it up on your work and it amounts
to a greal deal more than that, and yet it is an expense that you have
to incur in order to maintain the station there and do the business
there, and those are the facts that should be taken into account in de¬
ciding what is right and proper.
Mr. Bodine : As a matter of fact, isn't it generally true that all
the men they have at their local stations is the local agent ?
A. I think that is sometimes true, but I am under the impression
that generally it is not true, but even if it is, the expenses are spread
onto what little freight he handles and at many stations it would be a
pretty big item.
Mr. Bodine : He has to be there anyhow, and really the amount
of work he has to do does not really add any additional to the expenses
of the road so far as that is concerned ?
A. It is a question in the first place, whether you will have a
station at that point or not. It is partly that there is business there, or
altogether that there is business there that you put a station there, but
in doing that it costs you to maintain that station a great deal out of
proportion to what it costs at a larger station.
Mr. Bodine: Have you any idea of the expense, and the difi'er-
ence in the expense of the shipment between the cost of handling at
two such stations?
A. Well, you will see from the nature of the case, if you think a
moment, that there could not be any rule about it; it would vary at
différent points, according to the amount of business and the nature of
it, and all that; of course it ought not to be a very wide difference.
169
Mr. Bodine : The onlv diíference that should existís the mere
cost of handling it, is it, with reference to the movement of these cars?
A. There might be things come in I can see very easily. Now
supposing that the grades were reasonable say between St. Louis and
the junction of the Frisco over that thirty miles or so, and take beyond
that, that there are grades that might be very steep and hard to take
cars over, so that cars that you might be able to take that far you
would have to leave off. You would be willing to carry to that point
a little cheaper- But supposing j^our grades and everthing were the
same under the same circumstances and conditions, I don't see any
reason for making any very great difference between the first forty
miles out of St. Louis and the next forty.
Mr. Bodine : Now how about it in the other direction ?
A. The question between hauling in one direction and another
often times depends upon the preponderance of your trafile ; it is a
great object with the railroad companies to load their empty cars. I
take it, it is not only for the interest of the railroad company, but for
the interest of the public, that if the railroad companies are likely to
have empty cars going in a certain direction, and by making low rates
they can fill those cars that they should do so. They are handling the
products of the country cheap and making a little money, and accom¬
modating the public, and I think that is good railroad management.
Mr. Bodine : I^n't it true that the railroad companies in fixing
their schedule, give the same rate from St. Louis to a local station that
they do from the local station to St. Louis ? Do they, in fixing those
schedules, draw any discrimination whatever as to the direction ?
A. I think generally they do not, but I think that oftentimes
they do in practice.
Mr. Bodine : They do that secretly?
A. I don't know that they do it secretly; I dont't know that
there is any law to prevent that at the present time. I don't really
think there necessarily should be any law to prevent it, if it is a pub¬
lished rate and open to everybody. They can afford to take a lot of
wood, for instance, and here is a man who has got some wood that he
would like to send to market, and they have empty cars going that way
at the present time, and they will say that they will take this man's
wood at a low rate and carry it to market, and it seems to me that that
is in the interest of the public, and that there is no objection to it.
Mr. Bodine : You say there is no law now to prevent that ?
A. How is that?
Mr. Bodine : You say there is no law forbidding charging more
on some distances in one direction than there is in another direction ?
A. I don't think there is any law, except the Constitution of the
State, and that, I believe, is not construed to execute itself.
170
Mr. ßodine : Yes ; there is a law in the very language of the Con¬
stitution forbidding charging more for a short distance than a long
distance, and there is some penalty, perhaps not enough.
A. This, as I understand, is a question whether they should
charge less rather than more. I was speaking of reducing rates. I
don't know that there is any law against that.
Mr. Bodine : If they charge less from A to B than they do from
B to A, that is certainly charging more from B to A; it looks to me
like as if the principle was the same if that charge runs in one direc¬
tion ; then, in the other, they certainly must charge more than they do
in the first case.
A. The legislature might think they were doing an act of justice
to bring A down to a level, but I think there should be a leeway in
which, when a railroad company is in a changed condition of circum¬
stances, they have, say a lot of empty cars, and here is something that
can go to market if it goes at a very low rate, and they make a low
rate and take it.
Mr. Bodine : Would not that lead to discriminations in rates?
A^ Not if you give the same rates to everybody at the same
time.
Mr. Bodine: You might have a train of empty cars to-day going
east, and take wood at some low rate, and then not have another train
for a week.
A. That possibly might be ; so that only illustrates, it seems to
me, a sound principle of railroading, to be in the interest of the public.
Senator Hunter: I didn't understand you just now, and I desire
to read to you a part of section four of Senate bill 293 :
"The railroad commissioners are hereby directed to make for each
of the railroad corporations doing business in this State, as soon as
practicable, a schedule of reasonable maximum rates of charges for
the transportation of freights and cars on each of said railroads ; said
schedule shall include rates of charges for freights and cars transported
over such railroad to be transported on another, and rates of charges
for freights and cars transported over such railroad after coming from
another, and schedules of the two kinds of rates last above mentioned
shall be made so as to make the total charges for transportation from
the original place of shipment to the place of final destination reason¬
able, and so as to apportion such charges fairly among all the railroads
transporting such freight and cars, and shall also make rates of charges
for all uses and services which may be required of any railroad corpo¬
ration or common carrier."
Now the penalties for violating that or charging more than the
amount fixed by that is from a thousand dollars to five thousand dol-
171
lars for the first oifense; from $5,000 to $10,000 for the second offense,
and from $10,000 to $15,000 for every subsequent violation. And 1 un¬
derstood you to say juet now that you were willing for the commis¬
sioners to fix maximum rates, and then afterwards I understood vou to
say it would not do. Now, I want to know how you stand on that
matter and on this section.
A. I said that I looked upon it as a very material difference,
fixing maximum rates and the rates at which business -should be done.
There is a broad difference between the two. The maximum rate must
necessarily be a liberal rate, because it is to apply in every case. That
no road should go beyond the maximum, a fair maximum rate must
necessarily be considerably higher, therefore, than the bulk of your
business ought to be done for, and I think it is very proper that maxi¬
mum rates should be established. I don't know that there would be
any serious objection to a commission making up the maximum rates.
That would probably be as likely to be fair.
Senator Hunter: This Senate bill schedule empowers the commis¬
sioners to fix the rate ?
A. No, sir; I don't understand it so; as you read it, it fixes the
maximum rates.
Senator Hunter : Of course they can charge less than that ?
A. Well, it fixes fair maximum rates. Now the maximum rates
are the highest rate that any road under any circumstances may charge.
To be fair maximum rates they must be considerably higher than would
be proper for them to charge under a great many circumstance, and it
gives them a leeway to work below it, and to be fair maximum rates
they must be put high to be reasonable as a uniform maximum rate.
And it is a safeguard against extortion from the public to have them.
That, I take it, is what is intended by maximum rates, and I don't know
that there would be any serious objection to the commissioners do¬
ing it.
Mr. Bodine : There would be less objection when the rates were
made merely priina facie evidence of reasonableness than if they were
made absolute ?
A. I think it would never do to make them absolute.
Mr. Bodine: What do you think of making them prima facie ev¬
idence of what is reasonable?
A. I think that any rates that were established as the maximum,
so long as the railroads kept within them, that they should not be open
to extortion, but I say that the maximum rates fixed by law by the
commissioners ought to exempt the railroad from extortion if they
charged below them, and if in any case the commissioners saw fit to
have that maximum rate reduced, I don't think there would be any
objection.
172
The Chairman : Could you fix a rule of extortion any other way?
A. I don't see any other way than substantially that way. I think
if you make it extortion because a jury may say that under a general
provision that they should not be extortionate, and the plea came in
before the jury and it determined that they were extortionate, I should
want to be something other than a railroad man, for I should be liable
to have my property attacked and jeopardized at the instance of a jury
irrespective of my honest intentions, as I have seen them decide inter¬
ests in this State a great many times, and in other States. It is a sub¬
ject that would not be very well understood.
Senator Mansfield : How about their fixing the local rates on ¡the
railroad ?
A. . I think I have said that no three men had ever been found big
enough to undertake the control of all the rates over all the roads in a
State like Missouri.
Senator Mansfield: In your judgment, can three men\who were
elected by the people of the State, subject to the influence, political influ¬
ence, that might be brought to bear, be entrusted with the regulation of
rates, and would it be a wise policy to commit to them the regulation
of rates ?
A. I think it would be the most unwise policy that I could con¬
ceive of; I think it would just ruin the railroad interest of the State.
Senator Mansfield : Take section four there and look at it, and see
if you do not think we confer on them that power ?
A. I don't know that I ought to be put on the stand to criticise
your bills.
Senator Mansfield : That bill is not pending in either house. The
question I desire to ask is, if that section would not, in your judgment,
confer the power upon the commissioners to fix and regulate the rates
on the railroads in this State?
A. I don't understand that that is the intention of it.
Senator Mansfield: I ask you as to the language of the bill?
A. I don't think that the provision, fairly construed, would leave
them to do any such thing. It says that they shall fix fair maximum
rates, and I have already, two or three times, explained the diflerence
between them and the actual rates.
The Chairman : The rates you objected to are iron clad rates that
should not be varied from ? .
A. Yes, virtually making a freight tariff for all the railroads, such
as it is the freight agent's business to make up. This says a fair sched¬
ule of maximum rates, which is one thing, and fair maximum rates
must be extremely high rates, must be the extreme limit, while the
actual rates is another thing.
173
The Chairman : Then your position is, that you would fix an ex¬
tremely high rate without conferring upon them the power to reduce it^
but if you would give them the power to reduce it, that you think
wouldn't be a wise policy ?
A, I take it, in the first place, that every person who practically
looks at this question, who is at all familiar with it, knows that you
can not, with propriety, confer that power upon any board of commis¬
sioners, to make rates of freight for transportation over the railroads in
the State. If you undertake to do that you destroy your railroad in¬
terest and get no new railroads. The railroad companies employ men
and pay them high salaries, a long ways more than you would pay the
railroad commissioners oí your State, to get men of ability to fix rates.
It is one of the most difficult things in railroad management to properly
fix rates, even to do justice where everything is all as it should be. If
you were to put that power in the hands of the commissioners to govern
all the roads in the State, I think you will get no new roads. But
maximum rates are fixed for the protection of the public, and ^re fixed
at a maximum limit ; as I said before that is extortion, and this is
justice, but where is the line between these? The maximum rate is
clear over the border line. But that is a diflerent thing from fixing
just rates which are liable to be changed, and should be, where the men
who are watching that thing and interersted^in it particularly, by giving
the due notice of ten days, or whatever the required time by law should
have the right to change, and be responsible that their change was still
a reasonable one.
Senator Downing: Did I understand you to say that when the
maximum rate is fixed by the legislature it will hot be hurtful to the
interest of the railroads to confer on the railroad commissioners the
authority to reduce that rate below the maximum when they deem it
necessary or proper?
A. In reply to a question whether the commissioners should have
the power to reduce maximum rates, I think I said, and I will say now
that if they were clothed with that power, as they are to do under the
law in question, I don't think that it would militate particularly against
railroad interests. The presumption is it would be reasonably fair in
the matter.
Senator Downing: Now I would like to know the diflference be¬
tween the commissioners fixing the rate themselves independent of the
action of the legislature, that is fixing the maximum rate?
A. Between that and their fixing the maximum rates ?
Senator Downing: Yes; in other words,in the legislature fixing
the maximum rate and your conferring on the railroad commissioners'
m
authority to reduce them, what would be the difiference between that
and authorizing the commissioners in the first place to fix the rate ?
A. There might not be any difference, one would be fixed by the
legislature in the bill and would go forth and be known to the public,
and the other would be liable to be changed at any time j but now in
regard to the section to which my attention was called, which allowed
the commissioners to fix the maximum rate ; the presumption is, that
there would not be any serious trouble growing out of that ; the fair
presumption, that three intelligent men, understanding what was in¬
tended and meant by maximum rates, would fix them so that there
would be a margin below it for the railroads to work on. A fair maxi¬
mum rate is not the extreme margin of extortion. Now it is a question
whether the legislature would be the safer body to fix that, or three
men who were supposed to have made this a study. I can't say that
there was any serious objection to the commission fixing the maximum
rates if the commission is likely to do it so that it would be safe.
Senator Downing: You make a distinction between fixing rates
and fixing the maximum rates by the commission?
A. Certainly.
Senator Downing: And would you say it would drive out capital
for them to fix the rates ?
A. If the commissioners were to virtually make the schedules
under which the roads have to work, I don't think you can get any
roads to come in here. If they were instructed to make fair maximum
rates under which the railroads were to work as they saw fit under the
general regulations of the law, that would be in my judgment an en¬
tirely different thing. Of course they might, under that power, abuse
it, I understand perfectly well it is quite possible that they might do it
ignorantly and all that, and it is supposable that they might do it for
other purposes.
The Chairman : I understand you think when a legislature makes
a maximum rate, and the commissioners have power to lower ¿the
maximum raté, when they do lower it, that is the maximum rate ?
A. That is the maximum rate, and when they lower it, they
should not be allowed to do it without giving the parties an opportunity
to be heard on the subject.
The Chairman : The bill as read by you makes the maximum
rates only prima facie evidence ?
A. That is all.
The Chairman : In that case the roads may have the matter ad¬
judicated by the courts?
A. They might, perhaps.
The Chairman : That is the provision of the bill ?
175
A. Of course you want to get a bill that is practicable and fair
without going to the court.
Senator Hunter: I understand you, if the legislature fixes the
maximum rates, and empowers the commissioners to lower them, that
notice should be given, and the railroads should have a hearing ?
A. I think they should.
__ •
Senator Hunter : But you think it is still preferable that the com¬
missioners have the power to fix the maximum rates and lower them
and vary them at their will without giving anybody notice ?
A. I don't think that would be a wise move to do that without
giving notice. It is not very likely they would do it, unless they were
prompted by somebody, and then they should have a hearing from all
parties, it seems to me ; I want to say one word more, gentlemen, there
is but just one way to settle it. It has got to be settled on principles
of justice and equity, ur else it won't stay settled. Anything that is
just and iquitable cannot be objectionable anywhere, ought not to be,
and cannot be, and that is just the honest fact about it. If there are
not all the safe-gaurds thrown around it necessary to protect all inter¬
ests it will not stay settled ; it will come up at every session of the
legislature until it is settled on that basis.
Senator Mansfield : Suppose that this General Assembly should
pass a law prohibiting extortion, prohibiting discrimination, prohibiting
the charging of more for a short than a long haul, when the short is
included in the longer, and prohibiting pooling, and should fix a reas-
onable maximum rate and authorize the commission to stand between
the people and the railroad and enforce that law, don't you think that
would be a wise law and a sufficient law ?
A. I see no objection to all those points, but I don't want you to
forget one or two of those points that I suggested, for I think they are
very important.
Senator Mansfield : What are they ?
A. Where they run over two or three roads and can't agree about
the division, and about terminal facilities. You want it so that your
railroad system can be run in the interest of the public, just as though
they were one corporation. Now, fix it on a fair basis to secure that
result, and everybody ought to be satisfied.
Senator Taggart : I want to know if you know the effect of the
drawbacks and rebates that have been practiced by the railroads, and
if so, let us hear the effect oí it on the public.
A. Well, gentlemen, I supposed that that was so plain, that it
would not be necessary for anybody to explain it. That is the rankest
kind of discrimination, it builds up one house of community or busi¬
ness men at the expense of other interests, I have sometimes been
176
an insider, and been the favored one, and I have sometimes been an
outsider, and been driven out of the market, and I know it was one of
the g;rowing sins of railroad management, and that comes up here for
relief, I apprehend.
The Chairman : Gentlemen, I now beg to introduce to you, Mr.
Fusz, the Vice-President of the Merchants Exchange.
Mr. Fusz: Mr. chairman and gentlemen, owing to the absence of
the President of the St. Louis Merchants Exchange, Mr. Gaiennie, and
also of the absence of the chairman of the transportation committee,
Mr. Francis, the duty has been delegated to me, as its Vice-President,
to represent the St. Louis Merchants Exchange before your committee,
in order to show the interest which that institution takes in the passage
of a railroad law.
The transportation committee presented to the board of directors
of the Exchange a report of which probably all of you have received
a copy. If you have not, it was intended that you should, at least,
and I beg your indulgence to allow me to read it over again, and per¬
haps to comment on some few of its recommendations.
Merchants Exchange, }
St. Louis, May 9, 1887. f
At a meeting of the board of directors of the Merchants Exchange
of St. Louis, held this day, the following report of the committee on
transportation was received and endorsed :
IFRANK GAIENNIE, President.
Gteo. H. Morgan, Secretary.
St. Louis, May 4,1887.
To the President and directors of the Merchants Exchange of St^
Louis :
Dear Sir and Gentlemen: The transportation committee of the*
Merchants Exchange, in compliance with a request for recommenda¬
tions as to what action the Exchange should take regarding railroad
regulation in this State, beg to report as follows :
That legislation is required to enforce the several sections of the
Oonstitution of the State relating to railroad transportation, so far as
may be consistent with the material interests of the Slate. Those
sections oí the Oonstitution enunciate the principles upon which other
States have based laws and established commissions to regulate rates
of freight, to consider and [correct abuses, and to protect the people.
The result of such legislation by those States after many years experi¬
ence, has been satisfactory to the people and not injurious to the rail-
177
TOads; and Congress having passed substantially the same laws to
regulate interstate transportation, the necessity is increased for legis¬
lation in Missouri, in harmony -with the national law and with the
laws of neighboring States, and as required by the Constitution of
Missouri.
The required legislation is practically contained in Senate bill 293,
recently passed by the Senate, the leading provisions of which are—
1st. Prohibiting extortion.
2d. Prohibiting unjust discrimination between individuals or
localities, by rebates or otherwise.
3d. Requiring the commissioners to establish reasonable maximum
rates, which shall be recognized and enforced until either railroad or
shipper proves in court that the same are unjust.
4th. Prohibiting combinations to prevent carriage between two
or more roads.
5th. Compelling railroads to promptly receive and deliver freight
from other roads, and to provide suitable facilities therefor.
6th. Prohibiting the pooling of earnings or division of tariffs.
7th. Requiring reports when demanded by the commissioners.
8th. Providing penalties for enforcing the laws of the State.
These should not be excessive, as they appear to be in Senate bill
^293, but reasonable and in accordance with the Constitution.
These are substantially the provisions of Senate bill 293, which at
the recent session was defeated through a division of sentiment pro¬
moted by those opposed to railroad legislation, and which, we under¬
stand, the leading railroad representatives would have accepted as
satisfactory, when near the close of the session, the passage of the
House substitute, known as the Moni ton Bill," seemed probable.
The State has virtually authorized the railroads to tax the .people
for services performed, but it reserves and should exercise the right to
limit and equalize such taxation. The limit should be a fair and rea¬
sonable return upon the actual capital invested.
Equalization should mean protection to intermediate points, where
no competition prevents excessive charges to enable terminal and
junction points, or interstate points, only reached by crossing our own
State, and taking business through and out of the State at less than
fhe local rates, thus levyiug a local excessive tax for the benefit of
other States, and the burden of our own people.
The law is necessary for the protection of local points within the
State. The termini and junctions and river points can rely on compe¬
tition to protect them. The local points are without help otherwise.
E. M—12
178
Sound commercial sense, in the interest of our great city, so
dependent on the prosperity of the State, demands such legislation.
These expressions do not conflict with the friendly feelings for the
railroads. We appreciate that they are powerful instrumentalities,,
indispensable in the development of the State. We acknowledge the
identity of interest and community of prosperity, but we believe that
under proper regulation, such as proposed, their prosperity would not
be lessened, while..at the same time the people of the State will be
largely benefited.
The necessity of the times is the limit, and regulates the power of
corporations and fair and equitable legislation, in harmony with the
national law and other State laws, can but promote our general pros¬
perity.
In regard to the long and short haul principle, we have to say, that
as the interstate commission has suspended it in certain localities, and
may do so between points in this and adjoining vStates, and its eifects-
upon the commerce of the country being a matter of great uncertainty,,
that until a definite understanding as to the practicability of its
enforcement can be had, or its effects known, we deem any special leg-^
islation on the question inopportune. We therefore respectfully recom¬
mend that the board of directors of the exchange memorialize the-
General Assembly, and request the passage of a bill embodying the^
ideas set forth in this or some measure fair and just to all.
That copies-oí this report be promptly mailed to every commercial
and municipal body in the State, and to prominent citizens in eacb
representative and senatorial district, inviting their favorable consid-
oration and influence- That copies be mailed to senators and repre¬
sentatives, and that at the proper time, a delegation of twenty-five be
sent to Jefferson City to urge the passage of the proposed law.
(Signed) D. K. FRANCIS,
Chairman Transportation Committee.
E. F. KELLY, Secretary.
This report was adopted by the Merchants Exchange directors.
We do no pretend to say that it is just exactly in every respect what
it should be ; we do not pretend to say that we are, every one of us, as
united in its exact expression as we might be, but we believe that this
basis is one upon which you can safely act in making rates and regu¬
lating railroads, and do justice to all, and I deem it, gentlemen, at this
time, a rather fortunate circumstance that this present legislature,,
having been occupied for so long with matters connected with railroad
business of this State, and the rights of the public, and there having.
179
from all over these United States been a call made to examine into the
railroad question, I consider that this present Assembly is the most
competent to enact suitable legislation for our time of any that will
have to do with it. I believe that it is possible tor you to do it, and I
believe you will do it, and the efforts that you are now making to post
yourself on this matter, to inform yourselves as to the feeling of all
parties interested, will enable you to, and to perfect a bill which will
be ahead of any other of our neighboring States.
The question is asked sometimes why St. Louis should be specially
interested. It is a popular idea in the country that the large cities
have all the advantages at the expense of the minor points. Well,
gentlemen, we believe that any measure that is passed, which is not
based upon justice, will be very short-lived and will bring trouble to
its authors ; and we believe in that justice alike to the large cities and
to the small communities. It is the only proper basis of legislation.
One reason why the Merchants Exchange is intent upon having
just laws, may perhaps be explained by one fact, which came under
my personal notice early this spring. We have in our Exchange, which
represents the merchants generally, the men who receive the goods in
contradistinction to those who have just preceded us—the grocers—
who forward goods to the interior of the State, to other points. Now,
this receiving business has been so reduced that practically half a
dozen houses do all the business in St. Louis. As an instance, which
was not selected especially for the case, but which I had in my pocket
this morning, and which came under my observation, as I said some
time ago, the receipts of corn for January, in St. Louis, were 4,800 cars,
and of these 4,800 cars six firms received 4,600, and one firm received
100 cars, making 4,700 cars received by seven firms and the other 100
cars were received by the balance. Now, this conveys to you more than
anything else why it is that the Merchants Exchange, which is a body of
merchants, largely engaged in receiving freight in the city, have come to
you and appealed to you for the protection of the law. It is fair to
believe that but for the rebates, preferences and discriminations, the
other gentlemen who are in business would receive their fair share of
the business of the country. But on account of favoritism and re¬
bates, the six firms have received nearly the entire amount of corn
received in St. Louis during January last.
In regard, gentlemen, to this matter of a long and short haul prin¬
ciple at first sight, before examination of the question, the principle,
absolute cast iron, seemed to me to be the right and correct doctrine.
But an examination of it and its practice showed that the effect would
be to injure one party for the benefit of the other, and therefore again
violate the principle of justice which should cover all. We are not unan-
180
imous on that point, but at the same time I personally fully endorse the
sentiments which I have heard uttered here by competent parties that
have expressed themselves, and I believe that where it does cost more
to conduct the business of the short haul and the long haul there would
be no injustice, and it would be legal, and no one could complain of
the real difference in the cost. The parties that do tax the railroads
more for their business should pay that much more.
There are matters of detail, gentlemen, in this réport which the
Merchants Exchange have made, that they have not thought proper to
go into, but we would insist particularly that the matter of unjust dis¬
crimination, although 1 take the word ''discrimination" to mean ''un¬
just discrimination," because we use the word "differential" where a
discrimination apparently exists but is a fair one. The great evil of our
time has been this matter of preference, and if that alone were removed,
if the rates were always made open so that every one would,know
just exactly where they were, so that the public, when undue prefer¬
ences were made, could raise its voice to stop it. In that one matter
alone an immense benefit would be conferred on the whole country.
Now, we act from a principle that the business of the country is
not to be concentrated in a few hands. We do not believe in the prin¬
ciple of monopolies. We have seen in one example in this country
what the power of monopoly may do in the way of subverting all prin¬
ciples of justice, equity and fairness, and reducing every one else to
the condition of mere servants : that of the Standard Oil Company.
The full workings of it have been known by the people and yet not
fully appreciated. Now I do not believe that the business of receiving
or shipping should be confined to the few. We do not believe in
building up Standard Oil monopolies, or such as Armours of Chicago,
or any other monopolies that by means of their immense business
compel railroads to give them, special rates, which are not to be com¬
pared to those charged the general public.
One thing, too, in regard to the railroads : It has seemed to us that
classification ought to be simplified. This, however, we deem is a mat¬
ter to be treated by practical parties, and as we have had in this State
railroad commissioners, and while they have had, so to speak, no
power, nevertheless they are posted and have posted themselves, and
by the public are believed to have done all they could for the citizens,
and they would be competent parties in assisting the railroads in arriv¬
ing at the matter of classification.
One thing, we believe, that the laws should do: We have often
heard railroad men say, "we want to be protected from one another."
We have seen, in our interstate law that the railroad which was the
one that was most injured was the verv one that cut the most, and
181
which compels the direct roads to cut down to meet them. And these
roads have often, when speaking to us, said to us, ^^we wish to be pro¬
tected from one another."
Now in relation to this matter of railroad legislation as to open
rates, another feature would be to allow no charge without proper no¬
tice so as to allow the public a few days' time in which to shape them¬
selves for a change, both in raising the rate and in reducing the rate.
That will tend to their benefit. I will say that in reducing rates, since
that is not in the interstate law, and since it has been in operation, we
have found that even in the matter of reducing rates, a time should be
allowed, for we have seen that great injustice can be done by private
eonnivance between railroads and their favorites by simply dropping
the rate from one day to another, and some party holding back a few
hundred cars may be able to chip from there at a great diflFerence.
Gentlemen, I believe I have stated all that the Merchants Ex¬
change thinks proper to submit to you for your consideration. The
secretary of the transportation committee has accompanied us, and I
will say for him, that he was formerly a railroad man, and is fully con¬
versant with railroad matters and with the practical operation of rail¬
roads. For several years past he has been in the employ of the Mer¬
chants Exchange and does now represent the mercantile community
in that particular. With his experience as a railroad man, and the
practical operations of railroads, he may be able to afford you some
information if you think proper to ask him questions. I refer to, and
beg leave to introduce Mr. Kelly.
Senator Downing. By what authority do you state in your circu¬
lar that Senate Bill 293 was defeated by those opposing railroad legisla¬
tion?
Mr. Fusz : I would not like to answer that on my own responsi¬
bility. I was not a member of the transportation committee that sent
in the report, but speaking of what the popular idea is, they repre¬
sented what the public opinion has been on that subject. And that is
as near as I care to answer the question-
Senator Downing: I think you are'mistaken in your circular.
A. I will be glad to correct those gentlemen. Senator, if you
will inform me what the actual facts are.
Senator Taggart : State, if you know, the cause of those few per¬
sons receiving the corn you speak of.
A. The cause rests in these private preferences, rebates,
that are known to exist, but which we cannot get the evidence of, and
one thing more, gentlemen, I am not a speaker, so these ideas come to
me gradually and as occasion calls them up. It has been my experi¬
ence that no greater element of corruption which would tend to the
182
entire demoralization of the social community exists than this matter
of private rebates. I have been personally before railroad agents who
have pledged me their word and raised their hands as if affirming it
with an oath, that they were giving me rates of freight (I am a miller
in 8t. Louis) that they were giving me as good a rate, as low a rate as
anybody would have it, and persuaded me that they were telling me
the truth, looking me fairly and squarely in the face until I believed
that certainly 1 could not be mistaken, and had to believe them, and I
have gone back to my office, and in one instance had not been back
more than an hour when I had before me the evidence that the man
had lied to me out and out (laughter.) And I went back and made
him own up to it. (Increased laughter.)
Senator McGinnis. The remark was made that from competitive
points like St. Louis, could lead competition, and I want to know how
that can be done in the face of the long and short haul clause of the
law ?
A. The Senator misunderstood me. I stated that it may appear
perhaps strange, why the St. Louis Merchants Exchange should
wish to appear here to advocate a railroad law, and I gave the reasons,
which were, that even St. Louis instead of the present absence of law
being for the benefit of the majority of the merchants, the benefits ac¬
cruing from rebates and preferences went into the pockets of the few,
and that is the reason why the Merchants Exchange wishes a railroad
law to be passed. And I believe that is the statement that I made.
Senator McGinnis: I am not speaking about the rebate question
but about the question of the long and short haul ?
A. I gave the reasons for my views of the long and short haul,
and I said also that our people were not agreed on that, but in examin¬
ing into its justice, and its practical operation, we who believe in the
principle of a short and long haul clause take the wording'^on substan
tially the same conditions," and hold that when the conditions are not
substantially the same that then the same rate need not be charged, as
low a rate for the short haul as for the long haul. That, in other words,
if it costs more to transact a short haul business, that short haul busi¬
ness to that extent should be charged with that addition.
Senator McGinnis : Do you, as a St. Louis merchant, believe that
under the operation of the short and long haul clause St. Louis will
ever be able to compete with Chicago in the shipment of goods to Kan¬
sas City ?
A. We believe this : that under the interstate commerce law, if
that applies, St. Louis will stand as good a chance as smj other city.
Senator McGinnis : If not interfered with by any local legisla¬
tion, But suppose we step in here with a law which says that you shall
183
•charge do less for a shipment from St. Louis to Kansas City than you
ishall for any intermediate point between St. Louis and Kansas City ;
would you not then raise the rate so high between St. Louis and Kan¬
sas City that you would not be able to ship to Kansas City in compe¬
tition with Chicago merchants, under the operation of the interstate
law ?
A. I don't see how that will be ; because under any railroad law
that you would pass, you would insist upon the freight being trans¬
ported across our State, standing its full charge according to law, while
passing through our State. But I say for myself, personally, that it
would be unjust to charge the long haul as much as the short haul, if
it cost less to transact the business. Now starting from a principle
that the parties investing in railroads are entitled to a just and fair re¬
muneration for their investment, likewise that they are for the benefit
of the public, it would tax a certain portion of the public for the bene-
.fit of another portion, if those with whom it cost more to do business
were charged less in proportion than those with whom it costs less to do
business. The exact cast iron form of the short and long haul clause
I am not in favor of ; I think it is unjust.
Senator McGinnis : Are the merchants of St. Louis in favor of it?
A. In regard to the principle? They do not believe in just dis¬
crimination, but they believe in a proper, just difference.
Senator McGinnis : They believe in the law, but are opposed to
its enforcement ?
A. Simply under the construction that I give.
Senator Gideon : Do I understand the gentleman to say that the
Merchants Exchange is divided on the question of the long and short
haul ?
A. I would not say, Mr. Senator, that they are divided. They have
not really fully studied it out. I, personally, at first, was absolutely in
of a cast iron phase of the short and long haul in order to prevent the
favor system of discrimination and corruption that I have complained
of, but in examining it I find it would if applied in its cast iron form
work injustice.
Senator Gideon : Don't I understand from the circular issued by
the Merchants Exchange that they oppose the long and short haul?
A. They simply say that as the interstate commission has sus¬
pended it in certain localities, and may do so in this and adjoining
States, and its effect upon the commerce of the country being a matter
of great uncertainty, that until a definite understanding of the problem
and its enforcement can be had or its effects known, we deem any
special legislation on the question inopportune. We do not condemn
or commend it. You heard from a practical railroad man, getlemen^
184
Co). Hay ward, and certainly he has represented the case very fairly ii>
my opinion, coming from a railroad man engaged in building a railroad^,
he presented the case very fairly indeed, for the railroads and for the
public, and you have heard from him on that subject. ^
Senator Gideon: Do I understand the Merchants Exchange to fa¬
vor Senate Bill 293 ?
A. The principles of it.
Senator Gideon : The only objection, I understand, that you make
to that is the penalty ?
A. The penalty is deemed excessive.
Senator Gideon : With that exception I believe you approve of it ?'
A. The general provisions of it have been approved by the Mer¬
chants Exchange.
Senator Gideon : You have read the bill ?
A. I must state that I read it in a casual way, because there were-
so many bills being.presented.
The Chairman : I understand you to favor the long and short haul
provisions ?
A. In its elastic construction.
The Chairman: As it appears in the interstate law?
A. As it appears in the interstate law " under substantially the
same circumstances and conditions."
Senator Downing: Authorizing the commission to suspend the
rule where it works a hardship?
A. No, I don't say that quite. This law is experimental, and it is
recognized that in practical operation there may be diflBculties, that if
it were not that the law could at once settle those matters fairly and
equitably, they would bë settled very quickly as between two men in a
transaction with each other. They arrive at a conclusion as to what is
fair between one another. But in a matter involving as important a
question as this oí railroads, it cannot be handled so very quickly, and
thereiore the law ought to be made quite elastic in order To prevent
damage.
Senator Castleman : Mr. Chairman, I think Mr. Smith should
properly follow Mr. Fusz in this matter, as he represents the minority
report of the Merchants Exchange on this long and short haul prin¬
ciple,
Mr. Alexander H. Smith accordingly addressed the committee^
then as follows :
Mr. Chaikman and Gentlemen : I appear with some diffidence befor^e
this committee at this time to represent the views of a minority of the
transportation committee of the Merchants Exchange. The minority
report was signed by three members of the committee, and would have
185
been siiînêd by the chairman of that committee except that he advo¬
cates absolute long and short haul instead of what has been termed
"elasticity," and in order not to say too much, gentlemen, if you wiil
allow me, I will just read the minority report and put the matter be-
fore you in that way.
The seeming invasion of the long and short haul problem by the
majority of the Merchants Exchange transportation committee, in Its
report on state railroad legislation, published yesterday, has brought
out a minority report that goes straight to the point. Here it is :
We differ from the committee regarding the long and short haul ;
their recommendation to delay special legislation on this point is at
variance with their otherwise excellent report. The Constitution of
our State distinctly prohibits a greater charge for a shorter haul, and
the enforcement of this feature is necessary tp the protection of inter¬
mediate local points. If, by reason of competition or to favor termi¬
nals, the railroads establish and accept certain rates between extreme
linaits of the State, it follows that such rates are sufficient for less than
the whole distance over the same route. Furthermore, we would ap¬
ply this measure of value, whicb the railroads put upon their services,
by authorizing the commissioners to limit local rates to those'accepted
by the railroads as their pro rata on traffic from or to points outside of
the State, the acceptance of such pro rata by the railroads being evi¬
dence that the rates are sufficient. The railroads derive their fran¬
chises and receive protection from the State and should not be allowed
to discriminate against the people thereof. If they can carry one ton of
freight so many miles through, into or out of the State at certain rates-
for communities or corporations without the State, they can perform
equal service at equal rate for our own people and should be compelled
to do so. We regard the long and short haul principle as the essence
of protective legislation, and the reasons given by the committee why
legislation thereon should be deferred are strong arguments for early
legislation to' enforce that clause of the Constitution. The option to
suspend this feature is the weak point in the national law, whereas,,
such option is prohibited by our Constitution. The national law was
intended to protect helpless communities at intermediate points from
outrageous discrimination practiced against them in lavor of termi¬
nals, or for the injury or destruction of water transportation. The ex¬
traordinary efforts of some of the railroad systems to secure the sus¬
pension of the long and short haul clause of the national law, and to
bulldoze heretofore favored communities and trades into helping to
secure such suspension, proves that this is where the pinch is. Instead
of ail equitable readjustment of rates proportioned to services per¬
formed, as contemplated by law, they desire to continue to inflict
186
double to sextuple rates on the intermediate points that they may thus
make up the loss on traffic from long haul competitive points. We do
not deprecate reasonable competition, but we do maintain that any
system of transportation that thus taxes home industry to destruction
for the benefit of far-oif competition is unwise, unjust, and not to be en¬
dured. Applying this view to our own State and city, we claim that
with compulsory equitable rates to and from all parts of the Slate de¬
veloping the local traffic of the roads and the communities, the wealth
and prosperity of the State will increase and the city will be thereby
anore benefited than under any schedule of freights discriminating in
her favor. Some of our principle home industries, such as sugar refin¬
ing, wool and fruit growing, wine and fiour manufacture, have been se¬
riously crippled by far-off competition, only possible under discrimina¬
tion in favor of the long as against the short haul. We claim the pro¬
tection of our geographical position, and that the enforcement of the
long and short haul clause will give us the first chance to control the
trade of our own territory. This would prevent distant localities from
dumping their surplus manufactures on us, and we have nothing to
gain by returning the compliment. On the equitable adjustment of
rates under the absolute prohibition of greater rates fora shorter haul,
we can and will do more business and at a better profit, through better
control of rapidly developing country near home, and the same will be
true of other trade centers that have any natural and cultivated ad¬
vantages. Points that have been boomed and can only be maintained
by discrimination will of course suffer until they learn that the local
trade fairly within the limits of their control must suffice. Railroads
have no charter to build up one point at the expense of many others.
They have done this and will continue to do it unless the law prohibits
it. At the risk of taxing their*patience, we ask the directors of the ex¬
change to earnestly and carefully consider these suggestions before
going on record as opposed to any long arrd short haul feature, either
in State or national legislation, to regulate railroad traffic. We also
object to the clause of section 1 of the majority report interpolated by
amendment, reading as follows : " So far as may be consistent with the
material interest of the State."
ALEX. H. SMITH,
PHILIP F. SHIKMER,
L. L. PRINCE,
Mr. Chairman and Gentlemen, I want to say to you that in all
other matter contained in the report, I agree with the committee. The
report looked to me to be inconsistent in the remarks that were made
upon the long and short haul. It had endorsed the provisions of Sen¬
ate Bill 293 substantially in which the long and short haul principle
187
was expressed. In other respects, gentlemen, I agree with the commit¬
tee's report.
I would like just for a moment to call your attention to some illus¬
trations as to the long and short haul. You have probably all heard
of the fifty cent sugar rate from San Francisco to Missouri river points,
while they were charging a dollar and a half to half-way points. And
our flour trade was driven out of Texas .by California flour in compe¬
tition, coming 8,000 miles at less rates than we could ship one-third the
distance. Those are only examples. I have known a car load of hams
to be shipped to New York, and back through St. Louis to San Fran¬
cisco to get the rate prevailing from New York to San Francisco. It
was economy to send the car load of hams to New York to be sent on
from there, and start it from there to San Francisco right back through
St. Louis, rather than ship it direct from the point where the bacon
was packed. These instances could be multiplied without limit, and I
don't know anything but the long and short haul clause that will pre¬
vent it.
E. J. Kelly, secretary of the Transportation Committee of the
Merchants' Exchange was then introduced.
Mr. Kelly : Mr. Chairman and Gentlemen : I am here not to
make any talk, but simply to answer questions. I shall be happy to
answer any that any of you gentlemen wish to ask, if I can.
Senator Downing: I would like to hear your opinion on the long
and short haul ?
A. That is a pretty big opinion. I think the long and short haul
principle is entirely correct, this far, that under substantially similar
circumstances and conditions there should not be as great a charge for
a short as for a long distance, but where you make it iron-clad, as the
Constitution of Missouri does, prohibiting a greater charge for a shorter
than for a longer distance under any circumstances, I think it is mani¬
festly unjust and wrong. You take into consideration, too, in consid¬
ering this question, the fact that there are two characters of train ser¬
vice, to and from commercial centers. One is through freight train
service, another is way-service. As a matter of fact, a way-train run¬
ning as it does, stopping here and there and lessening its loads as it pro¬
ceeds on its journey, will cost at least 100 if not 200 per cent, more than
a through train that starts with its engine fully loaded from the termini
and runs to the end of the first division where it cuts loose and an¬
other engine goes on through with it. You take a car and put it in the
way-train service and hold it there a month, and compare it with
mileage of a through car, and you will possibly find that the way-car
would not make more than sixty per cent, that the through car does.
In other words, the carrying capacity or mileage capacity of a way car
188
is possibly fifty or sixty per cent, of the through car. That entails air
increase in the cost of box car equipment. Then there is another
peculiarity about way train service. Take a car load at St, Louis or
Kansas City and start it from those centers and as it advances—possi¬
bly it will run 100 miles, and is there empty, and if you take into con¬
sideration this fact, you have got a half a car-load of freight for lOO
miles, and that will reduce the.carrying capacity of the car. Now the
way freight service is different from the way-passenger service. The
way-passenger train takes up about what it drops off, but the way-
freight train service is a great deal decreased by the time it reaches
the end of its journey. Now you take a car that goes from St. Louis
to Kansas City and it will possibly empty itself 200 miles out, or the
train will about emply inself 200 miles out, and then it will begin to
pick up a little as it goes into Kansas City, but take a way-train over
the Missouri Pacific or the Wabash, between St. Louis and Kansas City,
and it will not average more than half or two-thirds of a load. Those
conditions change according to railroads. Now a strictly east and west
bound line, the average would be less than on a north and south line..
You take a line between St. Louis and Chicago, there are two points-
competing for the intermediate trade and very nearly on a parity with
each other, only a difierence of fifteen per cent. Now you will find
that Chicago and St. Louis, in competing for the trade in the inter¬
mediate territory, would make the trains on those roads run nearer full
than onto east and west bound lines, because there are two currents of
commerce. Now this state of affairs shows a loss not only in the box¬
car capacity, but in its running capacity,and it shows increased expense.
Then you must take into consideration the fact that a way train carries,
two more brakemen, one or two, and that is an increased expense. Now
the way-train also is more of an opposition to opposing trains, more
of an inconvenience, it runs in day-time only and it dodges in and out
and is more of an interference with the traffic,and that is another item
of expense that should be considered. Then you take a way-train, it
starts from St. Louis and runs to the first station ten miles. Its sched¬
ule time may be twelve miles an hour, and it should take about forty
or fifty minutes schedule time for the first ten miles. As a matter of
fact it will run thirty or fotty miles an hour in order to get to that
station and do a lot of station work. And the result is an increased
wear and tear on the machinery and on the tank and on the box car
equipment. And those are elements that go into the question of the
increased cost of way-train service over through service.
Now, I think, if you conclude that a railroad carrier is a common
carrier, and justly entitled to the cost of service, plus a reasonable com¬
pensation for it, you cannot apply the long and short haul principle.
189
If j^ou start out with the proposition that you shall not charge more
for a short than fora long haul, it is contrary to your public highway
system—public highway theory. Because we all know that if you
travel along the highway and pass a toll-gate, say between St. Louis
and Kansas City, if the Missouri Pacific was a highway taking toll at
each station, and a very small toll, too, you would pay possibly forty or
fifty tolls, and the result would be that you would have paid more for
a long than for a short haul. You could not pay as much for a short as
for a long haul under the public highway theory if that were the case.
Then if the railroad company is a common carrier and justly entitled
to the cost of transportation, plus a reasonable profit, and it costs more
to haul a package of freight from St. Louis to Jefferson City than it
does to haul a similar package on a through train to Kansas City, it
naturally follows that the railroad company, if it is a common carrier,
should have more.
Senator Downing : Don't you think that the enforcement of that
provision of the Constitution will operate more favorably to the coun¬
try traffic and unfavorably to the city ?
A. In what way ?
Senator Downing : Preventing discrimination ?
A. Well, I say of course if it is wrong to charge more for a short
haul, there are many cases in which it is absolutely wrong to charge
as much, let alone more, for a short as for a long haul. In such a case
as that why of course it is detrimental to the country to enforce such
a rule. Now I heard a gentleman this morning refer to the Omaha
and Kansas City rates from St. Louis. They are practically the same
although there is a diflerence of 213 miles in the haul. Now I say that
the rate from St. Louis to Kansas City, leaving out all questions of
competing roads—say if the Omaha rate is 70 cents, and it costs the
Missouri Pacific road for that 213 mile haul beyond Kansas City 25
cents, then the rate from St. Louis to Kansas City should be 45 cents.
In other words, the employment of a car from St. Louis to Kansas City
or from St. Louis to Omaha should pay the Missouri Pacific about the
same amount of net revenue.
Senator Downing : In your opinion that present rate is not a rate
to be justified on any ground of fairness ?
A. There is no principle of equity in it.
Senator Downing: You think in that section here the words
should be in it, " under like circumstances, or' substantially the same
circumstances and conditions." I would like to hear some explana¬
tion from you as to what shipments would be under similar circum¬
stances. To illustrate, in St. Louis, of course you pay higher rates
there, jou have elevators there built at a great expense, and men to
190
look after the grain, the accommodation of the public, etc.; and voir
ship from St. Louis to Kansas a hundred car loads of corn. Out at
Pacific there is some man there who has jione of these expenses that
you have, and who ships ten cars. Now the man shipping ten cars from^
Pacific, would he be under similar circumstances substantially, as the
man shipping one hundred from St. Louis? In other words, explaiir
what you mean by similar circumstances?
A. I thinki will have to decline toexplain. In the first place,in ad¬
justing those two rates from Pacific and from St. Louis, I do not think the
fact that there are two towns in existence should be considered. I think
you ought to look at it just in this way. What is a just and reasonable
rate between St. Louis and Pacific? Now if it is five cents or eight
cents, or whatever it is, charge it. If a just and reasonable rate be¬
tween St. Louis and Kansas City is 15 cents, that is, what a court would
allow a railroad company in a dispute, say it would be a question of
fact, and 15 cents would be a just and reasonable rate at law, and say
the cost of transportation from St. Louis to Kansas Oity is seven and
one half cents, now if the Kansas Oity merchant by the exercise of
superior intelligence, either by volume of business inviting competi¬
tion, or threatening the railroad conipany with using the river, goes to
work and brings those infiuences to bear and gets a rate of ten cents, I
think it does not concern the shipper at Pacific, Missouri. For why
should the Pacific, Missouri, man in any way share the benefits of the
Kansas Oity man, when he in no way contributed to the means by
which the other man absolutely forced the common carrier to accept
less than a just and reasonable compensation ?
Senator Downing: If he should charge sixteen cents from Pa¬
cific to Kansas Oity, wouldn't that be charging more for a short than a
long haul ?
A. If he should charge sixteen cents, you should send him to the
penitentiary; that would be the proper way to treat him, and you
could do it under your prohibition of extortion without any long and
short haul provision at all.
Senator Gideon: Mr. Kelly, what do you think about the car
load unit and less than the car load unit?
A. Well, there are some articles on which there should be a car
load unit, but on the great majority there should not be a less rate on
car loads than on less than car loads—there should be a less rate on
less than a car load.
Senator Gideon : On principle, do you believe that a railroad
should be allowed to charge any more for a ton than for several tons ?
A. That would depend on the article entirely. Say on a car load
of coal, where it is necessary to ship m bulk, why I would allow them.
191
to charge more for less than a car load per ton, than per ton for a car
load.
Senator Gideon : Then wouldn't that be discriminating against
the retail man who was not able to purchase a car load ?
A. No, sir ; not at all. I would not permit a greater or lesser
charge per car where there was 20 or 1,000 cars shipped than I would
for one. On certain freight it should be the car load unit, on other
freight it should be the hundred pound unit. Now, to illustrate, take
the question of grain ; I think there should be the same rate on grain
in sacks, less than car loads, that is on bulk grain in car loads.
Senator Gideon : Take sugar by the barrel ?
A. You don't want to tax the consumer and producers in this
country with the middle men's profits. You should make the 100'
pounds a unit there. You establish a difference between car loads and
less than car loads, say of 25 per cent., and what does it do ? Say the
rate is 40 cents, and on car loads it is 30, 25 per cent, off, we will take
the case of St. Louis to Springfield, Mo., and say there are competing
jobbers there. The St. Louis man places himself on a parity with the
Springfield jobber in competing, and the retail trade of Springfield has
got to take ten cents a hundred pounds out of his profit. That he can
not afford to do on close margins ; consequently, he surrenders that
trade and the instant he withdraws from competition with the Spring¬
field jobber, the Springfield jobber fixes it like this: have driven
St. Louis out of Springfield, they are not in sight. Sugar is worth so-
much a pound," say 6^ cents; "in St. Louis that St. Louis man will
have to pay 40 cents a hundred on less than car load lots ; that wilf
make him pay, say $6.90 a hundred ; I can still sell St. Louis sugar for
less than $6.90 as I only pay 30 cents freight, and this makes it cost
$6.80; consequently, instead of him coming to the Springfield retailer
and giving him the benefit of the 30 cent rate, and charging him ac¬
cordingly, he will simply add the less than car load rate and charge the
consumer the ten cents freight of which he has advantage, and put.it
into his pocket, and he will have that in addition to a legitimate job¬
bing profit at Springfield." And that works the same all over the
country.
Now, to give you a little better idea of this, and this is not a theory
or vagary, it is simply a conclusion reached by the best railroad minds
in this country. Mr. Fink is a gentleman who is very strong in his ad¬
vocacy of abolishing any difference between car loads and less than
car loads. Mr. Ripley, who was before you the other day, is an advo%
cate of there being practically no difference; I don't think he would
put himself on record as wiping out absolutely all differences, but he
would confine it simply to the cost of handling. The general freight
192
agent of the Chicago, Milwauke and St. Paul has had a great deal of
experience, and he wrote to certain parties on this question, and said,
"it makes the rich man richer and the p^or man poorer," and 1 think
ke hit it just about right,
Mr. Brown : You are speaking now of particular kinds of articles,
but you don't mean to apply that to all kinds of articles ?
A, Oh, no; I say there should be a great deal of judgment exer-
eised.
Mr. Brown : In relation, say, to live stock and grain.
A. With live stock the car load should be the unit, because if you
put cattle in a car you have got to give one animal a half a car, or you
can put ten in half a car. There are peculiarities of traffic where the
Cir load must be the unit, and in other respects the 100 pounds unit
should apply.
Mr. Brown : What would you think of this kind of an iron-clad
provision in a law, requiring that the persons who took advantage of
dhis through train service should not have any less rate per car for a
full train load than an individual or fifty individuals at fifty separate
stations, each shipping a single car load. Would it be just to incorpo¬
rate in a law such a provision ?
A. Well, I don't quite catch your meaning. But I will try and
answer you as I think you mean. I think you believe there should be
a difference between the rate per car in train loads and the rate per
single car ?
Mr. Brown : Yes?
A. No ; unquestionably. The shipper of a train load is fully
entitled to any economy the railroad company may save between re¬
ceiving a train load from twenty-five shippers and receiving it from
from one, but that does not amount to more than 10 cents a car. It
might possibly amount to 10 cents a car, supposing there was a switch¬
ing rate of twenty five cars where they were loaded, and the engine
could go in there and take it out from the siding, whereas in the other
instance they would have to go possibly to twenty-five different sidings
for it, but that would be a very rare case. Unquestionably, the ship¬
per of a train load is entitled to any saving that the company may
make. Now, as a matter of fact, the only difl'erence is what ma}; be
saved in terminal expenses. The cost of pulling and all the clerical
work incident to the shipping of a train load of cattle or corn, the
clerical work itself wouldn't amount to more than 50 cents a car, and
the cost of pulling would be the same.
Mr. Brown : Did I understand you a mbment ago to say the dif¬
ference between through train service and local service would some¬
times amount to 200 per cent.?
193
A. Now you are speakiog about the haul. I was speaking about
the terminal expenses just now. Do you mean to ask whether a party
shipping from Kansas City twenty-iive cars through to St. Louis should
have any better rate than twenty-five persons distributed at interme¬
diate points shipping one car each ?
Q. Yes, sir?
A. I think that question is answered in my remarks regarding
the long and short haul question, don't • That is' purely a ques¬
tion of a haul. The unit don't apply except where there are two com¬
peting jobbers side by side.
Mr. Brown: Then I understand you to say it would not be just
to put an iron-clad provision in a law of the kind I spoke of a while
ago ?
A. Yes; I think you can in the interest of society. When you
give any one the right to make a rate, a lesser rate on account of twen¬
ty-five car loads, you are building up a monoply. Now it is a generally
admitted fact that you can magnify these terminal expenses and create
differences that do not exist; that is, you can justify the giving of a
lesser rate on train loads than on single car load shipments in that
way, and if you do, it simply builds up a monopoly, and that is
against the interest of the railroad, as well as the shipper. That can
throw the business of any city into the hands of one man, and he will
dictate his own rates to the railroad thereafter.
Mr. Brown : It don't hurt any one if he gives every one the same
privilege, if he does not make any discrimination between individuals
at the same point ?
A. Well, you know that the majority of the competitors are un¬
equal in capital. The majority of commercial competitors are not
equal in capital; it is very rarely yoii find two men that are financially
able to handle large quantities of goods that are competing; and if
you step in and give the large capitalists the advantage, you will do
the public at large an injury.
Mr. Brown : JSuppose you do not assist him any more than you have
just stated; you give him the natural difference of cost in the service
which you have just stated would be in some instances 25 per cent.?
A. No ; I have not said it would be 25 per cent. We are talking
about two different things. I am talking about shipping twenty-five
cars in straight train loads from one point and the consequent differ¬
ences in terminal expenses, and you are talking about the difference
of twenty-five cars from twenty-five different points?
Mr. Brown : Yes, sir? .
A. Now, we want to separate those two questions before we go
any further.
R M—13
194
Mr. Brown : Now, in consideration of that question among the
members, those two things have been mixed, and 1 would like to have
you explain them ?
A. It is simply the difference between the question of the haul
and the question of terminal expenses. Say that through freight train
service on the Missouri Pacific—I don't know what it is, but I will
guess it at 60 cents a mile, although I don't want that understood as in
any way approximating the cost of train service—say it is 60 cents a
mile for twenty-five cars from Kansas City through, sa}^ the distance is
300 miles, and that makes $180 for the train service. Now they start
an engine and crew from Kansas City, and it runs out twenty-five
miles on time-card time, regular wages, etc., the same as they are for a
full train. It picks up a car there, and spends fifteen or twenty min¬
utes doing it, and starts on to the next station, and so on, and finally
reaches St. Louis with a car load. Now the chances are it would take
fully double the time to make that trip, gathering the freight from one
station to another; there would be the increase in the cost of wages,
about the same wear and tear, if not more, on the machinery, possibly
a little more on the track; all those things must be taken into con¬
sideration in reaching any conclusion about these two questions. As I
said, one is simply a question of terminal, and the other is that of run¬
ning expenses, which includes the maintenance of way, terminal
expense, labor, coal, and everything else.
Senator Castleman : Mr. Kelly, how long have you been connected
with railroads ?
A. Some 18 years.
Sènator Castleman : Where?
A. I have railroaded in St. Louis, Chicago, Indianapolis, St. Paul,
Richmond and New York.
Senator Castleman : And connected with the freight departments—
A. All the while.
Senator Castleman : Do you think that there ought or ought not
to be a difference between the car load and the less than car load rate?
A. I formerly, that is, up to the time that I came to the Exchange,
I had never given the question any careful or technical thought. I had
followed the general conclusion of people that there should be a differ¬
ence in favor of car loads; in other words, I'agreed with the majority.
But when the matter was called to my attention, and I went into a
very thorough examination of it, with a view of trying to have the
dijfferences abolished, it was a new proposition for me, and I went in
with this intention. When I went with the Exchange I said that I am
not going to putf myself in a position to advocate any policy or imprac¬
ticable measures or take up any question that will involve me in any
195
fight with the railroad companies» That is, put me in an unfavorable
position. I did that for self interest. So when I took up this car-load
rate question, I looked at it thoroughly, and became convinced within
a short time, possibly a week or two, that there should be practically
no difference between the car load rates and the less than car load
rates, and I have given the matter a great deal of very careful thought
and study, and I assure you, gentlemen, that I do not believe that you
should permit any difference, and if there is to be a difference at all,
say on articles that are handled by the jobbers and manufacturers, if
there should be any difference, it should be less on less than car loads
than on car loads, for this reason: You take the business as it moves
under the dual system of classification, and here is a wholesale liquor
house, shipping a car load of whisky. And there is another house
shipping a car load of coffee, and a third house shipping nails, and
these various heavy freights. Those cars go forward with straight car
loads and from three fourths to four-fifths of the space in that car is
unoccupied. Now if you go to work and put the shipper of less than
car loads on a parity with car load shippers, and encourage these mixed
car loads, the railroads will receive, say ten sacks of coffee, a few kegs
of nails, here and there a lot of horse collars and some sieves, brooms
and one thing and another, and the result is that that car will actually
go loaded to the roof. Well, you can see what an economy that is. It
is fully an economy of car service of from 25 to per cent. Some
men estimate it at more. Mr. Hayward this morning stated that Ool.
Rogers had said that there was a saving of two cars in ten. Ool. Rogers
himself told me he could save, he believed, one car in four, that was
his statement to me. You can see yourself that it is a saving in equip¬
ment, it is a saving in train service and in switching and in labor. Now
there is a great bugaboo made about this idea of terminal expense, and
I have some figures here that are quite authentic of a private nature.
The Pennsylvania road, the assistant general freight agent of the
Pennsylvania road under date of July 15, 1885, after I had had some
conversation and correspondence with him on this same question, gave
me this information. Cost per ton for way-billing, collecting, etc., can
not be arrived at. He afterwards told me it was so small it was hardly
worth considering. Nor even fairly approximated, as no figures on this
point from which an estimáte could be made were kept on file. The
cost per ton of handling freight at the platform is about teh cents per
ton.
Senator Castleman : Now that is in handling car loads and less
than car loads, is it?
A. That is in handling merchandise over the platform. These
statements are based upon the figures of this road at Chicago, Oolum-
196
bus, Cincinnati, Indianapolis and Louisville. Those conclusions are
reached from statistics kept at its various stations, and it costs to handle
this miscellaneous merchandise through the house ten cents per ton,
half a cent a hundred, and came from Mr. Chanute as I have stated.
Senator Castleraan: Do you mean now where lots of jobbers
freights come in, and goods of that character onto the platform of the
depot, it would cost ten cents a ton, the average cost to load them.
A. Yes, you take Mr. Peck and Mr. Furth and Mr. Simmons, and
the various wholesale merchants, boots and shoes, hats and caps, dry
goods, coffee, canned goods, fruits and all this miscellaneous jobbers
freight and it costs ten cents per ton to handle at the platform. Now
the cost of billing he says is so small that they had never kept any
figures on it. Now the figures at the station covers the following items :
Cost of switching, labor of switching and motive power, enters into the
switching charge; the average cost per car of gas, water .etc.; they
even get down to figure out the cost of water around the station. Then
the cost per car of agents, clerks, etc., and it includes handling and
billing, and then it brings it down to fourteen cents per ton at Chicago,
12.6 per ton at Columbus, and bear in mind that this fourteen cents
per ton covers the switching and all the expenses incident at this
station.
Senator Castleman : Covers the switching, handling, lighting,
water, and every expense ?
A. Covers everything, yes. Now, you see, if you take and carry
out the idea that a railroad company is entitled to so much revenue on
the business of a section, if it charges less, if the business goes forward
in carloads, and say the revenue on that business in a certain territory
is hundreds of thousands oí dollars, the net revenue, and that the rail¬
road company could by some means have that same business delivered
to them in less than car load lots, and mixed so as to save 25 per cent,
of their box car equipment and train service, there would be a material
saving in the cost of transportation, and consequently the rate on less
than car load lots should be less than the rate on car loads by the
amount of this saving.
Senator Castleman: Now, in arriving at this conclusion, what did
you find it costs to handle car load lots ?
A. Well, that represents it ; it don't costas much to handle car
load lots possibly as it would to handle these micellaneous lots.
Senator Castleman : These figures that you are using here, do
they represent the handling of all goods, car load lots and less than car
load lots, or only broken lots ?
Senator McGinnis : Are they lots based upon a hundred pounds ^
Senator Castleman : I would like my question answered first ?
197
A. These figures that I have just read from include the handling
of all freight at the stations.
Senator Oastleraan : They mean car loads and less than car loads ?
A. I want to just explain to you this: that the car load—it is
claimed the straight car load is not handled at the station, but is
handled by the shipper, and that the cost is saved to the company.
Now it iollows—
Senator Castleman : I am not talking about what is claimed, but
I am talking about the facts. They may claim what is utterly untrue?
A. They do.
Senator Castleman : Now what is the fact, if you know?
A. Certainly it don't cost any more; it won't cost any more to
handle the car load from through the house than it would if it was
delivered in less than car loads. You can safely estimate it to be the
same. Now, there is a point, I think, that you are after right here. I
now understand your question ; you mean what does the railroad com¬
pany save by having the cars loaded by the shipper on the tracks ; isn't
that it ?
Senator Castleman : I am trying to get you to answer my ques¬
tion, and then we will arrive at our own conclusion about it ?
A. Well, I will answer your question to the best of my ability•
Now, here is another thing: when cars are loaded by shippers on the
yard tracks proper, the cost of switching is less when loaded through
the house, and when loaded on the individual tracks the cost of switch¬
ing is greater than when loaded through the house.
Senator Castleman : From that do you conclude it costs more to the
road to handle the car loads which are loaded for the shipper, or less ?
A. Now we are mixing up the question of haul and terminal
expense.
Senator Castleman : No ; we are not mixing up the question oí
haul and terminal expense. I say when loaded at the station.
A. I would say there would be practically no difference, and I
will explain why : If the shippers all loaded their own cars on sidings
there would be a certain amount saved to the railroad company by
reason of the fact that they did not employ the labor to handle the
freight m and out of the car. But as a matter of fact, the shipper of a
straight car load gets the shipment ready and sends it to the railroad
company and says : Put the car on a team track to load with coffee
for a certain place;" and he sends his teams to the depot, and the
result is when he gets there he says, " Where is our car," and they say,
We have not had time to put that car on the siding yet ; just put your
freight in the house and we will load it up," so that possibly one-half
198
of the car load business that should be loaded by the shipper himself
is put in the freight house and loaded by the railroad after all.
Senator Oastleman : Then you mean to say this : that the railroads
really do not economize in the general plan of having the shipper load
his own freight ?
A. If you will take into consideration the question of terminal
expense and haulage, and all the elements that enter into the problem
of transportation, it is an extravagance.
Senator Oastleman : I am not asking your opinion whether it is
more or less?
A. Well, if you will put that question in another way, I could
answer it better.
Senator Oastleman : Do I understand you that it is not a source
of economy to the railroad to have the shipper load his freight instead
of handling it by the railroad across the platform ?
A. I would like to have you amend that question.
Senator Oastleman : No, I beg your pardon, I should rather not.
If you cannot answer it, just say so?
A. I can answer it, but I am afraid it will be misconstrued, and I
do not want to put myself on record as being inconsistent.
Senator Oastleman : How would you like for me to put it?
A. I would like for you to ask me whether this system of differ¬
ence between car loads and less than car loads is for the interest of
the railroads ?J
Senator Oastleman : That is exactly what I have asked you, if it
was a source of economy to the railroad company to have the shipper
load his own freight in the car instead of the railroad handling it across
its platform and putting it into the car itself?
A. If all jobbers were shipping straight car loads it would be
economy to have the shipper load it, but if it was a question between
straight car loads and mixed car loads and a question of transportation,
equipment, haul, and everything considered, it would be a great disad¬
vantage to the company to receive its freight in straight car loads, even
if loaded by the shipper.
Senator Oastleman : Will you be kind enough to explain that
answer ?
A. I wanted to mix you up a little, because
Senator Oastleman : W^ll, you have done it.
Mr. Kelley : I will say this much : The railroads can save a large
amount of money if they receive the business of any large center in
mixed carloads, and do not favor the shipper of car load lots of jobbers'
merchandise.
199
Senator Castleman : Well, now I will put the question again. 1
want you to answer it directly if you can, and if you cannot, we will
drop it. You are familiar generally with the operation of railroad ship¬
ments, loading and unloading. Talking now of what are understood
as terminal charges, is it a source of income as a general proposition
to the railroads to have the shipper load his stuff into the cars, rather
than have the railroad handle it across its platform and load it him-
8 elf ?
A. Is it a matter of economy in the way of terminal expense?
Senator Oastleman : Well, economy is a very broad term ; it means
the saving of money as we ordinarily understand it ?
A. Do you mean in the matter of terminal expenses or taking it
as a whole ?
Senator Castleman : Taking terminal expenses as a whole?
A. As a matter of fact, the company saves possibly some terminal
charges if the shipper loads the freight.
Senator Castleman : Now, is that saving large or small ?
A. That saving is immaterial.
Senator Castleman: Then it is your conclusion that there should
be no difíerence between the freight on less than a car load, and on a
car load. I mean in the rate of freight on the same class of freight ?
A. Well, I will qualify that by saying there should be no differ¬
ence between car loads and less than car loads on what we will term
jobbers' merchandise.
Senator Castleman : Jobbers' merchandise?
A. Yes ; I want to exclude bulk freight.
Senator Castleman : Senator Gideon asks me to ask you the ques¬
tion, what do you mean by "jobbers' merchandise? "
A. Well, you know what a jobber is ?
Senator Castleman : I am asking you, sir ?
A. Well, we take groceries, hardware, drugs, whisky, boots and
shoes, dry goods—that class of trade; wooden ware, willow ware, that
is, as I understand, the broad term jobbers.
Senator Castleman : People who deal in all sorts of things ?
A. Yes, sir; now, gentlemen, let me call your attention to some¬
thing that just occurs to me. The Southern Railway and Steamship
Association prior to last September, maintained a difference between
car loads and less than car loads to the extent of some five or six cents
a hundred pounds—a very large and excessive figure. They then went
to work, and at one fell swoop wiped out that difference, and made no
difference between car load and less than car load loads. There was a
little stirring up at first, but everything cooled down, and to-day the
southern roads are better pleased with the change than they were under
200
the old arrangement. Why ? Because they take this wooden ware,
and they ship it in cars on top of heavy goods, a space which would
otherwise go empty, you might say ; and every day they get freight,
the transportation of which you might say, is so much clear gain. It
absolutely costs them next to nothing to haul. I will tell you another
effect of the car load rate.
You take a man who is traveling agent, and he stops down here at
some station and he says to a retail dealer, here, now, if you can man¬
age to take a car load of this stuff I can save you $30 on the freight.
Now that S30 looks bigger to that retail dealer than it really is, and he
just moves heaven and earth to take it, and finally he says, ship me a
car load of that stuff ; and he gets it and pays his freight and says
what am I going to do with all this? I have no room for it. And he
goes to work and spends four or five days moving his goods around in
his store to make room. He gets it in, and it don't work oflT very fast,
and in 30 or 60 days along comes a draft. He writes his house and says,
I have not sold any of that stuff, can't you extend the time ? And they
say, yes, if you can't make it we will give you a little more time. And
he has got finally to take business out of its legitimate channels to pay
for this unsaleable stuff, and the result is, that at the end of the year
he has got a third or a half of the car load of stuff on his shelves yet
and it has depreciated in value, and, on the whole, to save that $30, he
has cramped himself fînancially. In other words, the result is, that to
save it he has lost money in the transaction.
Senator Oastleman : As properly understood, a jobber is one who
fills any order; is that it ?
A. I will say that it is the wholesale merchandise merchant.
Senator Cattleman : By a jobber do you mean a man that simply
fills an order of any size that is sent to him ?
A. No, sir ; a jobber is a wholesale merchant.
Senator Oastleman : Whether he ships it by the car load or less
than car load ?
A. Whether he ships it in any quantity. If he gets the order he
will ship it if the parties are good.
Senator Oastleman : Your conclusions about this matter are these,
as I understand you, that it is not worth more to ship by less than car
load than it is to ship by the car load,T)ecause it does not cost a rail¬
road appreciably more to handle a smaller quantity than the larger;
and secondly, because it enables the railroad to economize in the num¬
ber of cars which are necessary to transport its freight ?
A. I can say yes, to that.
Mr. Furth : Mr. Kelly, I would like to have you state for the ben¬
efit of this committee whether the fact that a jobber or merchant when
201
he ships a car load of goods can send his team to that car which is side¬
tracked and have his own men to load that car, does not open the door
for a great many false classifications that are daily and constantly
made to the detriment of the railroad company ?
A. Yes, sir; that was one of the causes.
Senator Oastleman : Please answer my question first.
A. Yes, sir ; the railroad companies certainly lose money by rea¬
son of this undervaluation of goods. They have lost,control of them
when the merchants load the cars, that is to say, when they have their
own men load the car.
Senator Oastleman : Now the amount of money which they save
in the actual loading of these cars, is not that more than counterbal¬
anced by the money that they will lose when they have thus lost con¬
trol over their classification ?
A. A great deal. I have known of cases, not in St. Louis, though,
but in other places, where the injury by reason of underbilling and eva¬
sion of classification amounted to as high as $70 on a car load of freight.
I have known pianos to be shipped as wooden ware. The car load
rate not only entails'a very material expense in transportation, but is
detrimental to public morals, and I think on that grotind alone, if on
no other, that it should be wiped out.
Col. Hay ward : In regard to this car load rate, T would like to
make a statement ?
The Chairman : Certainly.
Col. Hay ward : This idea of charging more for small quantities of
merchandise than for the car load is because it goes to smaller dealers
that are more likely to pay without making a fuss about it. The car
load business is done by men who look sharply after their own inter¬
ests and are able to lake care of them. They get low rates ; and it is
really taking it out of the pockets of the very men who are here in this
house and of those who are least likely to make complaint about it be¬
cause they are small dealers. That is the real fact about it. It is be¬
cause they think they can do it with impunity.
Senator Castleman : Mr. Chairman, Mr. Shelton is here and has
some resolutions which he desires to present to you officially. He is
the Secretary of the Merchants and Manufacturers Association of St.
Louis.
Mr. Shelton then spoke as follows :
Mr. Chairman and Gentlemen : At a meeting of the Merchants
and Manufacturers, Association, held the latter part of last month,
there was a committee appointed to draft resolutions with regard to
railroad legislation. They did so, and presented them at the subse¬
quent meeting and they were unanimously adopted. Now, all of you
202
have copies of those resolutions and I suppose you gentlemen do not
want me to take up your time in reading them, and as you have been
very patient this afternoon I will simply present them to go on record.
I suppose copies have been sent by mail to all of you, and so it will
save time.
Senator Castleman: I would like to ask whether or not these
resolutions will go into the proceedings of this committee ?
The Chairman : Yes, they will go in the record. I understand Mr.
Shelton submits them as what he wishes to say on the subject?
Mr. Shelton: Yes. The committee were unavoidably detained,
and so directed me to come up here and present them as the secretary.
The resolutions embody all that they desire to have stated, I suppose.
St. Louis, April 23,1887.
Whereas, Railroads are public corporations, created by the State
for the purpose of acting as common carriers over her public high-
ways ; and,
, Whereas, Chief Justice Waite, in an opinion delivered from the
United States Supreme Court bench, has defined the public right in
property devoted to public use, as follows : "Property does become
clothed with a public interest when used in a manner to make it of
public consequence and affect the community at large, when therefore
one devotes his property to a use in which the public has an interest,
he in effect grants to the public an interest in that use and must sub¬
mit to be controlled by the public for the common good to the extent
of the interest he has thus created. He may withdraw his grant by
discontinuing the use, but so long as he maintains the use he must
submit to the control and,
Whereas, A special session of the legislature of Missouri has been
called to convene on the 11th day of May next, for the purpose of en¬
acting laws for the enforcement of such provisions of the Constitution
as relates to railroads and railroad trafile; and.
Whereas, Such laws when enacted, affect materially the greatest
commercial interests of our city and State ; be it
Resolved^ By the Merchants and Manufacturers Association that
it is the policy of wisdom for all commercial bodies to give this great
question their serious consideration and close attention, to afford our
law-makers all possible assistance by way of information and suggestion,
to discourage and discountenance all methods of obstruction, and to
seek rather to direct than to prevent legislation.
Resolved^ That while mischievous legislation is to be avoided, the
interests of our commerce can be better served by a good law than by
no law.
203
Resolved^ That there is nothing in the conditions affecting the
actual cost of transportation iu Missouri, which either justifies or ex¬
plains the fact, that freight rates in this State are much higher here
than in the State of Illinois at the east, or the comparatively new State
of Kansas at the west, in both of which commonwealths regulative
laws have been in force for years, with results most satisfactory to the
people.
Resolved^, That when the owners of any railroad, éither established
or projected, represent that their enterprise would be "ruined" by a
law which would prevent them from charging unreasonable rates, or
from charging one shipper higher rates than his neighbor, they by in¬
ference acknowledge that their purpose is to practice both extortion
and discrimination, in which events their protests are unworthy of
consideration.
Resolved^ That the history of every State wherein railroad laws
have been in force for any considerable number of years shows con¬
clusively that such laws have not interfered with the building of new
roads, and shows, too, that although the prosperity of the people can
0
never be founded upon the wreck of the carriers of commerce, no State
has found it advisable to abandon such control when once established.
Resolved^ That we regard as fallacious the proposition that the in¬
terests of St. Louis, or any other metropolis, are dependent on advan¬
tages in tariff, over interior points of shipment, we believe, on the con¬
trary, that any shipping center can only thrive through the prosperity
of the country which it feeds, and which is tributary to it; and that
anything which tends to foster the business and improve the general
condition of such tributary country, is of far greater advantage to thè
great central market than any special discrimination could be.
Resolved^ That railroad pooling, although an evil in itself, has not
been without great benefit to commerce, in that it has served to estab¬
lish, in a measure, that stability of rates which is essential to sound
business condition. But, we also believe, that if a law should be
passed which would hold railroads to a strict adherence to reasonable
advertised schedules, the last necessity or justification for pooling
would be removed.
Re^olved^ That we deem it impracticable for the legislature to fix
maximum rates for freight traffic which would serve their purpose, dur¬
ing all changing conditions of the two years that elapse between ses¬
sions of that body, such rates must be so high that they would not be
ruinous to the railroads at a time when trade was depressed or when
other conditions warranting increased charges existed, and if made
thus high, they would be out of all reason at times when trade was such
%
as to vastly reduce the proportionate cost of transportation ; while not
204
objecting, therefore, to the establishment of maximum rates, we believe
that some provision should be made for a different standard of what is
reasonable, which standard can be changed with the variation in trade
conditions ; we believe that such standard should not be absolute, but
should allow the right of appeal and should be subject to correction,,
on proof of error.
Resolved^ That while we do not presume to outline a complete
measure, we believe that such law as may be passed, should possess the
features herein suggested ; we recognize that the railroads of Missouri
are her great arteries in fact, and that any undue pressure upon them,
or mischief to them, would immediately react and disease the great
body of the commonwealth ; we believe on the other hand, that to
place them in proper control or restriction, and to prevent any distor¬
tion or abnormality in their growth, is to increase their power for good
and serve a patriotic end.
0. C. KAINWATER,
V. O. SAUNDERS,
Committee.
Mr. Hay ward: If there are any of the Senators of the committee
who do not feel entirely enlightened on the subject oí the car load
question, I would be very much obliged indeed, if they would ask my¬
self or any other member of the Grocers Association any question that
they may need to enlighten them. We do not claim to ba thoroughly
expert with regard to all questions, but that question we have studied
so thoroughly that we think we are not at any rate afraid to express
our opinion, and if it could be shown that we are inconsistent we
would be very glad to know it ourselves in order that we may correct
any impression that we have given in that direction. I would call at¬
tention simply to one thing which I alluded to this morning. That
in relation to this difference existing between the cost of loading and
transporting car loads and less than car loads that the railroads make
in their rates, it seems to me it is impossible that it should not show
on every car load, no matter to what station it goes. It is simply a
difference in the cost of terminal expenses. What would be the differ¬
ence in hauling after they once get it on the track and in the train, can
not be much. It certainly can not cost more to haul a car load made
up of less than car load lots than the straight car loads. Therefore, it
must be in expenses at the point of receiving and at the point of de¬
livery of the car that the difference exists. Now I will show you, if
anybody doubts my statement in regard to it, that that difference is as
small on their tariff to a single point as one half a cent a hundred. It
seems to me if it costs the railroad 10 cents a hundred difference it is
205
bound to cost them that diflerence just the same whether they haul it
10 miles or a hundred miles, the difference being in the terminal ex¬
penses, and as they make that difference which I have just mentioned
of one-half a cent a hundred themselves it is fair to assume that if
there is any difference in the cost that is all the difference there is.
Senator Hunter : I would like to ask you if in the majority of
instances the railroads wouldn't have to carry these cars loaded in less
than car load lots from St. Louis to points in the interior half loaded?
A. Not necessarily, no.
Senator Hunter: I don't see why, if there is only so much going
to the various points.
A. ' The railroad companies may say that from St. Louis to some of
the very small stations down below here that the car load rate should
be so and so, and the less than car load rate should be so and so for
sugar, but when they say that that means that they will get the highest
rates for every pound oí sugar so shipped, because there never will be
at a town of that size a car load of suggar shipped at one time to one
merchant. I will show you where it discriminates against these small
towns. You take a town of the size of Jefferson City, if a dozen or
more of the merchants club together and buy a carload of sugar, hav¬
ing it all shipped to one party in order to get the car load rate—now a
man who is doing business a few miles below here can't do that—the
consequence is, that the merchant here is able to successfully compete
with the merchant a few miles below here and draw trade from that
man's very door by reason of an unjust discrimination that is given in
favor of the men there and against the man down below. The only
reason the railroad companies give is that it costs them less. When
we come to scrutinize the matter we find it does not, but if it does, the
utmost difference is a half a cent a hundred, and they will make a dif¬
ference of from eight to twelve cents a hundred, enough to control the
trade. Suppose there is a station where the wants of the trade make
it impossible for any man to buy a car load of salt, but there are mer¬
chants enough down below that station to buy a car load and save 25
cents a barrel difference, and they will draw trade unjustly from that
man's door, because they are enabled to comply with the railroad's re¬
quirements of a car load ; and this works against the jobber at the
border lines, and at all jobbing points, for the reason that it enables
other jobbers to lay down their goods in car load lots at a less price
than he can do in lesser lots, and we claim that everybody should be
put on a parity and the railroads not discriminate.
Senator Hunter : You have not succeeded in showing me yet that
the railroads can carry to a town in the interior a car half loaded as
cheap as it can carry a full loaded car?
206
A. Because I shipped a few hundred pounds to him, and my neigh¬
bor ships a few hundred pounds, and we all ship enough to aggregate
a car, that is not saying that the car goes half loaded, but the railroad
company does not give us the benefit of that car load, but if it is
loaded by a half a doèen different shippers.
Mr. Furth: They do not need to let the car go half loaded ?
A. There is enough merchandise going from all the different ship¬
pers to fill that car.
The Chairman I don't think you understand Mr. Hunter's ques¬
tion. Suppose a man at Springfield should have one-fourth of a car
load, would the railroad company ship that alone in one car?
A. No, sir ; they would fill that car from other shippers with goods
for other people.
The Chairman : Suppose nobody else should buy ?
A. But somebody else does buy.
The Chairman : Don't you sometimes fill a car with goods that go
to some station when there is no other freight going there ?
A. Yes, but that is not our business.
Senator Hunter: As a matter of fact, I know that they do go par-
tiallv loaded, often.
A. If that is true it is true for the reason that it is for the con¬
venience of the railroad company that they should do so.
Senator Hazell : Suppose that the car is only half loaded, what
loss is it to the company ?
A. I think you may take railroad business as it runs and the an¬
swer to that question would depend on this : which way is the prepon¬
derance of business? If they have got grain out there to ship in they
have got to get the cars back there any way, so that it would depend
upon circumstances on each road and the direction of the preponder¬
ance of the business.
Mr. Furth : I beg to draw the attention of the committee to one
question, one phrase which is very frequently used by the railroad peo¬
ple. I have no doubt that very railroad man that will come before you
will testify the charging more for less than car loads than car loads on
what they call the wholesale and retail principle, I think when you
have railroad people come before you you will have that phrase used
very commonly. J think it is proper that we should refer to it right
here and see what it amounts to. Take a grocer, dry goods merchant
or any other merchant, and what is the principle of wholesale as against
retail ? Take a man that handles sugar at wholesale, and take him who
handles the sugar at retail, and how much is the difference in the price.
You can go through the length and breadth of the United States and
you will not find a wholesale grocer who, on an average during the
207
year, selling everything there is in that line, will make seven per cent»
profit on all the goods he handles—I state that positively—except when
certain conditions arise where if a material advance, occurs and he
happens to be fortunate and that is not counter-balanced by a subse¬
quent decline, seven per cent, is to be considered a very good profit
for a grocer. Now apply that same thing to the railroad business
and what do you find ? You find the difference between car load
rates and less than car load rates never as low as five, six or seven
per cent., but there is a difference of from twenty to twenty-
five per cent, on sugar, and up to fifty per cent, on other
things, or rather if you figure it in that manner 100 per cent, added.
Now the question of wholesale and retail does not apply there, if you
iollow it to its legitimate conclusion. We are satisfied to make a profit
of 6 to 7 per cent, on sugar, why should they make 25 per cent, more
profit? If the wholesale grocer would make such profits he would not
want to stay in the grocery business very long. So that this principle
of wholesale and retail does not apply with the railroad people. You
can take a rate of 25 cents and on that principle the smallest pos¬
sible difference between car loads and less than car loads would be to
make it 30 cents.
You take green fruit, as I have stated to you this morning, the
classification is first class on less than car loads and 15 per cent, less
than third class on a car load. Why should it be so ? It is ^ rank case
of discrimination. To start in on, it is simply to build up a trade,
simply to make it possible for some locality or some man to handle the
«
goods to the detriment of the others. If the principle of the whole¬
sale and retail is carried to its legitimate conclusion we would be will¬
ing to have him adopt it and to pay him the difference.
Senator Gideon : I understand, then, that you think the retail and
wholesale theory should not obtain on the railroads ?
Mr. Kelly: We are satisfied to have it so, if on the same principle
which obtains everywhere else. The margin between the wholesale
and the retail would be certainly no larger than the margin which we
have for the wholesale as against the retail.
Senator Gideon: I thought I understood you to say that the
wholesale grocers ought to sell a barrel of sugar as cheap as a hundred
barrels ?
A. Very often he does.
Senator Gideon : Then quantity cuts no figure in his sales ; that is,
it doesn't enter into the cost ?
A. I didn't state that. I stated that the average of all the whole¬
sale grocers did not exceed 7 per cent, on the kind of goods they handle
that that about represents therr profit. Now if it ds a wholesale busi-
208
ness that the railroad people are doing, this 7 per cent, is what the
wholesale grocer adds and produces the cost for the retail grocer,
and they should apply the same principle to their business, and if
they have a rate of 20 cents, they should make it 25, and they should
make a 25 cent rate 30, etc. It is an arbitrary matter all the way
through as they do it, because they go from 25 to 30 and from 40 to 50,
and then from 35 to 70, and is not based on wholesale or retail prin¬
ciples except by word of mouth.
Mr. Alexander : When you sell one barrel of sugar you only
handle one barrel of sugar, but when the railroad carries the barrel of
freight she has to carry the other half of the car empty ?
A. You take it for granted, I assume, by the manner in which you
put your question, that where twenty men came to the city of St. Louis
from twenty different points and each with a quarter of a car load that
there would be twenty cars and that each one of those cars would be
three fourths empty, but that is not so. There is no such thing as a
half car load going out. If they have not enough at one station they
make it up at the second station. But if they begin to empty that
car, virtually it has got to go half empty, because they have been taking
out at every station. But where the car leaves St. Louis, and it is all
through, it is different ; and then when it is unloaded from station to
station they use the same cars for traffic from station to station.
Senator Hazell : In the shipment of your freight from St. Louis do
you have trouble in getting these cars or getting goods shipped when
you do not ship a full car load?
A. No, sir ; we have no trouble at all. They havelarge platforms
at which they receive our freight. They are fixed for it.
Senator Hazell : Do they hold your freight until such time as they
can have a car ?
A. Not at all ; the platform is emptied every night. ^
Mr. Hinten: Oiirfriend, Mr. Bodine, over there, has asked more
than half a dozen men the question, what is the difference between a
wholesale and a retail dealer ? That may be simple, but he has a dif¬
ferent definition from them, and I would like to have that question
asked and answered. It is a question that Mr, Bodine propounds very
often?
«
A. I can answer you that question, I think, very easily. A whole¬
sale dealer is one who handles goods in their original packages, while
a retail dealer is one who opens that original package and retails it out
as merchandise. Another definition is, that a wholesale dealer is one.
who does not supply the consumer but who stands between the con¬
sumer and importer on one side, and the retail dealer on one side, who
209
caters to the trade of the retail dealer, and who does not enter into
competition between him and the consumer.
Mr. Bodine: Isn't the difference owing to the fact that the re¬
tail merchant sells to the consumer, and the wholesaler sells to the
middle man ?
A. Yes.
Mr. Hinton : Now is it not the custom between a wholesale mer¬
chant, say a man comes in and buys $5,000 worth of goods, and another
comes in and buys $1,000 worth, that it is the usual custom to make a
distinction between the one who buys $5,000 worth and the one who
buys $1,000 worth?
A. You must frame the question a little different. If you were
dealing in groceries where the margin of profits was so very small it
will make but very little difi'erence. If you were dealing in millinery
goods or jewelry and he had a margin of twenty-five to thirty per
cent., we would of course take of five to ten per cent.
Mr. Hinton : Would you let the $1,000 man know that, or would
you try to conceal it from him ?
A. According to modern ideas of business, it is pretty well es¬
tablished as a fact, and every one knows it, that quantity makes a dif¬
ference, that is on some things, there are a great many articles in our
, line of business, you take tobacco and you will find printed across it.
If you buy seventy two pounds you can get it at thirty-five cents and
if you buy less thaii that it costs you thirty seven." There you have
a difference, a free and open admission that the quantity makes a dif¬
ference.
Mr. Hinton : That was a rate adopted by the manufacturers ?
A. Oh, yes, but it simply shows the principle.
Mr. Hinton : Take the great mass of the wholesale business of the
country and do they draw any such distinction-between the large
huyer and the small buyer?
A. You see it very frequently in printed prices. I can show you
thousands of them where it says tomatoes are worth ninety five a
thousand, ten cases ninety four, and 100 ninety.
Mr. Hinton : But in the great majority of business in the country,
is that distinction made by the wholesale merchant ?
A. In former times, when there was a great deal of hocus pocus,
when a man got a customer, he simply whispered in his ear You are
one of the favored ; I wouldn't do this for anybody else, but for you I
will do thus and so." That time has passed, and now every man
stands—Every tub stands on its own bottom"—and we say to a man
^'That is the market price for these goods," because others would tell
R M—14
210
him of it, he would easily find it out. If you were to tell him that yon
are selling him cheaper, for a cent a pound less than to anybody else,,
it would be a falsehood on its face. There is that which did not exist
in former times, especially not between merchants and merchants.
It is true that on the great bulk of goods the margin of profit a»
handled by the grocers is so small, that there would be no practical
difference between the buyer of $500 worth of goods and the buyer of
a $1,000 worth. But taking the prices of goods as they run, some will
bear less and some a greater margin of profit, and I should say to the-
question as to the amount, it did not enter into consideration at all. A
man who is thoroughly well posted with regard to the value of everjr
item he intends to buy, can go into the market and buy $500 worth of
goods cheaper than the man who has the money but not the knowledge-
can buy $5,000 worth of goods. So it is not dependent upon the amount
of money that a man wants to spend for a bill of goods, but his abso¬
lute knowledge of the value of them. The wholesale merchant in¬
tends to get no more than six to seven per cent, in the aggregate. But
some men are sharp enough to buy a bill of goods in such a way as^
that they can get them for about five per cent., while some may pay
from seven to eight, and it may be possible that the man who buya
$500 ^orth will get his for five per cent., and some other may who buys
$5,000 worth will pay the seven or eight per cent. It is dependent
upon the character of the goods, and upon the man's knowledge of
value.
Mr. Bodine : I ask you if the difierence between the two is not
that the retail merchant sells to the consumer. Now by that test,,
would you call a railroad company a wholesale seller of transportation
or a retail seller of transportation ? doesn't the railroad company sell
to the consumer ?
A. The railroad company as a public carrier is bound to carry
goods for everybody who tenders them.
Mr. Bodine : The railroad company does not sell transportation
to the middle-man, but sells to what you would call the consumer
of the transportation, does he not?
A. No, they sell to everybody. They will transport for you a
package and they will transport for another a car-load.
Mr. Bodine: But they do not sell that transportation to any
middleman who distributes it to others ?
A. The freight lines do, the are middlemen.
Mr. Bodine : I will ask you what is the rule now in the retail
business. Do retail merchants make an open rule, a distinction be¬
tween the man that buys fifty dollars worth of goods and the man
that buys $100?
211
A. I can't speak about that, I don't know.
Senator Ha^ell : It is six o'clock and I move we adjourn until to¬
morrow morning at 9 o'clock, to meet immediately after adjournment
of the Senate.
The motion was put and carried, whereupon an adjournment was
taken until that time.
Tuesday, May 31,1887, 9 a. m.
The committee met pursuant to adjournment. Senator Johnson in
the chair.
After sending a message to Mr. Nev/man that the committee was
in session, the chairman announced that in reply to that message Mr.
Newman said he would be present at 10:30.
Senator Castleman : I move that we adjourn. I don't see any
reason why Mr. Newman should expect to keep this committee wait¬
ing here an hour and a half at his pleasure. I move that we adjourn
until 2 o'clock, at any rate. This body is waiting on him, and they owe
something of respect to this Senate, sir, and I have seen enough dis¬
courtesy extended to it. Mr. Clark may come here and make some
explanation, but it is a piece of supercilious treatment; that is the only
word that can characterize it, sir, and I am not going to be subject to
the whims of these gentlemen, and be kept here at their convenience.
Senator Hazell : While I think the Senator's position, generally
speaking, is right on this matter, still, as we have been directed to
and consented to hear from these people, it seems to me that an ad¬
journment until 2 o'clock is going to lose us an hour and a half, from
half past ten till twelve, and I thinjk it would be well and wise to ex¬
ercise a little conservatism in the matter and not get angry about it.
The Chairman: I will say that I was notified last night that Mr.
Newman would be here, and wished to be heard early this morning. I
have written him a note saying we were ready to hear him, and have
a return irom that message that he would be here at half past ten
o'clock.
Senator Castleman : Not only has the chairman sent a messenger
for him to come here, and that we are waiting, but he receives back here
by the mouth of the boy a message, simply, '''I will come at half past ten
212
o'clock." In other words, ''I will come at my convenience." Now,
sir, with all my deference to the Missouri Pacific road, I have some for
this Senate, and I have some for the committee of this Senate, and I
say that this treatment is supercilious and contemptuous. Now, this
committtee owes something to itself, and this question of an hour and
a half should not be considered. This action should not be tolerated
by this committee, and we ought to send a subpœna for him and bring
him by attachment. But we have no authority to do that from the Sen¬
ate, and the only thing that we can do now is to adjourn, and I think we
ought to make Mr. Clark and the representatives of these bodies know
that we are not sitting here to submit to their convenience. This is
the second time I have seen that. I have seen other distinguished
railroad magnates come here and turn its back on this committee, and
march out of that door, simply to suit their own convenience.
The vote was then taken on the motion, and it carried, whereupon
the committee adjourned until 2 o'clock p. m.
After Recess, 2 p. m.. May 31,1887.
The committee was called to order. Senator Johnson in the chair.
Senator Castleman : Before we proceed with Mr. Newman, there
is some misunderstanding on the part of gentlemen who are not mem¬
bers of this committee, but who are members of the legislature, as to
their right to propound interrogatories to gentlemen who make state¬
ments, and I hope the chairman will state, for the benefit of all con¬
cerned, the substance of the resolution which passed the other day.
The Chairman : I understand that the House committee was in¬
vited to sit with this committee, and that members of the House and
Senate and members of the committee were also invited, and are privi¬
leged to ask questions, and to take part in the discussion as if mem¬
bers of the committee.
Gentlemen, I will now introduce to you Mr. Newman, of the Mis¬
souri Pacific.
Mr. Newman : Mr. Chairman and Gentlemen : I regret exceedingly
that a misunder^anding on our part this morning discommoded any of
the members of the committee and has delayed your work. We did not
know what your rules were, or what time you desired us to appear be-
213
fore you when we reached here. We were under the impression that
the Senate would hold its regular meeting and get through with its
business, and we would then be called before the committee. As we
were going along the street a messenger from the committee handed
ns a note from the chairman. Mr. Carroll, who was with us, asked what
hour would be agreeable, and I replied to him that any that he might
select would be; that we were ready at any time, and he simply an¬
swered, WiU 10 : 30 suit you?" and I said ^'Certainly." He then sent
reply by the messenger that we would be glad to come before the com¬
mittee at half past ten. After leaving there, I thought that possibly
that hour would not suit the committee, and on reaching the hotel,
wrote a note asking if it would be agreeable. It seems that note did
not reach you—the note was addressed to the chairman, as I have
said—until the committee had adjourned. It was certainly no inten¬
tion on our part not to be prepared at any time you might desire to
hear us. I would ask, Mr. Chairman, for the indulgence of this commit¬
tee in being permitted to read what little I have to say.
Senator Castleman ; We will have to ask Mr. Newman to be a
little more distinct. We have not heard a word that was said thus far.
I discovered that Mr. Newman was talking, but some of us are a little
deaf back here.
Mr. Newman : Mr. Chairman, I will say in reply to the gentleman,
that I am so unaccustomed to speaking that I am afraid I can neither
speak nor read loud enough, but I will do the best that I can.
Mr. Chairman and Gentlemen: Your honorable body has been
convened to discuss and determine what additional railway legislation,
if any, is necessary to promote the public welfare, and to make such
laws as will prevent discrimination and right any wrongs which may
heretofore have been practiced by the carriers of this State.
To fairly and without prejudice frame such statutes for the future
control and guidance of railways within the boundaries of your State,
cannot, in our opinion, safely be done without a full exposition of the
subject, and obtaining the views of all interests affected. It will not,
in this connection, be improper to discuss the existing relations between
the carriers and the people of this State, and endeavor to obtain there¬
from a comprehensive view of the situation as it is, which will enable
you to more clearly determine what errors, if any, have been made in
the past, or what changes in the present laws may be necessary to
better subserve the interests of all in the future. It can, we think,
easily be determined whether exactions or discriminations are being
practiced by the railway companies in this State, of such a nature as to
require or create additional legislation; and we also think it can be
quite as clearly demonstrated whether protective, just and reasonable
21á
legislation will promote further railway construction and secure the
benefits to be derived therefrom.
To-day, the State of Missouri, with an estimated population of two
and a half millions, has within its limits some 5,000 miles of railroad ;
while Kansas, its neighbor and sister state, with a population of about
one and a half millions, has within its boundaries more than 6,000 miles
of railway tracks. In this connection we would like to submit to your
committee a map showing the two states and the railroads which are
constructed in each, which we will leave with the committee, which
demonstrates very clearly the difference between the two States.
Kansas is now traversed in every direction and through almost every
portion of its territory with railway lines, and with more new roads
being constructed and pushed to completion to-day than any other
State in the Union, the result of which is that immigration is pouring
into every part of that State, its resources are being developed to the
fullest extent, and it is rapidly becoming an empire within itself, in the
formation of which the railway companies are a leading factor; while
the State of Missouri, though among the first in the Union in mineral,
timber and agricultural resources, has but tardily developed during
the past five years, and with no immediate prospect of future rapid
growth.
What are the conditions existing which have in one State produced
such a remarkable advance in development and prosperity, which
have not similarly affected an older settled and equally as productive
territory adjoining its borders? The capital invested in railway enter¬
prises in the State of Kansas has not, with a possible few exceptions,
sought the investment invited. The State has encouraged the con¬
struction of railways in all reasonable manner, and its legislation, while
preventing discrimination and unjust exaction, has been friendly and
*
protective. Is this, or has this been, the situation in Missouri? While
Kansas territory is covered with tracks in every direction, the roads in
JMissouri are practically without branches to develop local industries ;
the main stems or trunks of these roads crossing the State are used
mostly as a passage-way or avenue for the movement of the commerce
of a country beyond ; and a very large area of the State remains unde¬
veloped and witlfout any railroad facilities, sixteen counties covering
10,000 square miles of territory, with a population of 150,000 people,
practically without any railway facilities. Is it consistent to say that
this situation would remain unchanged if friendly aid was extended to
railway companies and capital invited to build roads in the unoccupied
territory of the State ? We do not think so ; but believe an invitation
from Missouri for such investments, when coupled with assurances of
protection through a fixed and well-defined railway policy, just and
215
reasonable in all its bearings, will rapidly develop its resources and
secure as beneficial results as have been produced on her sister state.
The building of new railways, the extension of those now inexistence»
the construction of branch lines will tend to develop the territory and
add new industries ; illiberal, harsh, hostile or oppressive laws will not
only turn away capital seeking such investment, but will prevent a
fair return on that already invested in the roads now constructed within
the S täte-
Oí the numerous propositions before you for enactment into the
laws of this State, we will now endeavor to show what appears to us as
some of the unjust and unreasonable features, and submit our views as
to what we think necessary legislation for the regulation of the rail¬
ways, and protective alike of the interests of t^ie carrier and of the
public.
Senator Oastleman : Mr. Chairman, there is too much noise in this
hali; as I am standing here near Mr. Newman, I can't hear him. It is
within the province of the chairman to keep order in this House.
The Chairman : Certainly ; the members coming in apd going out
necessarily make some noise. I don't know very well how we can
exclude that.
Senator Claycomb : Mr. Chairman, I make this suggestion : These
gentlemen are members of the house, and they desire to hear this
matter, and I think it is proper that the sergeant-at-arms should bring
«ome chairs in here so that all can be seated ; he informed me he has
-chairs that he can bring in here.
After the members were seated, Mr. Newman proceeded as fol¬
lows:
One of the leading features, and certainly one of the most import¬
ant ones of the various bills which have been submitted to you for
consideration, is that which fixes the maximum rates to be charged for
transportation within this State. It is but fair to assume that maximum
rates are reasonable charges for the service for which they are fixed as
a compensation. This, no doubt, created the question contained in a
resolution of your Senate, asking What constitutes reasonable max¬
imum rates for freight, taking the schedules furnished by the railroad
commissioners as the basis of the estimate?" Wha:t isa reasonable
rate for the fixed transportation service is the most difficult question
that can be asked those who make up and adjust the tariff charges for
the various companies, and one which presents different and varied
features in accordance with the railway line over wich the r%tes are
made.
The question presents a problem most difficult to deal with and
-one which has to take into consideration the geographical situation of
216
the road, the volume of its traffic and the varying conditions whicb
rule in different seasons. It presents a question which necessarily from^
the different conditions upon the several railway companies cannot be
answered by all alike, and by none without experience of a sufficient
period of time in the business of the railway to which they are to apply
to enable them to ascertain what rates are necessary to yield a suffi¬
cient revenue to pay the expenses of operation and a fair and reason¬
able return upon the investments. It presents a question which, if
applied to a transportation line, the construction of which was only
just completed and its operation begun, in our opinion no one can
answer# So many features enter into the cost of transportation,,
and this host differs so widely upon the several lines within this State
that it is impracticable to determine what would be reasonable max¬
imum rates if applied to all roads alike. The rates which would be
reasonable for a line not expensive to construct with low grades and
light curvature which largely reduce the expense of operation, free
from liability of damage to its roadways or bridges, enjoying a large
and continuous volume of business, would not be a fair compen¬
sation and possibly would not pay the actual cost of transportation
over another line, widely differing in its geographical location,,
with heavier grades and heavier degrees of curvature, of costly
construction, expense of maintenance and operation, and with a
limited tonnage. What may be fair and reasonable maximum rates
for a carrier whose lines cover a vast extent of territory, operated
under the favorable conditions described above, would not be fair and
reasonable for a transportation company reaching a less extended ter¬
ritory, operative under unfavorable and costly conditions, and with a
less number of distributing or producing centers to supply it with
traffic. In addition to the consideration which must be given the
geographical situation of a road, the cost of operating and the amount
of tonnage tributary to its line, the confficting claims of the several
markets it may reach have constantly to be recognized, in order that
rates may be adjusted so as to deal equitably between them and
between the producer, distributor and consumer. The position cannot
be assumed that the producer must be confined for the marketing of
his produce to an.y one city, and this desire of its patrons to reach one
market or another market yielding as the result of different selections
a greater or less revenue, materially affects the earnings of a transpor-
\
tation line. The greater the extent of the lines of any one carrier, the
broader, the more comprehensive and more consistent must be its
policy in fixing its rates, and the claims of the multitude of its patrons
depending on it for transportation facilities have to be considered in
all their phases and bearings, that even an exact justice may be
i
217
accorded to all. All of these interests, in addition to what may be^
reached as the fixed cost of transportation upon a certain volume of
traffic, must have due consideration in fixing the rates, as they are
materially affected thereby, which in turn affect the volume of tonnage
seeking the various transportation lines.
Taking the schedule furnished by the railway commissioners as the
basis for determining what is a reasonable rate for transportation over
various lines in this State, presents a question which is as difficult to
answer as is the question what is a reasonable rate under the various
conditions described above. A comparison of the figures, promulgated
by the commissioners, with the tariff now current in this State, cannot
be fairly made, as the commissioners rates are based on a classifica¬
tion not in use by the lines in this or any of the adjoining States. In
our opinion their schedule is sufficiently high in some classes, but on
others the results can but show they are unreasonably low. They are
not fixed, in so far as we can learn, by comparison with the tariffs of
roads in other States west of the Missisvsippi river, and are not the re¬
sult of an experience as to the cost of railway transportation, which it
seems to us is necessary before reasonable maximum figures can be
determined upon. We have been advised that the commissioners, in
reaching the figures they have submitted, were governed to a great ex¬
tent by the prevailing rates in the State of Illinois. If this is true, it
is but necessary to call your attention to the inconsistency of such a
basis by comparing the difference in the situation between Illinois and
Missouri. The cost of construction and operation of railways throogh
a prairie country, such as makes up the greater portion of the State of
Illinois, is much less than in the State of Missouri, which possesses a
very different surface. The roads in Illinois possess a territorial ad¬
vantage because of their peculiar position which makes them the av¬
enue over which a vast quantity of tonnage must jiecessarily pass.
They not only transport the local traffic originating within the State,
but are the roadways over which a large portion of the traffic of a vast
territory west and southwest seeks an outlet. These are only a few of
the conditions existing in Illinois as compared with Missouri, which we
think clearly demonstrate the fact that what may be reasonable maxi¬
mum rates for roads in one State will not apply in another. If, how¬
ever, the rates which are to be considered by legislative enactment as-
reasonable in this State are to be determined by the rates current in
other States, a territory should be selected similar in its conditions to
Missouri, say Iowa, Kansas, Nebraska or Arkansas. Experience has
demonstrated that the best results follow by permitting the natural
laws of competition to fix the carrier's rates.
te
The great object of railway corporations, and the purpose for
218
which roads are constructed and put in operation, is to secure traffic in
sufficient quantity to pay the cost of operation, and yield a reasonable
interest on the investment. Competition is created by the building
and operation of other lines, and rivalry at once springs forth to obtain
the largest share of the business which can be secured. This decreases
'the tolls and improves the character of the service they are called upon
to perform, and creates a stronger motive for the proper conduct of car¬
riers than can be secured by any other plan. Thàt the natural law of
competition at all times existing between carriers^has been productive of
good, is demonstrated by the rapid development of the resources of the
various States which have protected their railway interest by reasona¬
ble and just laws.
It is not inopportune to call your attention at this time to the im¬
practicability of placing the regulation of railroad rates in what are
.known as ''State railway commissioners," and the evil results to both
the carriers and the public interests which in many cases are liable to
follow. While they have no pecuniary interests in the properties,
their earning capacity they practically control by the provisions of
some of the bills which are now offered you for passage. They would
have the full power to determine what rates should be charged by the
several roads in this State, and while disposed to fairly treat the inter¬
ests they govern, their total inexperience as to what are reasonable
maximum rates and what will pay the cost of operation and yield rea¬
sonable returns to the various companies for their investment cannot
but be apparent to you. They will daily be harrassed by the appeals
of individuals, firms and communities for still further reduction in the
rates they may themselves consider reasonable, which rates, if made
less than the cost of service, which cannot be determined by them,
creates a situation which we claim is unjust to those who have in¬
vested in railway enteprises in this State, and is a policy which will
discourage them or other investors to add more miles to your present
railway system.
Some of the bills before you for consideration, which propose to
.give the great power to the commissioners, who are inexperienced in
railway management, the authority to fix rates, prevent them from
promulgating tariffs in excess of the maximum established by the
legislature, evidently and justly for protection against the adoption
of excessive and unreasonable rates by the railway companies, but not
one of the bills yet presented fixes a maximum below which they can¬
not go. It is not fair that in protecting the public against extortion,
the owners of the property should have protection accorded them
against the destruction and ultimate loss of tjieir property. In pre-
isenting this view of the case, it is not with the intention to impugn the
219
motives of the present or any future board of railway commissioners,
but to call your attention to what seems to us the inconsistency of
practically placing in the hands of inexperienced parties the solv¬
ing of transportation problems, which are most difficult for those pos¬
sessing years of experience.
In the event you may determine further protection to the public
is necessary, by fixing maximum rates, we ask that these maximum
rates be confined to grain and its product, lime, lumber, coal, live stock,
ore and other agricultural and mineral products of the State, and such
other staples as the Missouri people are especially interested in ; be¬
lieving that, with this done, the natural competition existing between
the carriers, and the rivalry created by them in their efforts to control as
large a portion of the traffic offered for transportation as the}'' can secure
will regulate rates so that the maximum on other articles charged by
any company will neither be excessive, unjust nor unreasonable, and in
our opinion, entirely satisfactory to the public.
Pooling agreements were the outgrowth of efforts and endeavors
♦
made by competing transportation companies to reach some plan
which would establish confidence between themselves and secure and
provide for the maintenance of fixed and reasonable rates, and, when
carried out in good faith, result in reducing to a minimum disastrous
rate wars, and drive from existence fluctuating and discriminating,
charges which are, and always have been, injurious to the public as
well as to the carriers, and beneficial to none. Providing, by their
terms and conditions, a physical division of the competitive traffic, or
a division of the revenue derived therefrom, in certain portions to each,
fixed by agreement if possible, by arbitration if not, they presented
the most effective method that to this date has been devised to accom¬
plish a reasonable and desirable result, insuting protection to the trans¬
portation companies engaged in the carriage of the traffic to the end of
securing a fair return for their services, and to the public in preventing
discriminating and partisan rates. They resulted in the division of the
traffic between competing lines, and reached more nearly a natural
distribution of the business than could be accomplished in any other
manner. Competing lines, prompted by self interest, jealous of any
infringement by each other of their rights, fearful of a detrimental re¬
sult to their traffic from any action radical in its measure, and watch¬
ful of the just claims and demands of their patrons, provide ah abso¬
lute guarantee against a pool being used as a vehicle to exact unreas-
onble or extortionate rates. The public distrust of such agreements
is caused partially by a lack of information in relation to their provi¬
sions and objects, and partially through failure of the contracting par¬
ties to conform in good faith to all their requirements. The public
220
seek a way, either by agreement of the roads themselves, or by the
laws of their State, that will absolutely prevent rates being made,
which unjustly discriminate between individuals, firms or corporations.
To accomplish this, and afford the proper remedy, it becomes neces¬
sary to establish rates uniform to all for similar service, and equitable
as between different communities and equal by different routes. The
natural way to reach this has been by agreements between the roads,
the pooling features of which were the strongest guarantee of their
faithful execution.
Upon motion, the committee here took a recess until the House
could be called to order, transact its business, and adjourn in order that
members might have an opportunity to be present here.
After the House had adjourned, Mr. Miller announced that mem¬
bers of the board of trade and jobbing merchants of Kansas City de¬
sired to be heard before the committee, and, upon motion, they were
invited to be present day after to-morrow at 10 o'clock, when they
would be given a hearing. After this, Mr. Newman proceeded as fol¬
lows :
Thus it is, we think, clearly evidenced that to establish uniform and
satisfactory rates, co-operative action between the carriers becomes
necessary. If any substitute can be offered to accomplish the object
sought in pool agreements, i. e., to compel the maintenance of fixed
and agreed rates, without rebate, drawback or favoritism to any ship¬
per to the disadvantage of another, it will subserve as well, if not bet¬
ter, the interests of the public, and be equally acceptable to the car¬
rier ; as previously stated, the primal object of pools being to maintain
in good faith reasonable and uniform rates and to serve all shippers on
equal terms and conditions for equal service. The interstate com¬
merce law has made it impracticable to pool the traffic having both
origin and destination in one State, it being so closely competitive with
interstate commerce as to make such an agreement as would compre¬
hend the one and not the other of but very little value ; therefore, its
practical prohibition by that law makes it unnecessary to legislate
upon it or place any laws upon your statute books in relation to it.
The advantages of pooling agreements, when they are equitable to all
interests, are apparent and manifold ; their disadvantages are created
only by their abuse.
The adoption of any law which prohibits a railway from making a
greater charge for a shorter than for a longer haul, aside from any
other effect it may have, forces such carrier, any part of whose line is
in competition with^waterways to the immediate decision of a vexed
221
question, whether it will relioquish to the water carrier such traffic as
it has formerly handled at competitive water points and depend upon
its strictly local business for its revenue, or continue in thé carriage of
both competitive and local traffic at less average rates for the whole.
To accept either proposition is adopting a policy the result of which
cannot be accurately foreseen and can only be demonstrated by experi¬
ence. Views upon this question naturally are shaped by the situation
of the road to which they apply. If the road follows a navigable wa¬
ter course, such a law means great injury to its revenue through loss of
busines, unless a proportionate advance in local rates can be made to
supply the deficiency thus created. Water routes, unrestricted, often
make rates which railway companies cannot afford to accept. Such a
situation occurs when a boat securing a certain amount of freight suf-
fficient to meet the expenses of its trip, offers the balance of its room at
a nominal cost, and, as is frequently the case, transports the same char¬
acter of freight between the same points on the same trip at a much
less rate for one than for another, a discrimination between shippers
frequently practiced, to which your attention has not we think previ¬
ously been invited. It is not inopportune to ask wherein, if at all, it is
less objectionable or less unreasonable than if practiced by rail ; and if
not, why one carrier should be exempt from restrictive laws free to
practice discrimination and the other prohibited? If, however, the
railway companies are left free to compete with water carriers, they en¬
joy a greater tonnage ; and it does not admit of denial that as ton¬
nage increases in volume, the average rate charged decreases ; thus
giving to the local shipper depending entirely on the rails for transpor¬
tation the benefit that may accrue from natural competition. On the
?
other hand; if carriers are restricted from participating in this competi¬
tive traffic as they practically would be by a long and short clause in
your laws, the commerce moved by water would be obliged to bear
such additional tax as the water lines can charge in the absence of re¬
striction or competition, and the railway depending alone upon its lo¬
cal traffic for a maintenance is forced to shape its policy to produce
results which it can be but obvious to you cannot secure similar bene¬
fits to its patrons as would be the outcome if it were left to participate
in all the traffic it could secure to and from river points at reason¬
able and uniform charges. The results which follow the prohibition of
rail carriers when competing with water carriers cannot be more clearly
demonstrated than by reference to the daily press which is filled with
appeals from the shipping public in many of the States for a suspension
of the long and short haul clause of the interstate commerce law. Is it
advisable to add additional laws in this State controlling this matter,
which at the best can only be an experiment, when it can so soon be
222
demonstrated by the national law whether it is or is not for the best
interests of the railways and the people? We believe when publie
policy demands such laws they should be applied to all alike, whether
the carrier is transporting by rail or by water.
To the inquiry in the Senate resolution '^should the custom of re¬
bates be abolished, and if so, why ?" we answer unqualifiedly '^yes.'^
Like rates to all, under similar circumstances and conditions, should in
every case prevail. The payment of rebates tu any particular firm, in¬
dividual or corporation unquestionably creates discrimination against
others engaged in the same character of business and should be pro¬
hibited by your statutes. Any advantage which one person, firm or
corporation may possess over others engaged in similar basiness should
not be obtained or accorded them by reason of any favoritism or parti¬
san action on the part of transportation companies, and the adoption of
any rule or regulation, or the granting oí any rate by the carrier, which
gives to one an advantage and at the same time creates a disadvan¬
tage to another under like conditions and circumstances, is unjust and
unreasonable, and a discrimination which cannot be defended.
We are in favor of any legislation having the effect of according to
all equal and like rates for the same service by the carriers without un¬
due preference to any.
We do not contend that laws should not be made to control com¬
mon carriers, nor do we ask that all such laws now upon your statute
books be annulled. We do not object to reasonoble and just legisla¬
tion, conservative in its nature and protective to all interests involved.-
The public are entitled to such laws as will prevent discrimination and
unjust extortion. The capital which has sought railways as an invest¬
ment in you ISsate should have protection and not be prevented by
harsh or hostile enactments from yielding a fair return to those who
have placed it there. We are opposed to such legislation as is contem¬
plated by some of the bills now before you, as it would be a notice to
the world "seek other fileds to place your money, build railways in
other States, not here ; if you do your roadways will be taxed, your
revenue prescribed, so that your capital will be absorbed and your in¬
vestments destroyed." We favor such legislation as will be equitable
to all ; which will give even and exact justice to the railways and to
the people. We predict, with reasonable, liberal and protective laws^
an increase in your railway mileage, the rapid growth and development
of the resources with which the State is so bountifully provided, and
the material advancement and prosperity of the commercial interests of
Missouri.
The Chairman : I will say now that by the rule of the committee
any person, either a member of the committee or of either House, has.
a right to ask questions.
223
Senator Sebree : I would like to have him state what his objec¬
tions are to some of these bills to which he has referred. I would be-
glad, and perhaps others here would, to knovr what those bills he ob¬
jects to are and in what respects he objects to them ?
Mr. Newman: I will say in that connection that I have not read
even all of the bills that have been presented. We have pointed out
and endeavored in this argument to show the objectionable features
generally of the legislation that is before you. Now if there are any of
the bills here that the gentlemen want our views upbn as to special
clauses, we will be very glad to give them any information that we
can on their merits or demerits.
I will say that one of the objections we have made is to the regula¬
tion of rates being put in the hands of commissioners We think that
is a decidedly objectionable clause. Individually we have tried to give
our reasons for objecting to that. We think it is proper that if it is
necessary for maximum rates to be established that this legislative
body should establish them. We believe it will be better for the peo¬
ple, better for the carriers to have certain articles which the people of
Missouri are especially interested in, such for instance as corn, live stock
and products of the 8tate, governed*by maximum rates, and that the
carrier should be left to determine what rate may be charged on the
higher classes of freight. We do not believe there are a hundred men
in the State of Missouri who care what the rate is on glass show cases,
yet there is not a farmer in the State that is not interested in what the
rates shall be upon his corn and oats and wheat and stock.
Now we could not overlook the fact that the staple articles of the
State have to be carried at exceedingly low rates, snd we have to
charge higher rates on the general merchandise. We believe it is fair
to the people, we believe it is better for the carrier, while it may cost
us practically the same, or about the same, to haul dry goods that it
does to haul wheat, we believe that it is better that the rates should
be so adjusted that the lower value of the article will stand a
lesser rate. The difference we will say of five or ten or fifteen
or twenty cents a hundred in the rate per hundred pounds on prints,.,
silks, dress goods of any kind, will not make one-tenth of a cent differ¬
ence in the cost per yard to the consumer, and the carriers have en¬
deavored to base the tariffs so as to render justice to all.
We have objected to the railroad commissioners making these
rates from the fact of their total inexperience as to what is necessary
to pay a reasonable return upon the investment, as to what is its cost»^
If there are any special features the gentlemen desire us to give our
views upon further than this we would be glad to do so.
224
Mr. Babcock : I want to ask Mr. Newman this question. He
•spoke about discrimination and then objected to the long and short
haul clause on account of their coming in competition with the water¬
ways. Now is it not competition if the railways of the State, and you
hold that they are the same where it comes in with waterways, that
is, if you have aline of road running north and south through the State,
and perhaps every twenty five or thirty miles there is another line
crossing it, probably running parallel with it, and can carry business
to the same points ; now we will say that the freight is $25 per car
from St. Louis to one of those points on the road, say twenty miles.
Then the next station at ten miles from that is not a competing point,
and there you would make the rate $35 a car. The next point after
that is not a competing point, perhap the rate there would be $40.
When you come to the next station above that, which is a competing
point with another railway, you come back again to $35 á car. Now
do you object to the law being framed to prevent a discrimination
of that kind ?
A. We do not object to the long and short haul provisions
of that bill that have been presented to you if it could be ap-
plied to the water carriers as well as the rail carriers. Our objections
to that clause are wholly on account of water competition. Though
you gentlemen are better able than myself to determine whether the
legislature of Missouri has the right to control the rates of your water¬
ways; whether or not they are national highways which can only be
controlled by national legislation, or whether you could go a little
further in the old States' rights doctrine that you do have the right to
control them. Now if you can and will control the rates of your
waterways, we will heartily accept your laws controlling the rail car¬
riers and its competition of that kind. It is only on account of such
competition that we ask that such laws should not be put on your stat¬
utes. Now with the adjustment of rates in competition between rail
carriers, I believe that every road operating in this State has made up
its tariff in accordance with the provisions of the interstate commerce
law. That no charge will be greater for a shorter than for a longer
distance, when the shorter distance is within the longer distance. While
that law does not apply to Missouri, by its terms it has as efiectually
fixed the rates as if it was on your statute books. I do not believe
that there is a tariff of a road in the State where that requirement has
not been complied with.
Senator Moran: I would like to have Mr. Newman, as an expert
in freight classification rates, to give me his opinion of section 5 of
Senate bill No. 4.
225
A. 1 presume, Mr. Chairman, that the gentlemen are familiar
with the terms of that section and do not care to have it read. That
section must be taken in connection with the other portions of the bill
of which it is a part. This is the first time I have read it (Mr. Newman
having read the bill when the question was propounded) and I may
not be clear about it. As I understand it, it is the intention of the
gentlemen who submitted this bill that the legislature shall fix the-
maximum rates on the articles placed in the several classes as named
in that section, and that in the following sections of this law the com¬
missioners will have the right to change any of those articles from one
class into another. The r>ght of the commissioners to change the
classification is equivalent to the right of the commissioners to change
any rate you can fix. Your rates can be as easily reduced or advanced
by changing the clássification as by a change in the figures in your
maximum rates.
Now we have given our reasons for objecting to the commissioners
making our rates and have asked instead of that that if it was neces¬
sary to put additional laws upon your statute books as to fixing maxi¬
mum rates that those maximum rates should be made by the legisla¬
ture and that we might know certainly for a fixed period of time what
rates we have got to conform to.
Senator McGinnis : I understood you to say a while ago that the
classification suggested by the commissioners is impracticable. I wish
to ask you if you have a system of classification to suggest to this
General Assembly which you regard as being practicable, and, if so, to
make that suggestion?
A. I think the Senator has misunderstood me in saying that that
classification as submitted to the commissieners was impracticable.
My intention was to state that it was impracticable to compare the
rates as furnished by the commissioners with the tariffs now in force in
this State from the fact that they were based upon a classification
which was not used by any of the roads or by the roads in any of the
adjoining States, and that it was impracticable to make that compari¬
son.
Now if it is necessary to put a fixed classification as well as maxi¬
mum rates in your laws I think you should follow, as nearly as you can,
the classification which is in general use by all the roads—not all, but
practically all of the roads west of the Mississippi, that is the connect¬
ing lines of the Missouri Pacific Company and known as the western
classification."
Now I would state in connection with that that we have to change
the classification much more frequently than we have to change the
E. M—15
226
rates in order to conform with-the classifications of the roads in adjoin¬
ing States so that their bills of lading and their rates may be given,
and I do think it is decidedly objectionable to give any fixed classifi¬
cation in your statute books.
Senator Johnson, of Madison: I understood you to say that you
have conformed in your tariffs with the interstate commerce law. I
want to ask you if in the State it does not militate against the local
freights, between intermediate points. In other words, increase your
tariff prices as to intermediate points on your different roads ?
A. I will state in answer to you that I do not think in putting our
new tariffs in effect on the first of April that a single rate was advanced
upon our lines. The tariffs had to be changed to some extent but those
changes were in nearly, if not every case, reductions. There has been
some advance possibly in the revenue of the road from these changes,
from the fact of there being a better maintenance of the rates to-day
than existed prior to the passage of that law.
Senator Johnson, of Madison: Will you please state as a matter
of fact whether or not the rates on general products on the Iron Moun¬
tain road (I believe that is a portion of your system) has not been in
fact advanced largely between local points since the interstate com¬
merce law went into effect ?
A. I do not remember a single instance, and I would like if the
Senator can refer me to something upon which there has been a change
in the rate in the way of advance. I would like for him to name^the
article.
Senator Johnson, of Madison: My information is that there were
such ?
A. I do not think there has been. From competitive water points,
such as Bellement and places of that kind, the rates may have been
advanced from the fact that the terms of the interstate commerce law
were such as to practically make us withdraw our lines from points
reached by water ways. And taking other States than Missouri, in the
extreme southern territory, we have practically had to go out of that
business.
Senator Parcher : I desire to ask Mr. Newman to state to the com¬
mittee and the audience the comparative rates between Illinois, Iowa,
Missouri and Kansas, that is the rate per ton per mile—the average rate
in those four States for the last year. s
A. Mr. Chairman, I cannot give the information the Senator asks
foras our company does not operate a road eitfier in Illinois or in
Iowa. I am familiar with the rates of this State and the rates in Kan¬
sas as compared with the current tariffs in Missouri to-day ; they are ap¬
proximately twenty-five to thirty per cent, higher. I may be wrong
227
in the percentage. The rates in Kansas are higher than the rates in
Missouri, however. I would ask these gentlemen who have been here
longer if I am not correct (the speaker referring to traffic managers
present)?
Mr, Sage, Traffic Manager of the Chicago, Rock Island & Pacific:
Yes, sir; you are correct.
Mr. Newman (continuing) : Twenty-five to thirty per cent,
higher than Missouri rates. I cannot answer as to fates in Illinois. I
have never been connected with a road which operated in that State.
Senator Parcher : I would ask you if the roads in Missouri which
are the avenues for Kansas freight in probably the same way as the
roads of Illinois are the avenues for freight coming west of Illinois,
the great bulk of that sort of freight passes over Missouri roads, does
it not?
A. I would call the attention of the Senator to the fact that the
roads in Missouri are the avenues or pa^ssage way for the business from
Colorado, Kansas, New Mexico, Texas and the Southwest; while the
roads in Illinois not only carryall of that traffic but the traffic having
origin and destination within the State of Illinois and practically all
of that of the great northwest, a territory four times as large in ton¬
nage if not in population and area.
Senator. Parcher: I would like to ask, what, in your opinion,
ought to be the rate, the general rate, take the whole tonnage carried
in Missouri over roads in Missouri, what per cent, in addition to the
average rate of Illinois ought to be added for Missouri business? We
have got to get at this in some way or another, approximately in this
way, and I hope to show that there is not so much difierence between
Missouri and Kansas as you say?
A. Mr. Chairman and Mr. Senator, I cannot give a very clear re¬
ply to that ás I stated a while ago, as I am without knowledge as to
the rates in Illinois and gave my reasons for not having that knowl¬
edge.
Senator Parcher : I do not want to be tedious, but Mr. Newman
in his argument states that we should not take Illinois as a basis, inas¬
much as Illinois roads or the avenues over which freights for the west
such as Missouri is the avenue for, passes—it is unfair to take Illinois
as a basis—and also the freight of the Northwest. Now he must have
in his mind a reason why it is unfair and be able to approximate as to
the difierence there ought to be recognized between the rates we find
existing in Illinois and the rates which we propose to establish here. If
we propose to establish any we must do it by comparison.
A. I endeavored to give that reason by calling the Senator's at¬
tention to the fact that Illinois had all of this business enjoyed byjthe
228
Missouri roads and all oí the additional tonnage of the Northwest over
its lines. I am entirely unfamiliar with the rates in Illinois but ex¬
perience has taught us that as the tonnage increases the rate neces¬
sarily is reduced, the cost of carrying the business is reduced.
Senator Parcher: Could you answer yes or no as to whether ten
per cent, would be a fair difference ?
A. I cannot answer whether ten per cent, would be or twenty
per cent, from the fact I have stated to you, that I am totally unfa¬
miliar with the Illinois rates. The gentlemen are probably aware, some
of them at least, that I have been in this section of the country but a
short time, and while here have not been connected with any of the
roads east of the Mississippi river.
Senator Moran ; What is it, Mr. Newman, that makes the rate so
much lower in Missouri than prevails in Kansas when, as a matter of
fact, the companies are charging much less for the transportation of
freight than the maximum rates, is it competition^?
A. That grows out of the fact that as we go further west the ton
nage is more limited and the rates increase, we go south, Arkansas, and
the rates are higher than Missouri, we go on south in Texas and Ar¬
kansas and we go into New Mexico and a very large increase in rates
prevails, and as we continue still further on that increase continues and
it is so until we strike the Pacific coast. It grows out of a more limited
tonnage. As the commerce of the country comes from the west that
tonnage is increased and the rates are reduced. That is the cause of
Kansas rates being higher than Missouri. Kansas lines have to depend
almost solely on the business having origin and destination in that
State, while in Missouri we have the business of Missouri and that of
Kansas and Colorado, and necessarily can carry it at lower rates.
Senator Castleman : Could you give us the tonnage per mile of
the railroads in Missouri ?
A. I cannot answer that question. I did not prepare any statis¬
tics of that kind. That can be furnished you. We have no objection
to furnishing any such information that we may have and that you may
wish.
Senator Castleman : Could you give us the tonnage per mile in
Kansas ?
A. That I cannot state.
Senator Castleman : Can you give us the tonnage per mile in
Illinois?
A. I cannot tell you in any of those States, I have none of those
tonnage statistics with me.
Senator Castleman : Now you have stated not a comparison, but a
very striking contrast between Missouri and Kansas as to the advant-
229
a^0 that Kansas has, as you allege, in mileage of railroads over Mis¬
souri. To what do you attribute it ?
A. I attribute it to liberal aid to new roads as much as anything
else.
Senator Castlemao : From what source?
. A. From fair laws and from capital being invited into the State
to build other roads and large subscriptions, large subsidies given to in¬
vestors to build those roads there. Those subsidies amount to from
three to five thousand dollars per mile to those roads in some in¬
stances.
Senator Castleman : Now can you tell us what the donations per
mile to railroads have been in Kansas ?
A. That would be a very difficult question ; that information has
to take the railroads as a whole from the time they were first con¬
structed up to to-day ; the roads being built in Kansas to-day are get¬
ting county bonds to the extent of two to five thousand dollars per
mile, though in some sections of the State it is greater than in others.
Senator Castleman: Can you tell us how much has been donated
by the State of Missouri, by county and other corporations, municipal
corporations, in the State, to the railroads and railroad enterprises?
A. I cannot ; I question whether there is a gentleman on this floor
that can give the total amount—if you go back to the beginning of the
railroad construction here. I certainly have no such iniormation.
Senator Castleman : Now what advántage have the railroads in
Kansas, under the laws of that State, aside from this question of public
donations, over the railroads of Missouri under the laws of this State ?
A. In Missouri, taking the department that I represent alone, we
have a maximum rate high enough on a great many classes—unreason-
ablv low on some articles. In Kansas there are no maximum rates,
the carriers are permitted to make their rates, but they have in that
State a board of commissioners who have advisory powers to hear com¬
plaints from the public, from the railroads who take up the cases, and
give each party the result of their advice.
Senator Castleman: What rates in Missouri do von think are too
low?
A. Take some of the rates on stock. We have another law in
Missouri requiring us, or a ruling requiring us, to load mixed stock,
which is verv bad for the carriers.
«/
Senator Castleman : You think that decreases the carriage of stock
over your road ?
A. It certainly increases the hazard of the'carriage, and as the
hazard is increased the cost is increased.
230
Senator Oastleman: Now what is the difference between the
tariffs for stock in Kansas and the tariffs in Missouri, of which you
complain ?
A. I cannot giye you that percentage, I think it would be fully
forty per cent.; I cannot give you the exact percentage, I should have
said.
Senator Castleman : Now, how, without any of these figures which
seem to me to furnish the basis of comparison, have you arrived at
your conclusions that Missouri railroads are suffering under adverse
legislation ?
A. Let me understand your question clearer.
(Question read.)
A. From the fact that we find in Missouri a great number of coun¬
ties entirely unoccupied by railroads. We find in Kansas almost every
county has roads through it, and there are but few points in that State
where the farmer cannot find a station within from twelve to fifteen
miles of his home to market his produce, and this is the general result
in the two States. We are not complaining so much of the laws you
have, however, as we fear the laws you may make and propose in many
of the measures that are before you.
Senator Castleman : What are the counties that you now speak of
which are without roads ?
A. Senator, I will submit a list this afternoon, I have them here
with me, but not up here.
Senator Oastleman : They are down in the southeast, are they
not?
A. They are in the south and southeast, some are in the south¬
west, Shannon, Ripley and that class of counties. All you gentlemen
are as familiar with the counties which haven't them as myself. My
recollection is there are twelve counties that have not a foot of road in
them, and that there are sixteen with scarcely a mile.
Senator Castleman : Have you ever been in them ?
A. I have not sir. Well, let me correct that. It is possible I may
have been in some of them.
Senator Castleman : Possibly, over the Iron Mountain of course ?
A. That would not be one of the counties without a mile of road,
however.
Senator Castleman : I thought you were speaking of that class of
counties in the southeast, and I believe the Iron Mountain road runs
through the southeast?
A. A portion of it ; yes, sir.
Senator Castleman : Now, you base your statement not on the
question of tonnage, not on the question of mileage, but entirely upon
231
the fact that there are from twelve to seventeen counties in Missouri
that have no railroads ?
A. What statement do you refer to ?
• Senator Oastleman : The statement that the Kansas roads have
better advantages than we have in Missouri ?
A. I base that statement very largely upon tonnage, from this
fact, that it is apparent to all of us that there is very great difference in
the tonnage.
Senator Oastleman : The tonnage is in favor of the roads in Mis¬
souri?
A. Yes, sir.
Senator Oastleman : We have larger tonnage ?
A. We have larger tonnage in Missouri.
Senator Oastleman : Larger tonnage per mile ?
A. Larger tonnage per mile in Missouri ; yes, sir.
Senator Oastleman : Then, according to the theory that you have
advanced in your statement, that ought to reduce the rates, ought it
not ?
A. That has, I presume, constantly reduced the rates, but the
proposed reductions in some of these bills are not, we think, war¬
ranted by the amount of tonnage to pass over these roads, taking that
from Missouri and Kansas and other western States together. Our
argument is based entirely upon bills that have been presented to you
and rates which have been submitted by the commissioners, and by
the manner you propose in future to make the rates. We are not here
as complaining of your present statutes so far as the matter of rates is
concerned. While we do believe that there are some corrections which
should have been made in them, we realize the fact that it is difficult
to get them and have not asked for them.
Senator Oastleman : Are your charges for the carriage of stock
up to the schedule made in our statutes ?
A. Not in all cases.
Senator Oastleman : Oan you tell us in what cases they are not ?
A. I could by comparison of the tariff, Senator. I must apolo¬
gize probably for a lack of knowledge on my part, but when you gen¬
tlemen consider the fact that we have some six thousand miles of road
you will see that it is very difficult for any one to keep in his head all
of the different rates and why they are made.
Senater Oastleman : Of course, I understand that, but I supposed,
inasmuch as your statement was made, your argument was made upon
this basis that you probably had the data at your hand. Now, let me
ask you, did you ascribe the growth of the railroads in the State of
Kansas to the absence of the board of railroad commissioners to con-
232
trol the rates, or to the subscriptions which are made to railroads there
by the public which you have described ?
A. Both have unquestionably had their influence in that. The
advertisement, you may say to investors, that the carrier is left free to
make its rates in that State, unquestionably has some effect on whether
it will put its money in that State.
Senator Oastleman : Now tell us how you account for the growth
of the railroad mileage in the State of Illinois since 1873 ?
A. I am about the same in relation to mileage in Illinois as I am
about the rates in Illinois, our companies not having a mile of road
east of the Mississippi river.
Senator Oastleman : I will withdraw that question and give you
another. In 1873 there were 5,000 miles of road in Illinois. In 1887
there were about 15.000 miles of road—
Senator Moran (interrupting): About 9,000.
Senator Oastleman : Very well, then, we v/ill assume that in 1887
there were 9,000 miles.
A voice : No ; there were 15,000.
Senator Oastleman : I think it is 15,000. We will take this for the
figure anyway. Now, in 1873, say, there were 5,000 miles of road in
Illinois; in 1887, 15,000 miles of road in Illinois. In 1873 there was
no power in the commissioners in the State of Illinois, and at that time
complete power was vested in the railroad commissioners in the State
of Illinois to fix rates. Now, Mr, Newman, how would you account for
that as compared wdth Kansas ?
A. Senator, was that power exercised prior to the years 1882 or
1883? While it was invested in the hands of county commissioners in
1873, did not the roads of Illinois take the position that the legislature
had no right to give that power to the commissioners, and was not that
finally settled in the Supreme Court of the United States some eight
or ten years afterwards, and did not during that eight or ten years the
ro^ds make their own rates as they had prior to the passage of that
law ? I ask for information ; I am not familiar with that.
Senator Oastleman : I cannot undertake to answer your question,
sir, but let us suppose that in 1878 the case of Ruggles vs. The People
of Illinois, and the case of the Illinois Central vs. The People of Illinois,
was decided by the Supreme Court of that State, in which the validity
of that law, or both the warehouse and the railroad law, was sustained
by the Supreme Court of Illinois, and the roads were bound by it—at
that time it was settled so far as the courts of Illinois could settle it—
that the laws were valid, just as it did out there in Iowa and in Min¬
nesota. Now, would you say that after the decision of the Supreme
233
Court of Illinois it could be still ascribed to the fact, the continued
,2;rowth of railroad building, that the laws of Illinois were worthless?
A. During that period we must not overlook the fact that the
great Northwest had built up and put a very large volume of traffic
over the Illinois roads, which caused the additional extension of those
lines and the construction of new ones. Now what would have been
the effect had that law been put into effect by the carriers in 1873 ? We
cannot determine now. You may say they had practically five years
relief from that law, the carriers did not think it was constitutional,
and the carriers did not think that they would ever be made to conform
to it.
Senator Castleman : But in 1878 it was decided otherwise, you
J C'
remember that, do you not ?
A. I do not remember the year, but I do not question it.
Senator Castleman : Now, with those dates before you, can you
account by a comparison between Illinois and Kansas for your own
basis ?
A. I have given the reason that I think caused it ; it was the growth
of traffic in the Northwest that went over those roads and justified the
roads—I believe that many of the roads which were operating in the
State of Illinois have seriously complained of the rates in that State,
and have taken the position that if confined to State traffic the rates
as fixed by the legislature would not pay them the cost of operating
expenses.
Senator Castleman : Then I understand that your opinion is that
this matter is determined upon the bulk of traffic, and not upon the
powers of the commissioners ?
A. I cannot argue with you about the powers of the commis¬
sioners as to what powers they may or may not have, as that is some¬
thing which the traffic department of a road does not cover ; that is
covered by the other departments.
Senator Castleman: You do not look into law questions ?
A. We do not look into law questions.
Senator Castleman : Not even to determine the dates of these
decisions?
A. No; not even to determine that. (Laughter.)
Senator Castleman ; Well, now, you cannot account for it at all,
and you won't try to ?
A, We desire to give you any information that we have ; we want
to go into any question you ask us about.
Senator Castleman : You have contrasted Missouri with Kansas,
and if you wilhundertake now to account for the cornparison between
Illinois and Kansas, under the different conditions in which you find
234
them, I would like very much for you to do it so it can ^o into the
record.
A. I do not quite clearly get the point that you desire to make,
Senator. If it is that you want Kansas contrasted with Illinois, I will
say that in that connection I have endeavored to explain, a while ago,
what has built up the roads in Illinois. We have no doubt but that
will build up the roads in Missouri and Kansas, as the Western trade
develops and puts tonnage over the lines in this State.
Senator Oastleman : Now the tact of the business is that relatively
Missouri stands in the position to-day which Illinois did about 1870,
does it not, so far as railroad traffic is concerned?
A. No, Senator, and it never can.
Senator Oastleman: You mean that Missouri can never attain the
position which Illinois had in 1870?
A. Geographically, never.
Senator Oastleman: Undoubtedly, sir; I never expected to see
this State moved across the Mississippi river! (Laughter.)
A. Let me go further. Illinois has for a number of years and will
always retain a large share of the traffic to and from the Northwest,
not one pound of which passes over the lines in Missouri. Missouri is
dependent on the trade from the south and southwest. Illinois not
only has that from northwestern points, but has that of the south and
southwest.
Senator Oastleman : Now it is a fact, isn't it, that the 'Frisco road,
the Missouri Pacific road and the Iron Mountain road are the channels
over which this commerce goes over the borders of Missouri to-day ?
A. A portion of it.
Senator Oastleman : Which of those connections through the
south and southwest was completed in 1870?
A. The Iron Mountain road to the southwest I believe was com¬
pleted in 1873.
Senator Oastleman : I am talking about 1870?
A. I don't believe that either of them had a connection in 1870.
The Missouri, Kansas & Texas was completed to the southwest I think
in 1871 or 1872 ; well, I am quite certain not before 1872 ; I think in
the summer of 1872 it was that that line was completed to Denison,
Texas. The Iron Mountain road was completed to Texarkana in the
summer of 1873, if my recollection serves me right.
Senator Oastleman : Now the Topeka & Santa Fe brings a large
volume of business across the borders of this State, does it not?
A. Well, it brings some, not a very large volume.
Senator Oastleman : And those are the four lines,which carry the
bulk of it, and, in fact, all of it, do they not ?
235
A. Which do you refer to ?
Senator Oastleman : The Iron Mountain, the San Francisco, Mis¬
souri Pacific and the Atchison, Topeka & Santa Fe.
A. To the south and southwest?
Senator Oastleman^: Yes, sir?
A. Yes, a very large volume is carried by those lines.
Senator Oastleman : Now, I ask you again does not Missouri to¬
day stand relatively, in the question of the volume of trafiSc, about
where Illinois stood as far back as 1870 to 1873 ?
A. I think not.
Senator Parcher : I would ask if you don't think a political revo¬
lution in Missouri would tend to bring Missouri up rapidly ? (laughter.)
A. You have caught me at a weak point; railroads are without
politics.
Mr. Kelly : I would like to ask you one or two questions. I un¬
derstand you to complain of the law of Missouri which enables a ship¬
per to ship mixed stock over the road ; you complain of the hazard. Is
it not a iacl that in all cases where mixed stock is shipped, the road re¬
quires a shipper to sign a release ?
A. That is a fact.
Mr. Kelly : Then there is no hazard in that case, is there ?
A. Well, there is a hazard in that, in this way, that notwith¬
standing that live stock contract, it does not by any manner of means
relieve us from all claims under it.
Mr. Kelly : The release is full enough to relieve of everything,
isn't it?
A. Well, the release is pretty strong.
Mr. Kelly : Yes, I should say so. Just another question : I under¬
stand you to say that competition between the roads is sufficient to
regulate freight rates in the State, and that the freight rates should be
left to competition between the roads ?
A. I made the assertion that experience has taught us that that
would regulate them better than any other means.
Mr. Kelly : I understood, also, from your statement here, that
you are opposed to an anti-pooling law?
A. I gave reasons why I thought it was inadvisable to put an an¬
ti-pooling law on your statutes. I said that your State was as fully
protected as if it had it on its statute books ; that it was practically
impossible to make a pool in the State of Missouri to day on account
of the State traffic being so closely interwoven with and competitive
with interstate traffic.
Mr. Kelly : Now, I want to ask you if when roads pool they
236
do not fix rates that all shall observe and divide up the profits between
them ; that is what a pool is, isn't it ?
A. That is one of the features of some of the pools. Pools are
made on quite a number of conditions, and that is one feature of some
of the pools,
Mr. Kelly : Then I want to ask you if a pool of that kind does not
effectually stamp out all competition between the roads that enter the
pool ?
A. Not necessarily ; not by any means, because these percent¬
ages that are fixed on the different roads by agreement are fixed for a
certain period of time, or, if not fixed for any definite time, any road
that is constantly increasing its percentage in that pool will expect to
get a re-allotment and an additional proportion, and we have found
that a road operating under a pool will struggle just as hard for com¬
petitive business as without it.
Mr. Kelly: Still they get their share of all that is shipped over
the other roads that are in the pool with them, do they not ?
A. While that is the case, our experience has shown that the re¬
sult is as I have stated, that every road is striving to carry the trafläc
with the hopes of a re-allotment under the same or a new agreement,
and that competition is as great as it would be without a pool.
Mr. Kelly : I understood you to say that the commissioners^
schedule that was lately submitted to this committee was unfair and
unreasonable in many respects, and I understood you also to say that
if this legislature should fix maximum rates, they should be fixed upon
grain and live stock and other products of that kind, staple products
of the State. Now I would like to ask iron how the commissioners'^
rate in that schedule is, in your judgment, as to reasonableness upon
grain and live stock?
A. I cannot answer that. I have not got the figures with me. I
have had them made up in my office, and have just looked at the gen¬
eral result, but as toéthe details of any article, I could not tell you
without taking the commissioners' tariffs and comparing them with
those in effect on the roads,
Mr. Kelly : As a representative of the Missouri Pacific Railroad^
are you satisfied with the commissioners' rates in that schedule upon
live stock and grain ?
A. That I cannot answer you, and I gave you my reasons for not^
as I have not selected any special article, and looked only at the effect
of them. I only suggested that certain products—that the maximum
be fixed on certain articles, as I thought if a maximum rate were to be
established, that you could take those of that nature and such others
237
as were most desired, that these rates should be fixed upon, and that
that would cover all the nece/ssities.
Mr. Miller : I desire to pursue the investigation of Mr. Castleman
a little further. Can you tell me what time the so called granger laws
of Illinois were enacted by the legislature of that State ?
A. I cannot. I must confess almost entire ignorance of Illinois
and its laws.
Mr. Miller : About 1871, was it not ?
A. I can't tell you.
Mr. Miller : Can you state what the railroad mileage was in 1871 ?
A. That I cannot tell you. Any of that information that you de¬
sire, we will be glad to assist you in obtaining, however.
Mr. Miller: Can you tell me how many years that was pending
before they finally got the thing in shape ?
A. I can't tell you.
Mr. Miller: Didn't it begin in 1871 and about 1873 ?
A. If you would ask me a hundred different ways the same ques¬
tion, I could not tell you. I am entirely ignorant on that matter.
Mr. Miller : I have a statement before me, which shows that there
were 6,116 miles single track railroad in Illinois in 1871. It shows the
same number of miles in 1872 and 1873. My own recollection of the
circumstance is, that that agitation began in 1871, and ended in 1873,
in the passage of the present law. Between 1873 and 1883, the law was
in contest in the courts. In 1883 the mileage in the State of Illinois
was 8,776 miles, showing a considerable increase in the mileage be¬
tween 1873 and 1883. During the time that the right of the commis¬
sioners to make rates was being contested, between 1883 and 1886, the
mileage was increased only to 9,444 miles, an increase in the four years
of about 1,200 miles. I want to ask you, if you would compare Kan¬
sas and Missouri, if a spirit of unfriendliness on the part of the people
has any effect towards retarding the construction of railroads in such
a community, while the legislation existing at the time may not be
inimical to their interests ?
A. I would like to answer that by asking you a question : If
you were going to invest your money in a State where there was an
unfriendly feeling towards capital, would you not be a little loth to put
it there on that account?
Mr. Miller : I was asking you how it affected railroad people ?
A. Well, I am not an investor, possibly I cannot tell as well as
some of the other gentlemen who are in your body.
Mr. Miller : Is the increased railroad building in Kansas in any
measure due, so far as you can judge, to the friendliness of the people
towards railroad construction and their desire to promote it?
238
A. I don't think there is any question of that.
Mr. Miller : You would regard that spirit of friendliness as a pro¬
motive of the construction of railroads ?
A. I think so, decidedly.
Mr. Miller: You said that the rates in Missouri were lower than
the rates in Kansas. I presume you refer to the local rates charged
between one point and another in the same State?
A. To the local rates between points within the State.
Mr. Miller : How do the rates between points in Kansas and Mis¬
souri compare with the rates charged between points in Missouri where
one is in Kansas and the other in Missouri ? or, just how does the rate
between them compare ?
A. The general rates to and from points in Kansas is much higher
than rates to and from points in Missouri, and to and from all
markets.
Mr. Miller: How do the rates between points in Kansas and
points in Missouri compare with the rates between points in Missouri?
How, for instance, does the rate between Wichita, in Kansas, and Han¬
nibal, Missouri, compare with the rate between two points wholly
within the State of Missouri ?
A. Nearly all rates to and from points in Kansas are higher than
the rates between points in Missouri. Now, there is some territory
where the rates are the same. I presume the point you are endeavor¬
ing to reach is the rate we will say between St. Louis and Omaha or
Hiawatha, Kansas, or Falls City. I presume the rates you refer to are
the northern class of rates as compares with points in Missouri.
Mr. Miller : How do they compare with points in Missouri ?
A. Those rates on a basis of mileage—take the Nebraska points
or northern Kansas points, the rates are the same to points in Missouri
—as the rates from Missouri points, St. Joe or Kansas City.
Mr. Miller : You don't mean the same basis of mileage ?
A. No.
Mr. Miller: The same in the aggregate ?
A. The same in the aggregate.
Mr. Miller : How do the rates on merchandise between Omaha
and St. Louis compare with the rates on merchandise between St. Joe
and St. I^ouis ?
A. They are exactly the same. That grows out of the fact that it
is necessary to give the merchants of Missouri markets an opportunity
to compete. In fact it may be termed foreign territory to them. And
we believe in doing that, that in increasing the volume of our tonnage
we can make the general decrease in the rates which will inure to the
239
benefit of the people in Missouri as well asthe people in Nebraska and
Kansas. We claim no injustice is done Missouri towns. Instead of its
being unfair to them, it is beneficial.
Mr. Miller : What Missouri towns do you refer to ?
A. Any Missouri towns—Kansas City, St. Joe—take the general
result of the business carried for that territory and it makes the gen¬
eral reduction in the rates.
Mr. Miller : If merchandise can be carried from St, Louis to Hia¬
watha, Kansas, at the same rate it is carried to Kansas City and then
a rate additional to that is charged between Kansas City and Hia¬
watha, Kansas, or say St. Joe, is not that a discrimination against Kan¬
sas City and St. Joe in favor of St. Louis?
A. We don't think it is. If you were to make the rates on the
basis as you suggest, you would localize every line in the country, and
you would increase your rates three, four or five fold. It is impracti¬
cable to make all rates on the sura of the locals. It is impracticable
for a merchant in Jefferson City to ship his goods to Jefferson City and
then reship them to Sedalia as cheap as the man can ship them from
St. Louis to Sedalia direct. If you undertake to build up your tariffs
on that basis your rates would be ten times as high as they are.
Mr. Miller: Is not your rates from Hannibal to all points west—
Montserrat, Missouri—the same as they are from St. Louis to those
points ?
A. Practically the same.
Mr. Miller: And from Montserrat to Omaha they are precisely
the same at every station.
A. Yes,
Mr. Miller : Now when Kansas City and St. Joe desire a trade in
that territory along your line, they have to pay that rate from St. Louis
or Hannibal, and then when they ship .their goods to the point beyond
they have to pay a local rate, does not that therefore cost them more
money than it does the St. Louis merchant ?
A. But you don't find in one single instance where the Kansas
City shipper pays more money than the St. Louis or Hannibal shipper.
We admit their rates are for a long haul in many cases as cheap as for
a short haul. We hold to the belief that that is beneficial to the people
at large.
Mr. Miller: Of course I know you are prepared to defend that
rate, but I want to ask you—
A. I just ask you what your plan as I understand it for making
rates is going to ? Instead of your rate on corn from Kansas City to
the Atlantic seaboard being about 30 or 40 cents as it is now, on your
plan, on the plan of making rates as I have gathered from the tenor of
240
your questions, it would be 90 cents or a dollar. Those rates are what
have built up the western country.
Mr. Miller: I just ask you the fact if the Kansas City or St. Joe
merchants pay for freight from St. Louis or Hannibal, the same rate
that is paid to points on your line beyond Kansas City and St Joe, and
then desires to do any business on your road with those points, if he
does not have to pay the local rates in addition to the rates which they
would have to pay if they bought their goods at Hannibal and St.
Louis?
A. There is no question of that in some cases.
Mr. Miller : Isn't it also true that some distinction against those
Missouri points exists on rates to southwest Missouri and southern Kan¬
sas, and into Texas, that the through rate from points in Nebraska to
points in southwest Missouri is lower than the sum of the two locals di¬
vided at Kansas City?
A. It is the fact that through rates from St. Louis to a point in
southwestern Missouri is lower than the rate from St. Louis to Kansas
City with a local added from Kansas City.
Mr. Miller: My question is if the business between points in Ne.
braska, through St. Joseph and Kansas City into southwestern Mis
souri not lower than the sum of the two locals, taking that western
business alone ?
A. I presume the through rate is lower than the sum of the locals.
Just as I stated that the through rate from St. Louis direct. Take Car¬
thage or Joplin and the through rate is less direct from St. Louis to
those points than it is to Kansas City and thence with the local added
from Kansas City.
Mr. Miller: Is not the rate also from your system of roads in
southern Kansas direct from St. Louis or Hannibal lower than the sum
of the tv^o locals at any point on the western border? isn't it true that
your rates from points on your system in the State of Kansas to St. Louis
or Hannibal are lower than the sum of the two locals breaking at any
point on the western border of Missouri, take Wichita, for instance ?
A. The rate from Wichita to Hannibal or St. Louis is lower than
the rate from Wichita to Kansas City or St. Joe and thence with a local
added.
Mr. Miller: Taking it on the eastern side of the State when
freight is crossing the Missouri river to or from your lines between
points in Missouri, or from points in Kansas, to points east of the Mis¬
souri river, is not that through rate lower than the sum of the two locals
breaking at St. Louis or Hannibal ?
A. It is in very few cases, St. Louis being on the short line from
the Atlantic seaboard where the great bulk of the freight originates,
241
the rates are made oq the sum of the locals on the same basis that Kan¬
sas City being on the direct line from St. Lpuis to a large western ter-
Titory, the rate is there made on the sum of the locals, but where Kan¬
sas City is on an indirect line, as to Carthage or Joplin or Wichita, the
rates are not made on the sum of the locals. Take business coming
through St. Louis, if it originates in Milwaukee or Detroit or some
northwestern point, St. Louis not being naturally on the direct line,
the rate does not break at St. Louis but requires the carrier to make a
through one.
Mr. Miller : How is it in that case where it breaks at Hannibal ?
A. In many cases the rates have to be made lower from Hanni¬
bal where it is not in a direct line; where Hannibal is in the direct line,
it is there made on the sum of the locals.
Mr. Miller : Is not Kansas City in the direct line between the
Mississippi and the west ?
A. You are possibly as well aware as any railroad man that is
here, that the rates to Nebraska and that territory are made by the
lines from Chicago as well as the lines from St. Louis, and I do not
think you ought to legislate here so that St. Louis, or other Missouri
<îities, will have to withdraw from that trade.
Mr. Miller : Then I will ask you another question : Is not Han-
mbal on the direct line from Chicago into southwestern Missouri ?
A. To some points of southwest Missouri it is.
Mr. Miller : On your line?
A. To some points on our line it is.
Mr. Miller : On your line, say to Nevada and Pleasant Hill and
those places, it is on the direct line. Is not the rate from Chicago to
those points lower than the rate from Chicago to Hannibal and from
Hannibal to those points?
A. In some cases it is ?
Mr. Miller : Isn't it so in most cases ?
A. I presume it is so in most cases.
Mr. Miller: Don't you regard that as a discrimination against
Hannibal ?
A. We don't regard it as an unjust discrimination against
Hannibal.
Mr. Miller: Isn't it a fact that the rates in the State of Missouri
between points in the State of Missouri as a rule are higher than the
rates between points in this State and points in the adjoining State ?
A. No, sir ; the rates between points in Missouri are not as high
.as the rates between points in Kansas; the rates between points in Mis
R M—16
242
souri are not as high as the rates in the other adjoining States, on the^
south, Arkansas.
Mr. Miller: The question I ask you is if it is not true that rates
between points in Missouri are higher than rates between those points
in Missouri and the points in adjoining States where it crosses the
State line ? I find from your answers that rates bet\yeen points in Ne¬
braska and St. Louis and Hannibal are lower than the sum of the two
locals, that the rates between points in Nebraska and Kansas direct
through Kansas City and St. Joseph to points in southern Kansas and
Texas are lower than rates breaking at Kansas City and St. Joseph ;
also that rates breaking at the several points are higher than the rates
from those same points to the same points where the sum of the twa
locals break at the State line. What I ask you is, if it is not a fact
that the rates between points in Missouri and points in adjoining States
where it is interstate, from one State to the other, are lower than the
*
rates between points in Missouri of equal distance.
A. I don't think so, and if you will cite a case where such a rate
is lower, we will be glad to have you do so.
Mr. Miller: Is not freight carried from Chicago to points on your
line in Missouri for less money than it is carried from Hannibal? isn't
the rate from Chicago to those points less than the rate from Chicago
to Hannibal and from Hannibal to those points ?
A. Yes, that is the case, just on the same principle that the rate»
from St. Louis or Chicago to Kansas City destined to a point in southern
Kansas is lower than the rate to Kansas City direct and a local added
on the same principle that your rate from New York to Kansas City is
lower than the rate from New York to Buffalo, the local added from
Buffalo to Toledo, the local added from Toledo to Chicago and the local
added from Chicago to the Missouri river.
Mr. Miller: Besides this rate made between points in Missouri
and points in adjoining States—is not that rate lower than the rate
made between points in this State and other points in this State ?
A. I cannot answer you as to that. I am not sufficiently familiar
with these tariffs to answer that question understandingly.
Mr. Miller: You are familiar with the tariff of the Missouri Pa¬
cific railroad ?
A. You must recollec that we have tariffs over 6,000 miles of road^
and I will say further in connection with that, that no one of those
tariffs do I make up ; it is only a general knowledge of the tariffs that
I have.
Mr. Miller: How are the rates between local points in Missouri^
like the rate between Jefferson City and California made up—on the-
distance tariff or on the local tariff?
243
A. The local tariíF is a distance tariff.
Mr. Miller: Is it the same?
A. The local tariff is the local distance tariff.
Mr. Miller: I observed one kind of tariff" sheet which reads from
St. Louis to points along your road ; from Hannibal to points along
your road ; from Kansas City to points along your road and so oh. I don't
find any tariff that gives the rate between California and Jefferson
City, or between Jefferson City and Sedalia, or any point like that.
But I find that there is in use another tariff, a distance tariff, just giving it
by the mile. Is not that the tariff that is used for making up the rate
from one local point to another?
A. We have a local distance tariff that applies between local sta¬
tions in Missouri, and we have a local distance tariff applying between
stations in the several States. Now that tariff is on file here in our
depof.
Mr. Miller : How does your local distance tariff in Missouri com¬
pare with the local tariff made from the terminals to the same points
in Missouri ?
A. It is practically on the same basis. I don't think there is one
instance in that tariff where any intermediate point is charged a higher
rate than the rate from St. Louis or a point beyond.
Mr. Miller: I am not an expert on the subject of tariffs, butin the
examination of them I found that the rate given by the mile on that
tariff is very considerably higher than the rateslaid down as from the
terminals to stations at corresponding distances.
A. 1 don't think you will find that there is a single case of course
in making our State tariff; we endeavored to conform fully to the pro¬
visions of the interstate law to prevent the hazard of any penalty.
Mr. Miller: I will say in justice to your road that I have not ex¬
amined the local tariffs and compared them with the distance. I want
to ask you just one other question. If, on quite a number of articles,
you do not make East St. Louis and St. Louis common points and take
the freight from East St. Louis to points in Missouri and Kansas at the
same rate that you take it from St. Louis ?
A. The interstate commerce law makes the rate between St.
Louis and Missouri river points. You are aware that Atchison, Leav¬
enworth, St. Joe and Kansas City by custom, for a great number of
years, take the same rate. Now under the terms of the interstate law,
the Chicago & Alton road operating from St. Louis to one of those Mis¬
souri river points carries the freight through East St. Louis and has to
make the St. Louis rate apply from East St. Louis, it being an interme¬
diate station on that line. That places the Wabash road and the Mis¬
souri Pacific and other lines operating between those points under the
244
necessity of conforming to the rates made by the interstate law for the
Alton road, and it is a fact that East St. Louis and St. Louis have the
same rates to Kansas City.
Mr. Miller : Then it is a fact that the roads in Missouri make East
St. Louis a common point with St. Louis ?
A. Not to all territory. They do to that territory affected in that
way. Take a point on the Missouri Pacific road, the southern portion
of the State, we do not make the same rate. We make a higher charge
from East St. Louis. We add the bridge cost, whatever that may be,
to the St. Louis rate, for instance, for the rate to Jefferson City.
Mr. Miller: You refer to the fact that St.Louis and East St.Louis
are made common points by the roads suggests another question : they
are made common points for all freight between them and the east,
are they common points on freights going to the west, even on your
line of road?
A. Not wholly, but most of them.
Mr. Milier: Is Kansas City and St. Joseph, or is St. Joseph and
Atchison, charged the same rates ?
A. Under the present adjustment of the tariff nearly all of the
territory that is tributary to the four Missouri towns take the same
rate. Almost every month additional territory is put into that basis.
The adjustment last week has put a very much larger territory into
what is known as the Missouri river rate than has heretofore been ef¬
fected.
Mr. Miller: You carry grain from St. Joseph, Atchison, Leaven¬
worth and Kansas City to St. Louis or Hannibal at the same charge, do
you not?
A. I cannot answer whether there is any difference; I believe it
is the same ; I don't think there is any difference.
Mr. Miller : Is it the same on your line of road, the Central Branch
Union Pacific from points out there to St. Joseph^as it is to Achison?
A. The Central Branch is not a Missouri Pacific line.
Mr. Miller : You operate it ?
A. It is operated by us, but operated under the terms and condi¬
tions of a lease, which fixes the rates which shall be charged to Atchi¬
son on all business. We have not the control of that line to the ex¬
tent of changing its rates, except subject to the consent of the owners
of the property.
Mr. Miller : Is that fixed as a differential with Kansas City and St.
Joe?
A. Where those rates are fixed they agree with them, the owners
of the property.
245
Mr. Miller: If a rate is fixed on grain from any point, say from
Lenora to Atchison, at twenty cents a hundred pounds, do they also re¬
quire you to charge, say five cents more a hundred ?
A. No, but they require that we shall give to the Central Branch
road that twenty cents a hundred, unless by agreement with the own¬
ers of that property that on business with Kansas City or St. Joe that
company will accept less than the terms called for.
Mr. Miller : You would be at liberty to make the rate from Lenora
to Kansas City and St. Joseph, the same as from Lenora to Atchison ?
A. We would be at liberty to make it the same, provided we paid
the Central Branch owners the full Atchison rate and carried the re-
mainer of the distance free.
Mr. Bodine : You spoke of the disadvantages under which Illinois
roads labor on account of Illinois maximum rates, did you not ? What
I
was that that you said in regard to the injurious eifect of the Illinois
law upon the roads in that State ?
A. Mr. Bodine, I don't think that I said anything having reference
to that.
Mr. Bodine : I thought you did. Didn't you make the statement
that if it were not for the business of the roads that operate in Illinois
in other States, that perhaps they could only make operating expenses,
or something to that effect? Now suppose that it is true with regard to
one of the leading railroads of Illinois, say the Chicago, Burlington &
Quincy, that, take all of its line east of the Missouri river, and sup¬
pose that forty-seven and a half per cent, of the line is in Illinois, and
that the earnings of the road in Illinois are fifty three per cent., does
not that tend to show that the Illinois law does not discriminate un¬
justly againt those roads?
A. You must not overlook the fact that the earnings in Illinois are
not only made up of Illinois business, but of business passing through
Illinois, which the roads receive and deliver to States beyond.
Mr. Bodine : I understand that.
A. Now, as I stated before, I am not familiar with the workings
of the roads of Illinois.
Mr. Bodine : But, I say, if it is true that that part of the system
of the C., B. & Q. in Illinois is only forty-seven and a half per cent, of
the total mileage, but that that part in Illinois earns fifty-three per
cent, of the total earnings, does not that seem to show that the Illinois
law does not injure them much ?
A. It is possible that sixty or seventy per cent, of the traffic on
which those earnings arose was not covered by the Illinois State law,
but was interstate business ; I only say that it is possible, I don't know ;
I am not at all familiar with it.
246
Mr. Bodine: You don't know what proportion, then, the local
freight bears to the whole through freight. Now, if as a matter of fact,
an average of passenger department earnings per ton per mile and the
average freight department earnings per ton per mile, and the average
freight department earnings per ton are higher say on that part of the
road in Illinois than on the whole line, does not that tend to show that
so far as that road is concerned the Illinois law does not do much
injury?
A, That only tends to prove, I think, Mr. Bodine, that statement
we made before you as to the advantage of the volume of traffic that
goes over those lines, which necessarily increases the average earnings
per mile on both freight and passengers.
Mr. Bodine : Of course that is true of any other State through
which through traffic goes. Now, I will take the Chicago & Alton.
If it is true that seventy-one per cent of the miles of that road are in
the State of Illinois, but that its earnings in Illinois are seventy-three
per cent, of the total earnings, doesn't it tend to prove that the Illinois
law does not injure the Chicago and Alton very much ?
A. You overlook the fact, 1 think, that such a large proportion
of that business carried over its line in Illinois is not aifected by the
Illinois rates. Now it is the higher rates from Kansas, Nebraska and
Colorado, of which that road receives its proportion, that is paying its
tribute to the Illinois line.
Mr. Bodine : Does the Chicago and Alton extend any farther
west than Missouri ?
A. It goes to Kansas City, which is the great outlet of the south¬
western traffic.
Mr. Bodine: Now, you will excuse me, but I am one of your con¬
stituents and live on the line of your road, and I therefore feel a little
more interest in it. You spoke of the local distance tariff, and the
rates that you charged for substantially the same distance from St.
Louis ; for instance, I understood you to say that bet ween two local
points on the main line of the Missouri Paeiöc you charged the same
rate about for the same distance that you would charge from St. Louis.
Did I understand you correctly, sir?
A. I think not, sir.
Mr. Bodine : What is the truth in regard to that—the charge be¬
tween two local stations when compared with the charge for the same
distance from St. Louis, say in the same direction ?
A. I don't think I quite understand.
Mr. Bodine : Say fifty milès.
A. Well, sir, for fifty miles I presume it is very little difference ;
I don't remember the figures.
247
Mr. Bodine: I have taken occasion to compare your local distance
tariff with what you call your through tariff, but I don't suppose that
is the word ; I mean your local distance tariff with your tariff from St.
Louis to local points along the line. I find that on one line from St.
Louis to a place called Dundee, sixty-two miles from St. Louis, yon
charge thirty cents, the Missouri Pacific ; between local points, that is
I take it between Dundee and some other local station the same dis¬
tance, you charg3 thirty-eight cents. Now, is not that too large a
difference ?
A. Possibly you may have the Missouri Pacific and the Iron
Mountain tariff's confused.
Mr. B3dine : No, sir ; I have the Iron Mountain tariff too.
A. In the adjustment of these local tariffs it may be that the
rates are made higher than the rates possibly from large markets like
St. Louis and Kansas City from the fact of the additional cost of the
carriage of that business, and that cost grows out of this fact, of the
very limited tonnage originating at these local stations, and the cost
per ton of handling it on that account as compared with the cost of
handling that same tonnage at a large distributing point. Now I think
you gentlemen will be surprised to see the difference in that cost.
Mr. B )dine: Now let me call your attention to this, it won't have
to be unloaded at the local station whether shipped from St. Louis or
another local station.
A. But in one case it has to be handled at the small station twice,
in the other case once.
Mr. Bodine: Then the only difference is the difference between
the loading at St. Louis and at local stations ?
A. That is one of the features.
Mr. Bodine : Is not that the only difference?
A. Well, we will admit that it is the only difference for argument's
sake ; though I don't think it is the only difference. I cannot recall
what other differences there are.
Mr. Bodine : I find that on the main line of the Missouri Pacific
from a point called Pacific, about thirty five miles from St. Louis, you
charge twenty-five cents, a point on the Missouri, Kansas and Texas,
equidistant from IJannibal, you charge twenty-eight cents. What is
the reason for that difference ?
A, Well, all the Missouri Pacific rates are lower than the Missouri,
Kansas & Texas or the Iron Mountain rates.
Mr. Bodine : What is the reason for that ?
A. The reason for that is the total tonnage carried by that com¬
pany, there being a very great difference between them.
248
Mr. Bodine : I supposed that was it. I think it is a ^ood reasonv
Now, I notice that on the Missouri Pacific from 8t. Louis to Sedalia^
one hundred and eighty-nine miles, you charge fifty-five cents for first
class freight; then, ten miles further on the Missouri, Kansas & Texas
you still charge fi^ty five cents; but fot ten miles further on this main
line, which you say can be operated cheaper, for the same distance you
charge sixty cents. Now why is that diJfference ?
A. A great many of those features have grown up by the passage
of the interstate commerce law, which precludes us from charging at
an intermediate point a higher rate. Now, it may be the rate as fixed
from St. Louis by the Wabash road to Moberly, Missouri, or to some-
crossing up there, is the maximum rate the Missouri Pacific can charge
to any intervening station. Now, while this Missouri State business is
not under the provision of that law, our tarifis'have been adjusted so as
to conform with it.
Mr. Bodine : I don't think you understand me. When you charge
us from Sedalia to a point ten miles north on the Missouri, Kansas &
Texas road less than you charge for the same distance from St. Louis
on the main line, are you not making a discrimination there for a
further distance, are you not charging there more for a short distance
than you are for a long distance ?
A. When we charge a higher rate from St. Louis to a point north
of Sedalia on the Missouri,* Kansas & Texas than we charge from St.
Louis to a point on the main line of the Missouri main stem ?
Mr. Bodine: You charge less.
A. Well, I say that a great many of those matters have come in
by the workings of the interstate commerce law. Now, that point
north of Sedalia: you will find by examination of the tariffs that the
rate there is probably the Moberly rate made by the Wabash road, and
we cannot, under the terms of that law, charge a lower rate; we are
limited to the Moberly rate.
Mr. Bodine : I notice further that you charge fifty-five cents from
Missouri to Sedalia ; and then, on the Missouri, Kansas & Texas from
my town. Parish, you charge us only fifty-six cents, for which I am^
very much obliged. That is, you haul the rest of this distance for one
cent, from Sedalia to Parish ; why is that the case ? ^
A. You will find a great many cases where we haul double the
distance for the same rate. We have tried to explain that we believe
that it is necessary, for the development of this country has grown up
on that; and we can go further and say that we have a very good pre¬
cedent established for that in the national laws: The government
charges you for carrying a letter the same rate lor five miles that they
charge you for carrying it five thousand ; though we all recognize the
249
fact that the cost to the government is more for carrying it five thou¬
sand miles than for carrying it five.
Mr. Bodine: I will ask you if before the passage of the interstate
commerce law you exercised the privilege, at least, of charging more
for a short distance than for a long distance, when it was all in the
State of Missouri?
A. If before the passage of the interstate commerce law?
Mr. Bodine : Yes, sir?
A. The Missouri rates have always been on the principle of the
long and short haul since my recollection of them.
Mr. Bodine : Is that observed on all roads in this State ?
A. I think so. I am not familiar with the rates on other roads,,
but the Iron Mountain and the Missouri Pacific ; I think.all tariffs have
been on that basis there.
Mr. Bodine : Do you know that there is a law in this State, and
has been all the time, forbidding charging more for a short than a long
haul ?
A. I do know that, but I would call your attention to the fact if
you prohibited to-day it is accompanied by penalties very onerous, and
whether the infraction be by mistake or otherwise, that penaltv has to
be paid. We have in cases—not in this State, but I will cite a case in
Texas—we have, from a clerical error in five cases, paid a penalty of
$500 each, and there is no way to get that penalty remitted.
Mr. Bodine : Just one other question : Your idea would be if any
penalty was imposed on a corporation it should be for an act wilfully
done ?
A. Yes, sir.
Mr. Bodine: Isn't it right hard to tell when a corporation wilfully
commits an offense ? It has no mind or heart or soul, you know.
A. Yes, I concede it is right hard in many cases to tell whether a.
man steals a horse, but you don't put him in the penitentiary until
you prove that he did steal it.
Mr. Bodine : So you think it would be a good idea to put a pen¬
alty upon the corporation for committing the act, but upon the em¬
ploye only in case it is wilfully done ?
A. If you put your penalties where your laws are wilfully vio¬
lated it would be better ; but your bills don't cover that point ; I don't
think there are any of the bills which I have seen where it is limited
to that extent. The penalties are imposed, but they do not state any¬
thing further. I think it would modify your Statutes considerable if
you would use the word ^'wilfull," and I think it is fair that it should be
done.
250
Mr. Leising: Mr« Newman, you have just stated that before the
passage of the interstate íaws the roads on the Missouri Pacific were
governed by the same principle, the long and short haul. I would ask
you how it came about, then, that it was possible for a person ship¬
ping from eighty-one miles west of St. Louis to Kansas City, to pay the
rate to St. Louis, and from St. Louis to Kansas City, and make money
by it. That was the case within a year ago, at least in Hermann.
A. I cannot answer that because I have no knowledge of such a
state of facts. Now, I would like for the gentleman to point out a
single tariif adjusted on that basis. Although that there have been di¬
versions from there tariffs and that there have been some violation of
the rates I think you gentlemen are quite well satisfied.
Mr. Leising : I certainly could not show the tariff for it but I can
substantiate the facts. Would you consider it a rebate for the steam¬
boat at that point, or any other point along the river, if they brought
freight to this side of the river and shipped it out of the territory
which does not belong to the Missouri Pacific ? Is that considered in
the light of a rebate, or would you consider those parties acting as the
agents of your company ?
'A. If we were to make an arrangement for through rates with a
boat operating on that river, and for delivering the traffic to us at Her¬
mann, I think we could under your present statutes accept a lower
proportion from Hermann to Kansas City on that business than we could
on business from Hermann proper, provided the rate from Hermann
proper does not exceed in any case the rate from the point beyond.
Mr. Bodine : That is the point I wanted to get at, whether you
considered that a matter of rebate or of- employing those people to do
your business for you.
A. I do not think either your State laws or the interstate law deal
with the proportions that any carrier may receive of a through rate
but deal with a rate from the point of shipment to the destination in
the aggregate. The courts, I believe, in every case where that ques¬
tion has been up, have so decided, and it was very clearly demon¬
strated that that was the intent of the interstate law in the discussions
before Congress when that law was passed.
Senator Hazell : You are the General Traffic Manager of the Mis¬
souri Pacific system ?
A, Yes, sir.
Senator Hazell: What are you duties as General Traffic Manager
ivith reference to rates ?
A. I have general charge of the adjustment of rates of that com¬
pany.
Senator Hazell : Do you fix rates ?
251
A. Not often, they are generally fixed by my assist ants i Senator,
•we have several departments.
Senator Hazell : When was your last adjustment of rates ?
A. The last general adjustment was the first of April. At that
time the tariffs were changed over the entire lines of the road.
Senator Hazell: Isn't it a fact that at that time you advanced the
rate from twenty five to one hundred per cent, on the local tarifi in
this State ?
A. I do not think it is ; 1 do not think it is the fact that we ad¬
vanced it five per cent. Now in that general adjustment some articles
may have been adyanced ; I do not remember a single article that was.
Senator Hazeil : Did not you advance to rate on coal, or dry goods
and groceries, boots and shoes ?
A. I will state very positively that on coal the rate was reduced
instead of advanced, and that the tariffs in effect to-day will not show
one instance I think where the rates are higher than they were prior
to the first of April.
Senator Hazell : You deny, then, that the rate was advanced on
coal ?
A. I do not think one single instance can be shown, and on the
other hand Í will state there was a reduction in the coal rate at that
time.
Senator Hazell : I think I could convince you in twenty minutes
that you are mistaken.
A. I wish that you would ; I would be glad if you would.
Senator Hazell : I think I can show you some bills that will
ohange your mind on that subject.
A. The coal that you refer to, I am not so positive about, do you
mean on hard coal ?
Senator Hazell : That is it.
A. The hard coal which comes from the eastern markets was ad¬
vanced by lines east of the river, but I think not any by the Missouri
Pacific roads. Now, when my answer was made, I referred more espe¬
cially to coal mined in the State of Missouri, soft coal. There was a
general reduction in that rate; in the case of your hard coal, I remem¬
ber some investigation of that question came up, and that the advance
was made east of the river, it came about on the Pittsburg division,
and was not advanced by the Missouri Pacific roads.
Senator Hazell: Now, is it not a fact, that you advanced these
local rates by reason of the enactment of the interstate commerce
law ?
A. No, sir.
252
Senator Hazell : In order to make up what you lost on interstate
traffic ?
A. No, sir.
Senator Hazell : You stated awhile ago that the Wabash system?
made rates, that you were governed by those rates in carrying, by
reason of the fact that the interstate commerce law was in force, did
you not?
A. I did. '
Senator Hazell : Are not these rates on the Missouri Pacific,
especially, were they not advanced at your last adjustment in order to
make up your loss on such carriage ?
A, If you would cite one single advance in our rates that took
effect on the first of April, I would be very glad to have you do so.
Senator Hazell : I have stated several, boots and shoes and dry
goods.
A. From St. Louis to Jefferson City ?
Senator Hazell : To different points along the road.
A. I think your information is wrong. Indeed, I think you will
find it so, and I am quite sure we can convince you of it ; I do not
think there is a single instance on the entire lines of our road, take the
extreme southern portions of our lines, the country that is tributary to
the Gulf coast, we have made a nominal advance of our tariffs, becauso
of the provisions of the law being such, we cannot carry at the rates
heretofore in effect. Take Houston and that section, it is practically a
prohibiMon, and we had to go out of the business, and we don't carry
it. We made a nominal advance there to Memphis, to Shreveport,
Louisiana, to New Orleans and that section, but in the section of Mis^
souri and Kansas I do not think there is an instance on record where
those tariffs were raised.
Senator Hazell : Now, it is suggested to me by Senator Sears, that
all the roads advanced their local tariffs during last spring ?
A. I cannot answer as to that, I am not familiar with what tho
other roads may have done.
Senator Hazell : Can you furnish to the committee your livestock
rates per car load ?
A. We will be very glad to furnish you any tarifls we have on
Missouri business, or the business of any other State through which we
operate.
Senator Ball : I want to ask a question suggested by Senator
Hazell : Isn't it a fact that all the roads advanced their rate on inter¬
state commerce business ?
A. They did not advance their tariffs, there have been advanced
in the rates which grew out of the maintenance, a better maintenance
253
of the tariffs in effect, but I think you will find in the other lines and
on our road, that in nota single instance have the tariffs been ad¬
vanced.
»
Senator Ball : This is what I want to get at. In shipping beyond
the Missouri lines, if the tariff has not been advanced?
A. That would depend entirely upon such advances as were made
I)y the eastern lines. In some cases, possibly, there have been ad¬
vances by the passage of that law, and in fact, I know there have in
that case of coal, I know that the rates on hard coal are higher.
Senator Ball : Do you ship over your road from Kansas City a
car load of stock for less thin you would ship it, say from Jefferson City
to St. Louis ?
A. No, sir ; in no case.
Senator Ball: Don^t you give to the Kansas City tariff a rebate?
A. We do not.
Senator Ball : Have you ever followed that practice ?
A. Senator, I presume that rebates have been paid on Kansas
Dity business more or less for years. There has been, since the passage
of the law, practically a prohibition of rebates.
Senator Ball : That is since the interstate commerce law ?
• A. Since the interstate commerce law went into effect there has
\
been practically a prohibition of rebates. ,
Senator Ball : The interstate commerce bill does not affect you
from one point to another in Missouri?
A. It does not affect us by the terms of the law, but nearly all of
the provisions of that law are as applicable to strictly State business
as to interstate business in its effect, on account of the State business
being so closely competitive with the interstate.
Senator Hazell : I would like Mr. Newman to furnish us with the
live stock adjustment previous to this latter adjustment he speaks of
in addition to the latter one.
Senator Proctor: I now suggest that it be in order that we have
another witness, if we have any more witnesses here.
The Chairman : We have other witnesses, but I am not here to
decide whether we shall call another one or not.
Senator Claycomb : I would suggest that Mr. Newman now has
occupied about three hours, and I think that certainly he has told us
all he is able to tell us, and I am in favor of practicing no unjust dis-
orimination to these other gentlemen. I would like to hear them. I
move that Mr. Newman be excused, and that we listen to one of the
other gentlemen.
The Chairman: Unless there is objection, he will be excused for
the present.
254
The Chairman: I will now introduce Mr. Smith, of the Wabash
Western railway.
Mr, Smith then spoke as follows :
Mr. Chairman, if you will permit me, I will read the remarks I
have to make; they are not many. By proclamation of the Governor^
the legislature has been convened in extra session to provide the le^-
islative enactments necessary or expedient to enforce and execute
those laws and principles with reference to railways and railroad com¬
panies, which the people themselves have enacted and declared in
their Constitution, and to fix maximum rates and fares for all railways
within the State.
The honorable board of railroad commissioners have, in compli¬
ance with the Senate resolution adopted May 20th inst., prepared a
schedule of maximum rates, which thej^ have submitted, with the fol¬
lowing candid expression of opinion : We fully appreciate the diffi¬
culty of making schedules of reasonable maximum rates for the trans¬
portation of freights by railroads in Missouri, and we submit the
accompanying schedules, and not claiming by any means that they are
perfect, but such as in our judgment are reasonable at this time for
roads of the first class."
I have no doubt the gentlemen are honest in their convictions that
the schedule of rates recommended by them is just and reasonable,,
but it is simply an expression of their opinion, and would, if adopted,
cause such serious reduction in our revenue as would not enable us to
earn operating expenses and interest.
During the year 1886 the movements of freight and the revenue
derived therefrom on " The Wabash Western Railway," not including
interest, were as follows :
Earnings per ton $1.7843
Expenses per ton 1 3421
Rate per ton per mile. 01134
Expenses per ton per mile .00853t
Net earnings per ton per mile 00281
Average earnings per loaded car per mile. 1158
Average expenses per loaded car per mile 0871
The above is based upon rates in effect on the Wabash Western rail¬
way during the year 1886 and nearly corresponding to present rates, and
it will certainly not be claimed by any intelligent, fair-minded man that
(11.58) eleven and fifty-eight hundredths cents is an excessive charge for
handling a loaded car one mile, nor that a profit of (2.87) two and eighty
seven hundredths cents per loaded car per rpile above operating expenses
is extortionate or unreasonable. It will also appear from this how
255
disastrous an effect a small reduction in rates would have upon the
railroad property of the State and the many thousands of men em¬
ployed in the service, together with their families depending upon
them for support. A greater economy would also follow in the ex¬
penses for repairs and renewals necessary to maintain the properties in
first-class and safe condition, and reduction in wáges would of necessity
J
follow reductions in rates and consequent loss of revenue. This inevita¬
ble result cannot be too strongly urged upon your serious consideration.
It may appear a very simple matter to make a schedule of rates, but
it is one of the most difficult problems managers have to solve—how to
80 arrange their tariffs that the average rate will accomplish the de¬
sired result, and at the same time give reasonable encouragement to
local industries, and not subject themselves to charges of extortion or
discrimination of local traffic. If this is so d:fficult on one railroad
under an experienced manager, familiar with all the elements neces¬
sary to be considered in fixing reasonable rates, how, then, is it possible
to fix an inflexible tariff of rates by statute, to apply alike to all sec¬
tions and all railroads within the State^ the enforcement of which will
not work great injury to individuals, localities or carriers, and in this
connection I beg leave to mention a few of the elements that must be
considered in establishing a tariff of just and reasonable rates.
BASIS OP KATES.
Rates should be reasonable and non discriminating—^just alike to
the carrier and the public, and so adjusted, if possible, as to yield a
reasonable return upon the investment in addition to the cost of operat¬
ing-
Rates that would secure a fair net revenue one y^^ar or month,
might, because of failure of crops or other causes, not pay operating
expenses the next—all losses and expenses incident to operating are
chargeable to traffic, and is an element to be considered and provided
for in fixing rates. The extreme cold and snow blockades of winter,
resulting in great expense from damage to motive power and cars—the
removal of snow and loss from interruption of traffic. Then follows
the warm sunshine—the snow melts—the water courses overflow their
banks—bridges, culverts and track are washed away and trains possi¬
bly wrecked. These and other causes of outlay, too numerous to men¬
tion, and uncertain traffic, are all important factors to be considered in
fixing rates. But rates are not advanced at any time to meet these or
other extraordinary expenses, neither are the}'^ advanced during a pe¬
riod of depression in business or because of a failure of crops to pre¬
vent a decrease of our revenue, thereby we share in the misfortunes or
256
prosperity of the people and labor to promote our mutual interests. In
adjusting tarifí's we are guided by the light and experience of the past
and the requirements of the present in arriving at fair and equitable
average rates and classification that will best serve the larger number.
LONG AND SHORT HAUL.
All freight tariffs now in effect.within the State recognize the long
and short haul principle, as they do the interstate tarifis, and rates are
in no instance less tor a longer than for a shorter distance on the same
line where the shorter is included within the longer distance. It would
appear to be the better part of wisdom not to add to the present com¬
plications until the 4th section of the interstate law has been more fully
tested, and it has been demonstrated whether the enforcement of that
law will have the demoralizing and ruinous effect upon the commerce
and railways of the country that many fear. The experiment thus far
has certainly been disappointing to many of the strongest advocates
and supporters of the measure, and until the commissioners have de¬
cided whether the ijresent suspensions shall be continued after the
limited period allowed in each case, an intelligent judgment cannot
be formed of its effect upon the country at large. We know of much
injury that has been wrought, but have yet to learn of any benefit that
has resulted, either to individuals or communities, in sections of the
country where it has been in effect.
UNJUST DISCRIMINATION.
Discrimination may exist and yet may not be unjust, caused by
natural advantages on water ways or otherwise, giving one community
a natural advantage over another, and for which the railway is in no
sense responsible. Under such circumstances it would not be an un¬
just discrimination for the carrier to forward or deliver freight at such
station, so situated, at lower rates than to another distant station, al¬
though the distance to the latter may be less than to the former, and
should not be declared unlawful, provided, however, that all shippers
at the same point should be treated alike under like circumstances.
We favor laws prohibiting unjustly discriminating rates. The rich
man should not be made richer at the expense of his poorer neighbor
engaged in the same class of business by such unlawful practices.
POOLING.
I am in favor of associations for the maintenance of reasonably
uniform rates and division of revenue among roads, members of such
•association, under the rules and regulations that governed prior to the
257
passage of the interstate law. Experience has demonstrated that the
best method of securing uniformity and stability of rates is by an equita¬
ble division of competitive traffic and revenue among competing lines
under the system of''pooling" so called. In the general scramble for
business moral obligations and agreements will be set aside or evaded
by some device, unless there is a community of interest among rival
lines, and each is assured of a fair division of competitive traffic, such
agreements, legally sanctioned and enforced, would not only result in
great good to the railway interest, but would in a still greater degree
inure to the benefit of the community. Rapidly fluctuating and ex¬
treme changes in rates unsettle values and demoralize trade—benefiting
none and bringing many to ruin—frequently removing for a time the
natural and legitimate trade from one city to another. Law makers may
in their wisdom attempt to remedy this evil by fixing arbitrary rates,
but this will not remove the cause nor have the desired effect. The
interstate law has, however, very effectually disposed of this question,
so far as it relates to interstate traffic, which comprises the bulk of
competitive business, and we therefore do not oppose the enactment of
a similar law within the State.
RAILROAD BOARD OF COMMISSIONERS.
We favor a Railroad Board of Commissioners, and will give them
our hearty support and promptly comply with all lawful and reasona¬
ble requirements, but we are opposed to delegating to them authority
to reduce, without the consent of the railways, the maximum schedule
of rates, or classification fixed by the General Assembly. We believe
it to be a dangerous and unwarranted power to delegate to any board^
however just and fair minded they may be, and they should be relieved
of the embarrassment in which they would be placed by the constant
pressure and influence of numerous applicants for reductions in their fa¬
vor from the established rates and classification, and, while reductions
in exceptional and individual cases might appear trifling, I have shown
what a serious effect in the aggregate they would have upon our
revenue.
The railways will act in harmony with the Honorable Board of
Commissioners, and, if reasonable, maximum living rates are estab¬
lished, will not hesitate to voluntarily make such reductions from time
to time as may be necessary to promote the common interest.
I did not expect to be called upon to make an argument and have
had only one busy business day in which to give the subject any con.
sideration. I have endeavored, as briefly as possible, to make answer
to the resolutions adopted by the Senate 25th inst.
R M—17
258
I thank you, gentlemen, for your courteous attention.
Senator Ball: In what capacity are you acting with the Wabash
road?
A. I am the General Traffic Manager.
Senator Ball : Have you compared the rates furnished to this com¬
mittee with the rates on the Wabash road now used ?
A. I have not had time to give them the consideration that they
should have. A copy was placed in my hands on Saturday afternoon,
the first time I saw it, and I have only glanced over it casually and
have not had time to make a fair comparison with our present tariff.
Senator Ball : From the impression made upon you by the sched¬
ule of rates fixed by the railroad commissioners of this State and fur¬
nished to this committee, are they very much lower than the rates now
in use on the Wabash ?
A. Yes, sir ; they are very much lower, car load rates especially.
Senator Ball: And your attention has been called to the rates
fixed by Mr. Ripley and now in Senate Bill No. 1 ?
A. No, sir ; it has not; I will say farther that I have not seen one
single bill that is now before the Senate or the House of Representa¬
tives. There has none been set to me, and if any of our people have
had copies furnished to them I have not seen them, so that I have not
read the bills and am not familiar with them.
Senator Ball : On this question of discrimination, do you think it
is unjust discrimination to ship from St. Louis to Hannibal cheaper
than you would to Troy, Lincoln county, Troy being hall way between
these points?
A. From St. Louis to Hannibal?
Senator Ball : Yes, sir?
A. Well, not if Troy is on the same line over which the goods
pass.
Senator Ball : It is not on the same line ; Troy is on the Short
Line road, the St. Louis, Hannibal & Keokuk ?
A. It might not bean unjust discrimination, though, to make lower
rates from St. Louis to Hannibal than is made to the point you have
alluded to. The river controls the rates between St. Louis and
Hannibal, and the rail in order to do any portion of the business must
make rates nearly corresponding with the rates made by the river
Senator Ball : That being made would not the long and short haul
prevent you from charging more from Hannibal to Troy than it would
from Hannibal to St. Louis ?
A. Troy is not on our line and we do not carry any freight from
St. Louis to Hannibal by way of Troy.
Senator Ball : I know ; I was just giving that as an illustration ; I
knew it was not on your road.
259
A. I think you asked if I understood the Senator correctly ; if I
considered tt^atit would be an unjust discrimination ?
Senator Ball : Yes, sir ?
A. Against a merchant or dealer living at Troy
Senator Ball : Exactly ?
A. I answer that I do not think it would be. That where there is
an apparent discrimination,a discrimination caused by the natural water
way of the Mississippi river and rates that are in éífect on that river,
yet it might not be an unjust discrimination against a merchant at
Troy. That discrimination exists ; it is not caused by any act of the
railroad, and if they may be permitted to do any buiness between St
Louis and Hannibal they must either do it at nearly the same rates as
are charged by the boats, or if compelled to charge such rates as might
be considered reasonable to Troy, why, then they would be compelled
to go out of the business between St. Louis and Hannibal.
Senator Ball : What objection have you to fixing maximum rates ?
A. I have not objected to fixing maximum rates.
Senator Ball : Your objection is to fixing them too low ?
A. I think that the public would be better served if the rates were
fixed by the railroad companies themselves and subject to competition
that they necessarily have as between themselves and the rivers than
any rates that might be fixed by the legislature. I deem it impossible
for the legislature to fix any maximum rates for all roads alike, that
would treat all roads fairly and equitably. It would be necessary to
fix a different tariff for each individual railroad.
Senator Ball: Mr. Smith, leaving it to the roads to fix their own
tariff, would not the tendency of the roads be to impose largely upon
non-competing points ?
A. Well, I think not, sir. In the territory through which our road
runs we have very little local business—business that is strictly local.
We are crossed at so many points and are paralleled by so many other
railroads, that there is very little strictly local business, and as a mat¬
ter of principle I have always opposed, and am now, to the fixing of
any lower rate at any point, simply because two railroads happen to
cross each other at that point, and make such rates from that crossing
as will unjustly discriminate and draw business from another station
only a short distance from it. That is the principle by which we are
governed on our line of railway, and have been and are now, and will
continue to be.
Senator Ball : Isn't it a fact that complaint frequently comes to you
that you charge more from Montgomery City, High Hill, Florence and
places along down the Wabash, than you do from Kansas City or other
competing points west of your road
260
A. I have never seen any such complaints, Senator ; none have
ever been addressed to my office, nor have any such evei been called
to my attention.
Senator Ball: Has your attention ever been called to the fact that
persons are discriminated against in favor of shippers along the route
of your road ?
A. No, sir ; I know it is a fact that they are not.
Senator Ball : That they are not ?
A. That they are not.
Senator Ball: Isn't that discrimination brought about in this way:
That you will charge the same amount of money to each of the ship¬
pers, but that you will give one of them a rebate?
A. We do not give any rebates now.
Senator Ball : And never have ?
A. Well, you must not question me too closely on that (laughter) ;
what we have done; we may have done so in the past, and perhaps I
could show reasons for doing it; but we are not making any rebates
now.
Senator Ball : I will just ask you this question : A.re you trying
to reform now in that direction ?
A. We believe in reform, and we have been reformed, and are
reforming. (Laughter.)
Senator Ball: Has that been brought about by this trouble up
here in Jefferson City in the legislature on this railroad question ?
A. Oh, no.
Senator Parcher : Do you remember whether your rates are higher
now up in northwest Missouri towards St. Louis than they were two
months ago, or lower ?
Mr. Smith : They are lower at some stations.
Senator Parcher : Did you have a pool at places where you crossed
the Quincy system in northwest Missouri two months ago ?
A. Not now—we have not.
Senator Parcher : Two months ago ?
A. Yes, sir.
Senator Parchér : Do you remember whether you charged more
or less from two stations away from those pool points than you did
from those pool points towards St. Louis ?
A. I have no information that we ever did.
Senator Parcher: If it be a fact that you did haul freight lower
from two stations away, do you know how far those pools extended
from the crossing ?
A. Those pools took in the entire line of the Wabash right of way
261
up to Council Blüffs, and also all the parallel competing lines of the
Chicago, Burlington & Quincy and Kansas City, St. Louis & Council
Bluffs.
Senator Parcher : Suppose you take Maryville, for instance.: is it
your recollection that the pool that was established at Maryville, where
it crossed the Crestón branch of the Quincy, extended clear on to where
it crossed another branch of the Quincy system ?
A. It extends clear to Council Bluffs—to the ñrst-station this side
of Council Bluffs.
Senator Parcher : Our understanding always was it only extended
two stations away from the crossing?
1
A» Then you were misinformed.
Senator Parcher: Do you know whether it was a fact or not that
we could afford to drive hogs from Maryville over to Stanberry and
save money by doing so, and pay our drivers for their time in doing
that, and ship from there to St. Louis over your line ?
A. Did the C., B. & Q. do that?
Senator Parcher : I am talking about the Wabash ?
A. No.
Senator Parcher: Your rates up there never would permit that,
you think ?
A. You to drive hogs from Maryville to Stanberry ?
Senator Parcher : Yes, sir.
A. And ship to St. Louis ?
Senator Parcher: And save money instead of shipping by Mary¬
ville ?
A. I would state that such an instance has never been called to
my attention.
Senator Parcher : That would be wrong if it were the case ?
A. That would be wrong if it were the case.
Senator Parcher: And if it was the case up to two or three months
ago, then a little legislation in that direction to prevent it in future
would be entirely judicial ?
A. There is no reason why it should have been, because Stanberry
was included in the same pool.
Senator Parcher : In your essay you have some very good senti¬
ments, to the effect that the rich should not be made richer and the
poor made pooier by any discrimination ; do you mean by that that you
would fix a limit at which one man, if he couldn't afford to ship as much
as another, should have the same rate as a man who could ship a larger
quantity?
A. I certainly did not intend to convey any such meanings
262
Senator Parcher : Woold you fix a unit anywhere at which the
rate should apply and'that that rate should be uniform?
A. The rate should apply the same to all at the same point, all
men engaged m the same class of business.
Senator Parcher: Do you mean tjiat one who shipped a car load
should have the same rates as the man who shipped ten?
. A. Yes. sir.
Senator Parcher : Good enough. (Laughter.)
A. I do, however, believe in the principle of wholesale, and I
would even go further, and believe that the tariff should recognize
lower rates for train loads than for single car loads as we do recognize,
and make fixed lower rates for a single car load than we do for less
than a car load, but so long as our tariff does not recognize any such
difference I think that all men should be treated alike, and all should
be charged in the same rates.
Senator Parcher : Well, it is very seldom indeed that you find one
man prepared to ship a whole train load of stock from your country
stations, county seats, etc., your best stations ?
A. They do that very often.
Senator Parcher: Would there be any marked difference between
one man, if one man furnished you a train load of twenty-five cars
and twenty-five men furnished you a train load at the same place?
A. There would be no marked difference.
Senator Parcher : Would there be any difference in your expense ?
A. No; the expense of moving that train would be the same
whether the cattle were owned by a company or an individual.
Senator Parcher : Whether you got one car load at a station or
three car loads at a station and there aggregated, picked up and aggre¬
gated at a particular station by your local freight train that passes up
and down your line every day, the difference between picking up one
car, and one, three or five cars and aggregating them at the division
finally where you make up a whole train, is small indeed, isn't it ?
A. The difference in expense is very great.
Senator Parcher : Very great ?
A. Very great ; yes, sir.
Senator Parcher : I wish you wouid explain that?
A. The cost in moving a full train load of stock from Maryville
(as that point was mentioned a short while ago I will take that) to St.
Louis without interruption would be much less than to move the same
number of cars picked up here and there locally on our line.
Senator Parcher: But I was speaking of this, that the difference
in getting one car load at a station, one car load at Elmore, one at Clair-
mont, two at Maryville, three at Stunberry, and aggregating them finally
263
at the end of the line, these cars being gathered up by your local freight
passing up and down on your line every day upon a very liberal time
schedule so that they can spend 10 or 20 minutes at a station ; now the
difference between picking up one car load here and two at the next
station, etc., and aggregating them at the end of the run, and there
making up the train, I say there should be no discrimination between
the one and the two cars, or the final train load made up in that way?
A. We do not make any discrimination ; but you ask me in refer¬
ence to the cost. Every time we stop a train to switch cars in and out
it costs money, and every time we have to stop 20 minutes it costs
money. Time with railroads is money as well as with any individual.
Senator Parcher: Now will you say what has been the tendency
since the Wabash commenced running up through that country in 1879
or '80 of rates, up or down, since that time ?
A. I can't speak prior to 1884 ; since then there has been very
little change.
Senatar Parcher : What has been the tendency then in the country
at large ?
A. On our railroad our rates generally are lower than they were.
Senator Parcher : Well, then, if it be true that the tendency has
been downward for the last ten years, if statistics prove that, and what¬
ever this legislature may do will be subject to revision in a year and a
half from now, what is the serious objection to giving the railroad com¬
missioners power here to come together and agree upon the maximum
rates, and what is the objection to giving the commissioners power to
lower, as circumstances may demand and require and experience
warrant, the rates within that maximum rate within the interval be¬
tween the adjournment of this special session and the next regular
session ?
A. T have stated in my argument reasons why I believed such a
power should not be placed in the hands of the commissioners ; I think
it is unsafe to place such a power in the hands of inexperienced men,
who have no interest whatever in our property, and who are subject to
a constant pressure every day in the week for reduction in rates. They
will never be asked to advance a rate. The tendency will be down¬
wards, and if there is no limit to their power, no maximum beyond
which they cannot go—it is proposed that they shall fix a maximum
but not a minimum rate—if there is no limit to their power they may
ruin the property of every railroad in this State in a very short time.
They might in a very short time fix such rates as would not pay our
labor, say nothing about interest.
Senator Parcher: Take the past history of Boards of Commis¬
sioners in the States, what are they most susceptible to, the influences
264
of shippers, oí the commiinit}?- at large, scattered and diversified
throughout the thousand individuals or the concentrated power in the
hands of the railroads?
A. I think they are subject more to the infiuence of the public
than of the railroads.
Senator Parcher: Take Georgia as an example ; do you think the
railway law of Georgia has proved detrimental to Georgia or the rail¬
roads of that State ?
A. I am not familiar with the railroad law in the State of
Georgia.
Senator Parcher : Do you remember the history of that State in
that particular during the last six years, how much the aggregate
charges of railroads in proportion to the mileage has been decreased by
that commission ?
A. I have no information on it.
Senator Parcher : You don't know what effect it has had upon
railroad building in Georgia, if any ?
A. I have no information in regard to railroad building or busi¬
ness in Georgia.
Senator Parcher : You know whether the railroads of the country
would regard it as getting rid of a baneful nuisance if they could get
rid of the importunities of persons for passes, for free rides over their
lines ?
A. I have always been rather cranky on that subject of free
passes.
Senator Parcher: What direction does your crankiness lead you
in ?
A. I believe that free passes should not be issued to any one ;
they should only be on account of business ; if the rates of freight were
too high they should be reduced. And when a shipper travels he should
pay his fare. That is my belief.
Senatar Parcher : Now right on that point: take a stock dealer
and they claim they are passed back. You wouid just as leave col¬
lect the man's fare for riding back and ship his stock so that the aggre¬
gate amount of money you got from him would be the same 2
A. We carry shippers free both ways. Some railroads don't do
that, but we desire to have men go with the stock tp take care of it, and
to that extent we consider that they act as our agents and should be
returned free, and we do return them free.
Senator Parcher: Well, if you charged them their fare back, and
charged them that much less for going it would be the same to the town
pump wouldn't it ?
A. Do you mean if we should make a corresponding reduction
265
from the freight rate and collect his fare going back ? We could do it
that way ; it would be difficult to average our rates in that way,
though.
Senator Parcher : Take the Wabash system : What proportion of
all the passengers, that are carried over their lines are dead heads ?
A. There is a very small proportion now.
Senator Parcher : Then go back a couple of months ; I don't like
to mix up that interstate law with our investigations here, but go back
to your experience there with the Wabash at that time ; have you any
idea in the past months and years since the Wabash commenced run¬
ning as to that ?
A. We never dared to keep any account of it; I can't tell you
what proportion of our passengers were dead heads.
Senator Parcher : You could not give an opinion, then, as to
whether passengers, if all dead-headism was done away with, wouidbe
reduced to a half, or the railroad company make just as much money as
heretofore, you couldn't fix any judgment on that ?
A. No, sir ; I could not.
Senator Parcher: Do you remember whether the Wabash has
been charging substantially the maximum rates as you find them on
our old statutes ?
A. We have.
Senator Parcher : Charging substantially the maximum rates ?
A. Excepting on coal. We have adopted the commissioners'rate
on coal, the special class rate.
Senator Sparks : Mr. Smith, I understood you to say that the Wa¬
bash company does not give any rebate. I would like to ask you this
question : that in less than car load rates isn't your tariff based on the
100 pound unit in less than car load lots ?
A. That is correct.
Senator Sparks : That is your unit in less than carloads, in the
shipment say of 5 or 10 or more cars or one car wouldn't your unit
in that case be based upon the one car load ?
A. It would be.
Senator Sparks : Suppose my friend, the Senator from Mary ville,
and myself were engaged in the same business, shippers of live stock,
and he ships 25 car loads annually, that is during the year, and I have
only one car load to ship, do I get the same rate on your road per car
that he would get per car for his 25 cars ?
A. Exactlv the same.
Senator Sparks : Then you believe that to the Wabash railroad
no law passed by this legislature could be too strict or too stringent
266
for the prevention of discrimination between individuals in like busi¬
ness ?
A. We would favor the most stringent measure this body may
see fit to pass against the payment of rebates or against unjust discrim¬
ination.
Senator Moran : You said if a bill be enacted containing maximum
rates it should also contain a minimum below which the commissioners
should not go. About what per cent, would you say that minimum
should be fixed at; how great a per cent.less than the maximum rate?
A. The figures I have just given showing how very small a profit
we have, we earned last year about three cents for hauling a loaded car
one mile shows how disastrous an effect a very small reduction would
be on our road, and if the commissioners were empowered to fix rales
and would establish a tariff reducing our rates a very little below where
they are now, we could not pay interest on our bonds, and our bonded
debt in this State is only $22,000 a mile. We are not more than earning
our interest.
Senator Moran : A brother Senator suggests a question on the
ground that you take a shipper who accompanies his stock to be your
agent and compensate him by giving him a pass back. Would you
favor a Senator with a pass after the expiration of his term of office
who would secure the passage of an anti-free-pass bill taking him back
as your agent ? (Laughter.)
A. I could not promise to do that.
Mr. Kelly : At the request of a gentleman here, I would like to
ask Mr. Smith this question : whether he thinks it right to charge more
for a hundred pounds of any commodity when it is shipped simply as .
100 pounds, than for 100 pounds of the same commodity when it is
part of a car load ; that is whether the car load rate for 100 pounds
should be less than the rate for less than a car load per 100 pounds?
A. I do think that the rates for a full car load of pig iron should
be less than for 100 pounds of pig iron shipped at the same time in the
same car.
A Voice: I didn't understand that ?
A. I said that I thought that the rate for a full car load of pig
iron should be less than for 100 pounds of pig iron.
Mr. Kelly : Or any other time ?
A. Or any other time ? I understand that to be the question of
the Senator.
Senator McGinnis : I wanted to ask in an informal way if from
the tenor of the questions he has heard asked here, he is of the opinion
that this General Assembly knows enough about railroads to justify
267
them in undertaking to pass laws controlling railroads ? You need not
answer the question if you don't like to ? (Laughter.)
Senator Castleman : I hope the gentleman will include the last
questioner in his answer.
Senator Hazell : When did you arrive in the city?
A. About half past four o'clock this morning.
Senator Hazell: Are you acquainted with the other trafldc man¬
agers that are here?
A. Well, I am sorry to say that I do know some of them pretty
well.
Senator Hazell : Did you meet with them down below under a
tree and compare your brief, as you might call it, as to what you should
state before this committee ?
A. We did not, sir.
Senator Farcher : An answer is insisted upon to the question of
the Senator from St. Louis.
Senator McGinnis : (To Senator Farcher.) Oh, I didn't ask you
the question.
(The question was then insisted upon and read )
Mr. Smith: If the Senator alludes to the fixing of maximum
rates, I do think that this honorable body, with the assistance of the
trafile men now present, might fix such a schedule as might be satis¬
factory. (Laughter.)
Senator McGrionis : I think you have thrown a great deal of light
on the subject myself.
Senator Castleman : I move that we hear Mr. Wann-, who is
very anxious to go home to-night.
Mr. Brown : I would like to ask Mr. Newman what the cost of the
through train service is as compared with the train load rates and train
loads made up at the way stations?
Mr. Newman: That is a very difficult question to answer, as to
what is the cost of through train service as compared with train loads
made up at the different stations. I presume that is the question the
gentleman wants to get an approximation of—of the cost of carrying
freights in full train loads from any one point as compared with gath¬
ering a train load up in separate car loads at each of the several sta-.
lions ?
Mr. Brown : Yes ; that is the question.
Mr. Newman: That cost will depend almost wholly upon the cost
of switching at the several stations and the additional cost óf fuel and
water in the longer time required. A train starting from any given
point going direct through to destination will.consume much less fuel,
less water, less time of the men and necessarily reduce the cost ; a train
268
where the locomotive rues throagh, starting from one end of the line,
from one gathering up the train at several points. But as to approxi¬
mating what the difference is, it would be very difiäcult to tell.
Mr. Smith : Would you think it would be a wise provision to in¬
corporate into the law a limitation that in all circumstances no more
should be charged for any number of cars per car than for one car ?
Mr. Newman: I don't think that is a wise provision to any law;
there are some circumstances possibly where the charge will be made
by the carriers on full train loads at a lower rate per hundred pounds
than the charge will be made in several car loads. The custom of the
carrier has been to make 100 pounds the unit for less than car loads
and to make one car load as the unit for greater quantities than the
less than car loads, and you are fully protected. If there are any
reasons why you make the train load, although costing less, to be
charged the same as car loads I do not know them. You are fully pro-
ted in that by the custom of the roads in Missouri, and of every state
in the Union. I do not think it would be a wise provision to putsuper-
ñuous laws of that kind on your statute books. It looks like legislating
for something that we have no grievance for.
Mr. Newman : I wmuld like to ask the indulgence of the'gentlemen
to let me away to night. I will say in that connection that I will stay
here to morrow if desired, or will return at anv time the committee
desire me to come back. But I hope the committee will not keep me
here to night, and that any further questions they may have will be
asked now.
Mr. Miller: I want to ask him in case the.car load limit be adopted
as the absolute limit, and that all charges for any number of cars be
made the same per car as one car load, whether such an arrangement
would be beneficial to the railroads or to the people—which would be
benefited bv it most ?
A. I don't know that such an arrangement would be beneficial
either to the people or to the carriers, and I question it very much. I
say that certain circumstances may arise by which it would be bene¬
ficial both to the carriers and the public that the difference in cost be¬
tween train loads and between car loads should be recognized. As I
say, the custom of the country has made the single car load the unit
and I don't think there is any grievance will arise from that not being
on your statute book.
Senator Hazel : Mr. Chairman, before the motion to adjourn is
put, I would like to have the following resolution read :
Resolved^ That the Senate Railroad and Internal Improvement
committee requests shippers, merchants and others to send to H. W.
Johnson, chairman of said committee, immediately, one or two receipts
269
for freight paid since the 10th of April last, and one or two receipts for
freight paid during the month of February last, and any other infor¬
mation, so that the committee can ascertain whether general or local
rates have been advanced in Missouri since the passage of the inter¬
state commerce law.
I think that all these roads have advanced the local rates in this
State, and I want to prove that and I move the adoption of the resolu¬
tion.
Mr Newman : As that resolution is aimed at the Missouri Pacific
road, I would ask that these freight receipts will be such as to show
whether that is the charge by the laws within the State of Missouri
where any changes have been made, and that when any have been
presented, that the representatives of the roads complained of will be
permitted to show whether or not that is the charge of a Missouri rail¬
road.
At this point the committee adjourned until to-morrow morning
at 9 o'clock.
Wednesday Morning, June 1,1887.
The committee met pursuant to adjournment, Senator Johnson in
the chair.
The Chairman : Gentlemen, if there is nothing before the com¬
mittee, I will introduce to you Mr. Wann of the Chicago & Alton rail¬
road, the general freight agent.
Mr. Wann : Mr. Chairman and Gentlemen oe the Committee : I
don't know that I can say very much in addition to what has already
been said from raikoad standpoints and also from shippers, which I
have had the pleasure of listening to for the last two days. I will say
for the line of road which I represent in St. Louis, that we want to see
a fair bill passed. We want to see a bill passed that will prevent dis¬
crimination, and when I say prevent discrimination, I mean a bill that
will prevent any corporation giving one man a lower rate than another.
So far as our road is concerned, we deny that rates are exorbitant, we
claim they are just to the company and just to our patrons. To sus¬
tain my position in that, I will say that the road I represent is con-
270
sidered a prosperous corporation, it is prosperous possibly, because her
owners try to take care of our local patrons. And that is shown by the
fact, that, I believe, our earnings from local traffic average about 73 per
cent, of the entire earnings of the road. That, in my judgment, is con¬
clusive evidence that the rates are reasonable or else our local patrons
could not afford to ship over the road. Past experience has taught me
that there is no man in business who is going to ship at a loss, and I am
free to say that you can expect we are not going to carry freight at a
loss, if we can help it. Sometimes we are forced to do it. It has been
stated here|by gentlemen before your committee, since I have been
within yourfcity, that the handling of traffic at local stations, the com¬
parison, for instance, was brought with the Pennsylvania system, com¬
paring it^with the lines in Missouri. I think the comparison was a
very unjust one, for the simple reason that the system that the com¬
parison wasfdrawn from is one of the largest corporations in the United
States if not in the world. I will state for your information that the
earnings'of that system run over $100,000,000 a year, I think, and they
can afford^to handle freight at their stations cheaper on account of it&
volume.
Another'railroad gentleman stated to you the great importance of
having^maximum and minimum rates; in other words, drawing a line
between what is extortion and what is fair. Now, from our standpoint,
we thinkphat line^impossible to draw, for the reason that no corporation
can, in my judgment, afford to hold to exorbitant rates, for extortion
means that your traffic can not move, and I do not think there is any
corporation thatfcan afford to hold to such rates. Therefore, I claim
that all rates must be reasonable and fair, and, in my judgment, after
giving it a great deal of thought, that this whole trouble has arisen
from the fact, as I have before stated, possibly the best illustration
that came|before you was given by Mr. Fusz, the vice-president of the
Merchants Exchange, wherein be stated that in the month of January
there were received 4,800 car loads of corn in the city of St. Louis, of
which 4,600 cars, if I remember correctly, were received by six firms,
100 by one firm, and 100 by the balance of the merchants of St. Louis^
And he intimated, possibly correctly—I am not in a position to deny
or affirm—that those six firms had special prices from the railroads for
that corn. I don't know that ten per cent, of those shipments came
from the State ofj Missouri.' I don't think they did, but it illustrates
the tact that some thippers have been favored to the detriment of
others. And I will .say frankly that I am opposed to this and always
have been opposed to it, but we have been forced to do it ourselves. I
am free to say that, and, in my judgment, the best thing to do is ta
leave the making¡of the rates entirely in the hands of the railroads.
271
But you can not make your law too strong to suit me ; that if we
favor one man as against another we will receive the penalty, and be
made to suffer for it. That js discrimination, and that is what has
caused this trouble. I understand the question of passenger rates is
led up, too. 1 am not a passenger man, but my attention was called
to it last night, and I do not think the question has been brought be¬
fore the committee. I understand they want to reduce the rate of three
cents a mile, such as we have in the State of Illinois. It is safe to say
that our passenger business^there is ten to one what it is here, and we
get three cents a mile there, and we want the same rate in Missouri. I
do not think we can afford to haul for less than three cents.
I will say in connection with the interstate commerce law, that as
far as our company is concerned, although we are an interstate line al¬
most in all our traffic, that we have conformed to the law, and the result
has been that we have stepped out of all traffic from the seaboard to the
city of St. Louis, and we formerly carried nearly as much as any other
road. We also were forced out of all traffic from St. Louis to points
west of the western terminus of the trunk lines and east of the line of
our own road, which represents possibly hundreds of thousands of dol¬
lars to this country, We were forced to do that by the other lines
making less rates from Chicago than we could meet, because if we had
adopted that schedule over the through lines it would have forced us to
carry all our business in Illinois at less than one-half our present tariff,
so we conceded it to the other lines, and forced us to make what vou
7
might call our own and legitimate business keep up our earnings and
expenses.
Since I came to your city I have seen one or two bills that have
been presented showing rates which are called reasonable rates for the
railroads in Missouri to adopt. I will state to you frankly, gentlemen,
and I will try to show it to you, that if those rates are adopted, while
it may not be bankruptcy to the Chicago & Alton it means that we
will be forced to stop every improvement we are making on our road,
and we are putting in stone ballast and the best of steel rails we
can now buy in the market. Possibly in the State of Missouri last
year we spent a million and a half of dollars putting in stone ballast
and taking out curves.. That is because we have been prosperous, and
we spent the money in the State to make our property not only more
valuable, but safer for our patrons to travel on, and to transport freight
over it.
Now one thing that looks to me rather peculiar in connection with
this tariff', and it shows you that placing the rate-making power in the
hands of gentlemen who, while they may be all right, who are sincere
in all they say and do, do not understand a great many things in this
272
business. I have studied it eighteen years and I learn something every
day. Now make a note of this, it is something I never saw before.
They make a rate on manufactured articles lower than they do on the
raw material, making the rate on flour cheaper than they do on wheat.
It is the only tariff I ever saw that did that; it may be the correct basis,
but I can't see it.
Now I have stated that I will try to show you the efl'ect of the
tariffs introduced, and I can hardly make an exception. If you make
the rate across your State from one river to the other the shortest dis¬
tance being possibly from Hannibal to Kansas City 200 miles, it affects
every rate that is made from every Mississippi river point to the Mis¬
souri river. It is the basis of the rate from St. Louis to Kansas City,
Atchison, St. Joseph and Leavenworth. The short line, or the cheaper.
It is the basis for all supplies that come from the east through St.
Louis. It means if you put that rate from Hannibal it has got
to apply from St. Louis. The differential has been established and can
not be changed, under the basis of the trunk-line rate and has been
in effect for years, and has been established by the principal railroad
men in the United States. They hold a differential on first class freight
of twenty cents. If you reduce your rate from Hannibal to St. Louis
you reduce your rate from St. Louis twenty cents, and that means a
reduction for our road from Chicago to every Missouri river point of
twenty cents. It means further than that, it means reductions to every
local point on the line of the Chicago & Alton railway, because under
the interstate lav/ we can not charge more for a short haul than for a
long.
And in that connection I want to state my own personal views.
I am in favor of the long and short haul clause. There may be some
cases where it is necessary, or some roads where it is necessary to make
a lesser rate for the longer haul. Personally I don't think so ; and this
change in rates would not only affect the business of the line of the
Chicago & Alton, but of every road south of the line of the Northern
Pacific. I am just showing the effect of it if you reduce your rate
across the State. It is going to affect every rate on every railroad west
of Chicago and south of the line of the Northern Pacific railway, al¬
though that is foreign to Missouri.
I do not think that I have anything else to say on this subject. I
will be pleased to answer any questions as far as I can and will try to
answer them honestly, and if I do not know the proper answer to give
you I will tell you what I think. I am much obliged for your kind at¬
tention.
Senator Ball : Mr. Wann, under this interstate commerce law, the
Chicago & Alton is trying to comply with that, is she ?
273
A. Yes, sir.
Senator Ball : You recognize the fact that at a point on the Mis¬
sissippi river lumber from the pineries of the north floated down the
river, say to Louisiana, ought to be shipped to any point in Missouri
over the Chicago & Alton cheaper than from Chicago, oughtn't it ?
A. It is according to the distance. It depends upon circum¬
stances. If 5^ou would name the points, Senator, I will try and ex¬
plain my position.
Senator Ball: Well, you know where Chicago is ?
A. I have been there.
Senator Ball: You know where Kansas City is and Louisiana;
Louisiana is a little over half way between the two places. Now
should not lumber be shipped from Louisiana to any point on your road
between Louisiana and Kansas City cheaper than from Chicago?
A. My judgment is that it is, sir. I will say in connection with
that that I have not charge of the local line of the Chicago & Alton
railway.
Senator Ball : Do you know it to be a fact that the Chicago &
Alton road does ship lumber to Fulton, Missouri, and along the line of
your road as cheap from Chicago as it does from Louisiana ?
A. I do not know that, sir ; no, sir.
Senator Ball. If it is a fact it ought to be corrected, oughtn't it ?
A. I would say, yes. At the same time. Senator, I would like to off"er
you an explanation in connection with that, and I ouly do it as a cer¬
tain thought came to me. As I say, I.have not charge of it ; I do not
hesitate to say that should be less when stock business to Chicago is
very heavy. We handled last year about 42,000 cars of live stock. It
is a question of hauling those cars empty from Chicago, or loading
them with lumber, and possibly in some instances we may be glad to
get that car loaded back to Fulton on a low rate. I do not concede
that we do charge from Chicago as low as you get from Louisiana, and
if you know that to be the case, I would like to have the figures, and
will take it up with pleasure for you. There may be circumstances
under which we have done that.
Senator Ball : I will be frank with you, and state that so far as
my personal knowledge is concerned, I don't know that to be a fact,
but I will say this, that the lumber men in my town said to me, that
when they were out on the road trying to sell their lumber, parties at
Fulton and at other points on your road said to them that they could
get rates from Chicago that were better than the rates from Louisiana ?
A. Well, if you will permit me, possibly I am in a position to
hear more complaints of that nature than almost any of you^ gentle-
R M—18
274
men, and I will tell you a story about it. It is within six months past
that the firm of Samuel 0. Davis & Co. of St. Louis sent me a letter
from one of its principal men in Kansas. It was to the eíFect that,
you need not be surprised if you are losing the trade at St. Louis. I
received the shipment that you sent me at such a date, the weight was
so mucb^ and our freight charges were so much, (naming them,) and
it came via the Chicago & Alton. I received from New York about
the same time, the same amount of goods which came east over a trunk
line and over the same road, the Chicago & Alton, via. Chicago, and
my freight—" I think he said the freight from St. Louis was some .fi26,
and the freight from New York was $21 and some cents. I know it
was about $5 less than the rate from St. Louis. He said, that is the
reason that you can't sell goods in this territory." Well, I let the
young man talk to me for half an hour, and he made my office a little
bluer than this room is now, you may imagine, and went for the Alton
road at a great rate. I told him I was there to hear such things, and
was very glad to hear them ; that it was only our friends who told us
about them, and if you will just give me five minutes, I would like to
write to Mr. Davis. And I wrote him in connection from that letter,
that if the party would prove his statement, that this was a contract
to carry hi^freight from St. Louis to that place free for 12 months, and
it would be honored as such.
Well, when it simmered down, it was a lie. He meant all right,
but the weight of the goods which came from New York was less than
one-half the weight of the St. Louis shipment. He did that to stir up
St. Louis to try and force things down there. There was not a word of
truth in it. And in those cases, I have always asked for the proof, and
when we get a complaint, we always go to the bottom of it, and if there
is anything in it, we try and rectify it at once, and we are always glad
to do it for our friends. And we are always glad to have our friends
notify us when they think there is anything wrong.
Senator Ball: Under the interstate law, isn't it possible for the
Chicago & Alton road to ship lumber or anything else from Chicago to
any point on your line in Missouri as cheap as from Louisiana, and still
be within the purview of the law ?
A. To ship as cheap from Chicago to a station west of Louisiana
as cheap as we do from Louisiana ? I don't know that it would cume
within the law. That is, that we would not violate the law by doing
that, providing we did not charge less from Chicago.
Senator Ball : That is the point I was trying to get at. Now, I
want to ask you another question : Is it true that the Chicago & Alton
under the workings of the interstate law has advanced its rates on in¬
terstate business?
275
A. No, sir; to my judgment it is just the reverse. That is my
understanding of the tariff. The tariffs are not made in my office ;
they are made in Chicago.
Senator Ball : How do you account, then, for the complaint, taking
it to be a fact, that there is a complaint from my town that rates are
higher on interstate commerce business than heretofore ?
A. Well, Senator, if I understand you, you live in Louisiana ?
Senator Ball : Yes, sir.
A. Under the interstate commerce law, the Keokuk road that
runs up the line of the river have put in rates from St. Louis to Louis¬
iana that we cannot meet.
Senator Ball : Why ?
A. Because we would like to be consistent in what we do. That
rate is possibly forty per cent, less than our rate to Louisiana. If we
met that rate to Louisiana, after that time we could not charge a higher
rate to any station that is south of there, XL we did that, to be con¬
sistent, we would have to change every rate we have got in Illinois for
the same distance, and it would reduce every rate we have forty per
cent. ; therefore, we conclude we had better concede that business.
As good an illustration as I can give you of that is our position in re^
gard to going out of the seaboard traffic, because it would reduce every
rate we had in Illinois to do it, and we have conceded it to Louisiana,,
also as far as St. Louis and East St, Louis are concerned, to the Keokuk
road, because it would affect our rates so much that we had better do so.
Louisiana isn't hurt any ; your rates, if I remember correctly, are low
enough, and it is only the question of using one road instead of two.
Senator Ball : I wish you to understand me that we are not com¬
plaining of the Keokuk road, because we think a great deal of that
road, and if every road in the State of Missouri was as popular with its
people as the Keokuk road is, there would be no complaints here
to-day.
A. I am very glad to hear that. We like to have popular com¬
petitors, I will say that.
Senator Ball : What I want to get at is this : Do you know
whether or not the Keokuk road is able to pay its running expenses
and at the same time meet its interest on its debt, if it has any ?
A, I don't know.
Senator Ball : Don't you recognize another fact, that the Keokuk
road has had a great many disadvantages to overcome that the Chicago
& Alton has not had ?
A, If I am informed correctly, although I am not thoroughly
posted, they have a large territory north of that and they are forced to
those figures by the steamers.
276
Senator Ball : Now, if the Keokuk road is making money on the
rate that it hauls freight for, ought not the Chicago & Alton road to
make money on the same rate ?
A. I don't know that the Keokuk road is making money from
that traffic. In that connection, Senator, I will say frankly, if you con¬
fine it to the Keokuk road business proper, the business that origi¬
nates on its own road, I will say positively that in my judgment it
could not pay expenses.
Senator Ball: Now one branch of the 0., B. & Q., the Keokuk
road being a branch of it, doesn't one line and the Chicago & Alton
run around through Illinois down to St. Louis ?
A. It has a branch that way, if I am informed correctly. They di¬
vide the territory. A certain per cent, goes from East St. Louis and a
certain territory from St. Louis. Their system is very large.
Senator Ball : Then you think that the Keokuk road from Bur
lington down is fed from other sources than local, otherwise it could
not pay expenses ?
A. That is my judgment.
Senator Ball: You know that the Keokuk road runs through a
"country that overflows and has had a great deal of trouble and expense
from that cause, don't you?
A. I know, and we have had trouble in the same way.
Senator Ball : Not to such an extent ?
A. I have never been over the Keokuk road ; I have read in the
papers where they have been washed out, and I know where we have
been washed out. In fact, I don't know a road that is not subject to
those misfortunes.
Senator Ball : Is it a fact that the Chicago & Alton road will haul
freight from St. Louis to Louisiana a very great deal cheaper than they
will to Curry ville, eighteen miles west of us?
A. That is not true to-day. That is the reason that we revised
our tariff and went out, under the interstate law, of Louisiana business.
Senator Ball : Is it a fact that you are to-day hauling freight from
St. Louis to Mexico, Mo., cheaper than you are to Curry ville and Van¬
dalia ?
A. Those two stations being east ?
Senator Ball : East of Mexico ?
A. It is not true, sir.
Senotor Ball: Has it not been true in the past?
A. I think not, sir ; in my judgment it has not. My attention
never was called to it, I will say that frankly.
Senator Ball : Hasn't it been true that shippers could ship from
277
Kansas City or from Mexico per car cheaper than they could get a car
at any station east of Mexico and west of Louisiana ?
A. If that is the case, which I do not admit, the tariff don't show
that, and that is all I have to go by, for the simple reason, as I have
explained to you, that I have not charge of the local traffic on the road.
Senator Ball : Don't yau meet that by giving a rebate ?
A. I am free to say. Senator, that the chances are rebates have
been paid on the Chicago & Alton. I don't hesitate to say that. I am
not in a position to deny or affirm it, for the simple reason that those
matters are handled entirely in the Chicago office.
Senator Ball : Has that practice been abandoned if it ever was
carried on ?
A. As far as I know positively ; yes, sir.
Senator Ball : I will ask you a general question : Is it the policy
of the roads in Missouri to abandon that practice of giving rebates
and discriminating between individuals now?
A. Yes, sir ; positively.
Senator Ball : Have they agreed upon that sort of a policy ?
A. There is no agreement at all, sir, for any road, as far as I
know, not to pay rebates ; we have made our tariffs and agreed to
maintain them.
Senator Sears : I desire to ask the gentleman just one question
in connection with Senator Ball's question. Now Hannibal is near
Louisiana, and is a very large lumber market, and supplies the country
in which I live, Hannibal does, and I am informed by lumber men that
the rates from Hannibal to Macon, seventy miles, are as high as rates
from St. Louis to Macon, 170 miles. Now is that right?
A. Well, that is not on the line of our road.
Senator Sears : No, sir ; I know it is not on your road ?
A. On general principles I would say positively it was all wrong.
Senator Sears: Is it not a fact that the Hannibal & St. Joe road,
and I don't know but that the Wabash, too, have increased their rates in
the State on local freight since the interstate bill ?
A. That is not on the line of my road. I was talking to Mr.
Smith last night, the traffic manager, who appeared before you yester¬
day afternoon, and I stated to him it was an assertion made to me that
the Missouri short rates were higher, Wabash short line rates were
higher than Missouri Pacific, but on long rates the Missouri Pacific
were higher than the Wabash. And Mr. Smith explained that under
the interstate law he cannot charge a higher rate to Omaha under the.
basis of making our rates; the rates from Omaha are about the same
as to Kansas City; and I don't know but what it applies in your case
although I am not familiar enough with the State to know.
278
Senator Ball : Cannot roads afford to haul the raw material cheaper
than they can manufactured articles, or manufactured stuff?
A. As a rule I should say yes, for the simple reason that the risk
in case of accident would be less.
Senator Ball : Can't you haul wheat at a lower rate than you can
haul ffourin sacks or barrels?
A. The cost, I should say, is about the same, and possibly there is
very little difference if any in the value. I think, if I remember cor¬
rectly, a car of flour of about 100 barrels is worth about $400, and as
I do not speculate in wheat I don't know what the value of wheat is,
but they load about 600 bushels to the car. Possibly the valuation of
wheat is greater than it is on flour, so that our risk is greater.
Senator Ball: Now 1 want to ask you this question. You stated
a moment ago in answer to ray question about hauling lumber from
Chicago west of Louisiana being something nearly as cheap as you
would haul lumber from Louisiana west, and gave as a reason for that
that possibly a large number of cars were in Chicago having hauled
stock and other things there, and that you could afford to haul lum¬
ber back cheaper on that account. Now, then, can't you afford to
haul stock as cheap to Illinois as you can afford to haul the lumber
back west ?
A. No, sir ; for this reason: On live stock the risk, as you know,
is greater possibly than on any other freight we handle, for the reason
that we have to run it faster and we do run if faster than our dead
freight. It has the right of way over every train on the road except
passenger trains, and the flow of live stock is one way. You all know
it is not going from Chicago to Kansas City, but it is going from Kan¬
sas City to Chicago, and it is a question of running the cars back
empty. Bécause we may have 400 cars of stock into Chicago to day
and have an order for 400 empties at Kansas City to-morrow, and may
not have one west of Bloomington, and may have to hitch up a train
load of cars and pull them into Kansas City empty to take care of our
patrons.
Senator Ball: Who gets the benefit of the lumber hauled from
Chicago, say at half price, to points west of the Mississippi river?
A. I don'C understand the question ? Half price ?
Senator Ball : I was only assuming that ; I will put it in a differ¬
ent shape. Who gets the benefit of your reduced rates on lumber from
Chicago to points in Missouri west of the Mississippi river ?
Al^ I don't know that I exactly understand your question and I
want to answer it correctly.
Senator Bali : Well, take it for granted that I am in the lumber
business in Fulton and I buy several car loads of lumber from a lum-
279
her merchant at Ohicag:o at a very considerably reduced rate, when
you hauled the lumber for me—
A. You mean the price of the lumber not the tariif rate ?
Senator Ball : I am talking about the tariif rate. Now I will get
the lumber and you haul it for me at a reduced rate and sell it to
some one. Who gets the benefit of that rate, me, you or the con¬
sumer?
A. I am free to say that a shipper never divided it with me, so I
don't get it. That must lay with the consignee. We are not responsible
for how our consignees act about it ; if they want to keep it themselves
we can't say give it up.
Senator Ball: As a matter of fact, taking your position to be
true, that when a large number of cars are run into Chicago filled
with stock, and the cars are there and the question is to bring them
back empty or bring them back full, if you bring them back full of
lumber or groceries or dry goods, or other things for along the road at
a reduced rate, does not, as a matter of fact, the consumer get the
benefit of the reduced rate ?
A. I don't think they do ; no, sir.
Senator Ball : The consignee gets it ?
A. Either the shipper or the consignee. It depends upon whom
the contract is made with. If it is made with the shipper, he may sell
his goods that much cheaper to the consignee and secure the trade
from other competitors. And that is where the evil has come in.
Senator Ball : Now, Mr. Wann, isn't it a fact that stock and grain
should be hauled at -a less rate, very much less rate, than first class
freight ?
A. It is, sir.
Senator Ball: Wouldn't it be policy for the roads to concede the
hauling of grain and stock at a very considerably reduced rate and
allow the roads to haul first class freight at a considerably increased
rate ?
A. It is very easy. Senator, to answer yes, but if we advance our
present rates I would want to leave St. Louis just for about sixty days •
There is not a merchant in St. Louis who would not denounce every
railroad that advanced what we call the class rates enough to make
up the difference. As I explained to you a second ago, our live stock
shipments last year were between 42,000 and 43,000 car loads. It is a
class of freight that we should have a fair living rate on. I don't say
an exorbitant rate, but we should have a fair rate on it, because we
have to run it at an extra rate of speed ; the risk is greater, and as you
know, we have to haul possibly 75 per cent, of the cars one way empty.
Grain, possibly, we could handle cheaper than any freight which comes
280
under the same class, I was going to explain, for the reason that we
load the cars both ways, and when you can load all cars you have got
both ways, you can transport freight just that much cheaper.
Senator Ball : A farming community, or^ those engaged in farm¬
ing, is very much larger in proportion than any other class of people
you deal with, are they not ?
A. I think it is the heaviest part of our shipments.
Senator Ball: Who make complaints more frequently, the farm¬
ing community or the merchant with whom you do business?
A. The merchants ; for the simple reason that they are at home
with us.
Senator Ball : Don't you think that it would be wise for this legis¬
lature to fix maximum rates, reasonable maximum rates, for the haul¬
ing of stock and grain and other commodities that the farmers have to
deal with, and fix that low to protect them, and let you and the mer¬
chants fight it out among yourselves ?
A. It is a great deal easier for me to answer yes than no ; but I
will say in answer to that that I don't think it would, because the
question comes up, what would ^mu claim to be a reasonable rate ?
What you would claim to be such the railroads might show you would
be ruinous, and would mean bankruptcy to the roads. As I tried to
explain a moment ago, no railroad can afibrd to charge and maintain
an unreasonable, unjust or extortionate rate. They are there for busi¬
ness, and if they kill a man to-day, they cannot expect to get his traffic
to-morrow. They have got to treat him fairly and squarely.
Senator Ball : That is true with the merchajits, but it is not true
as to the farmers ?
A. It is equally as true with the farmers as it is with the mer¬
chants. If a farmer is going to ship his traffic and he sees a loss ahead,
he won't do it.
Senator Ball : Doesn't he thereby sustain a loss when he has no
other way on earth to get to market except over your road ?
A. I claim there is not an exorbitant rate on the Chicago & Alton
road.
Senator Ball: I am not saying that there is ; but if a farmer is on
your road and he has got 500 bushels of grain, and it is twenty to thirty
miles to another point to ship from, must he not, as a matter of course,
ship over your road ?
A. Yes, sir.
Senator Ball: Now, oughtn't we to take care of that man and leave
the merchants in these commercial centers to do the best they can
where they have competing points ?
A. No, sir; I say that the railroad has got to take care of that
281
man, and that they do take care of him ; they cannot afford to do
otherwise than take care of him. My answer to the question whether
I did not think it advisable for you gentlemen to make reasonable
rates, was taking into view the position I hold that our rates are rea¬
sonable. I take the position if j'ou fix maximum rates that they are
liable to and will change every rate we have got from Chicago and
every rate we have on the line of the Chicago & Alton road. It is not
the question of unreasonable rates, it is not the question of unjust
rates,; it is the question of discrimination in giving one man a lower
rate than another that has caused all this, not only the bills in this
State, but in every other State, and the interstate bill.
Senator Parcher: I understand you to lay it down as an axiom
that extortion cannot well subsist, that the substance upon which it
feeds will die out after a while by reason of that extortion ?
A, That has been my experience.
Senator Parcher : Now following up what Senator Ball has stated
you say that it will apply the same to the farming community as to the
mercantile communities where they have competing points ?
A. Yes, sir.
Senator Parcher : And the merchant that can change perhaps from
one business to another with greater facility than the farmer, let me
ask what the farmer would do in a community, suppose extortion was
practiced upon that community for ten years, would he go into some
other business or change his locality ? in other words, how are they going
to help themselves other than to suffer on, they would lose what they
may have if they change their locality, and would it be any better to
suffer on at their hands ?
A. If a farmer can't live for ten years on the farm and subsist, I
won't admit that there is any extortion.
Senator Parcher: You won't admit extortion ?
A. No, sir.
Senator Parcher : Supposing that for ten years he has had a rate—
I will go into my section of northwest Missouri, your road don't come
there, but then we are asking all of you at the same time—and he has
had a rate to Chicago for stock of S50 to S55 a car, and then for the
next seven years there has been a continuous rate of $70 a car to the
farmer and every small shipper—that is the men that ship twenty or
twenty-five cars a year, would you call that state of affairs extortion?
A. It depends upon the circumstances that force the low rate in
the first place.
Senator Parcher: How should the rates in 1887 compare with
those in 1880 on the main lines, such as the Chicago & Alton and the Q. ?
A. I am hardly prepared to answer that.
282
Senator Parcher : What is generally true of railway rates in the
country ?
A. The railway rates have beeh reduced.
Senator Parcher : Then I will repeat that question : If it be true
that in 1878, 1879, 1880 and 1881 the common rate that any man could
get with one or two car loads to ship, was f50 or $55, then if it had been
proved for seven years it had been for $70 a car —
A. How long IS that f50 rate in ? The reason I asked was we
hâve hauled freight from St. Louis to San Francisco for ten cents, but
that was nothing to go by.
Senator Parcher : I will say it has been in effect ten years.
A. I should say it looked very inconsistent, then.
Senator Parcher ^ Would you call it extortion ?
A. That is a word I don't like to use. I would say it is very incon
sistent.
Senator Parcher : Well, let us call things by their right names. It.
would border very much on the line of extortion.
A. I would not like that evidence brought up on the Alton road.
Senator Parcher: Would that be extortion ?
A. If it was on the Alton road I think I would admit it was ex¬
tortion ; I don't like to say anything against a competitor, however.
Senator Parcher : If that exists for seven years now I want to ask
you what is the limit of the life of extortion for want of something to
feed upon (Laughter)?
A. I will give it up, make the next one easy.
Senator Parcher : If it is practiced upon a rich country, very pro¬
ductive, that takes something almost superhuman to kill it off on
account of its natural advantages and the pluck of its people, extortion
can subsist then a lenghth of time that ought to be prevented perhaps
by a little law, oughtn't it ?
A.
Senator Parcher : Well, if it subsists that long, a little law would
be in place, wouldn't it ?
A. In connection with that there are a great many things to be
considered. I don't want to be construed as favoring the large shipper.
It doesn't look consistent and you are pleased to call it extortion, which
r wouldn't contradict, but the chances are that a shipper derived the
same profit from his shipments under the $70 rate that he did under the
$50 or $55 rate.
Senator Parcher : The chances are, you say, that he does ?
A. That he did or does, I don't know that. The price of meat
may have gone up in the meantime and there are very few roads in
283
the State of Missouri thai are making big money out of the Missouri
shipments, if there are any—surplus money—over and above expenses.
Senator Parcher : You are probably aware that in 18T8-1880 those
same men paid as high as eight cents a hundred for hogs in Chicago?
A. I lived in New York then.
Senator Parcher : And eight or nine cents for cattle, whereas now
the price is lower, so that that doesn't account for the difference in the
rate ?
A. I know that my butcher's bill does not show that.
Senator Parcher: If, under those circumstances, you were living
on one line of railroad and then another line came in ti:>rough the
country, you would think that should have a tendency to reduce rates,
would you not?
A. No, sir ; I don't think so, and the reason is if any locality has
a railroad that is operated fairly and squarely in justice to itself and
its competitors and reasonable rates obtained, you can not expect that
two roads are going to live on what one did. It is natural that roads
will get together in combinations when they onl}^ get half the traffic
that they did before.
Senator Parcher : Then the pool becomes necessary when men
have been so foolish as to put their money into railroads when they had
enough; you would justify the pool in order to inñict upon the com¬
munity the subsistence of two railroads, whereas one could do all the
work necessary ?
A. The trouble is in the past, and I am sorry to say it, that pools
were necessary to protect one railroad against another, not from the
shippers or to extort anything from them, but it was one railroad going
for business that they had no right to, it was not their territory.
Senator Parcher: What would you do in the case I have in¬
stanced ?
»
A. I would not bring any more railroads there. (Laughter.)
Senator Parcher: When we found they were coming through that
country, although we didn't want them, to save ourselves from being
cut off we went to work and were foolish enough to give them $50,000
or $80,000 to come there ; now I ask you how you are going to prevent
them from keeping up that rate? Is it right or wrong, or what is the
remedy for a people that are circumstanced as I have described when
they have a legislative authority that has granted thern these fran¬
chises indicting these things upoii the people ? Now would you look
to the State to protect them against what you have almost admitted to
be extortion ?
A. When you talk about extortion in that connection I want to
explain myself; I don't know the road you refer to.
284
Senator Parchar: It don't make any difference?
A* It makes this difference: That while you call that rate extor¬
tion, if no other road in your same locality charges less, I say the rate
isn't extortionate in my judgment. I hope I am not referring to the
Alton road.
Senator Farcher : Is it the practice the of Chicago & Alton to
ship one car at the same price that they do fifteen or twenty ?
A. Yes, sir.
Senator Farcher : That is your theory ?
A. That is our practice, and we think it is a correct principle.
Senator Farcher: It is not the practice then of the Alton that if
one man comes in with fifteen cars of stock, such a man as Weiler of
Illinois, whom we all know, comes into Missouri and scoops up all tho
stock and goes to the Alton with it, you wouldn't make him any better
rate than the small shipper, would you ?
A. Not to-day.
«•
Senator Farcher : Not to-day; how long has that been the prac¬
tice ?
A. I don't know. I say not to-day, because I don't like lo an¬
swer prior to the first of April as to what we may or may not havo
done.
Senator Farcher : You don't do that under the interstate com¬
merce law ?
A. We don't have to do it, because our competitors do not. Thero
are twenty-two lines across here between East St. Louis and Chicago^
and we do not think they are quite as good roads as ours, and in the
past to get our business they would put in cut rates to force people to
go to them.
Senator Farcher : You deem it right in theory that there should
be no discrimination against the small shipper as such?
A. Yes, sir.
Senator Farcher : And you are practicing it now ?
A. Yes, sir.
Senator Farcher: Is there any justification whatever where there
is water competition, such as at the border cities of the State, and where
you have sharp railway competition, where you go in there and cut
each other's throats in rate wars, and thus decrease your aggregate re¬
ceipts in recouping yourself upon the localities that cannot help them¬
selves ?
A. There is no justification in that, and I will say that our road
that where we have been forced by our competitors to reduce our
through rates, we have never advanced our local rates to make it up.
Senator Farcher : What does the Alton road think of the passen-
285
-ger business ? would the Alton road like to have the pass business
stricken out by statute?
A. I can say the Alton road isn't in favor of issuing passes to ship¬
pers, because it influences business.
Senator Parcher: Is it in favor of issuing passes to anybody else?
A. If there could be a law passed in the United States prohibiting
passes, as far as I am concerned, I would be perfectly willing to pay
my own fare on any road in the United States.
Senator Parcher: Is it as objectionable a form of discrimination
as is connected with your whole railway business ?
A. It is the meanest discrimination we have got to contend with.
Senator Sebree : Why do you want a law to prevent your railroad
from issuing free passes; haven't you got the right now to refuse them ?
A, I will tell you why ; all roads are not as honest as the Alton ;
there are other roads that are possibly a great deal more honest than
we are, but if I stay in St. Louis as I do and solicit a man's traflic and
he says, "'Wann, I want to go up to Kansas City," and I say, "buy a
ticket; " he goes to my competitor and says, " I will give you my traf¬
fic if you will give me a pass." There is the evil of it.
Senator Sebree : I don't wish to introduce a comparison between
the honesty of railroads, because the bottom might drop out of the
whole business. I just asked why you want a law when you already
have the right not to do it.
A. I don't know what you mean by the right ; by right of agree¬
ment between the different lines ?
Senator Sebree : Can you not now refuse to issue a free pass to
^very human soul ; haven't you the right to do it ?
A. I will explain in my remarks to you by saying that I have not
issued a pass to a shipper from St. Louis since the first of January,
1885 ; I have not had a blank trip pass in my office since then.
Senator Sebree : Then you certainly don't need a law to prevent
you from issuing free passes when you already have the right ?
A. No, sir; we don't need any laws if the roads would do right.
Senator Sebree : Isn't there a law to prevent the railroad com¬
pany from discriminating betweeñ Smith and Jones, and yet don't you
fio that in the face of the law ?
A. Well, then, we want the law enforced.
Senator Sebree : Can you suggest how we should enforce it?
A. As I say, as far as penalties are concerned, personally I don't
<5are what you make the penalty, if you will force the roads to put up
their rates and make them maintain them.
Senator Sebree: How about putting them down?
A. Well, give the railroads the option of putting them down.
286
Senator Sebree : You want the law to compel the railroads to put
the rates up and leave the railroads the option of putting them down ?
A. No, sir.
Senator Sebree : That was your remark ; you want a law compell¬
ing the railroads to put the rates up ?
A. When I say put them up, I mean to put them up on the side of
the depot. (Laughter.) I am much obliged to you for the correction.
Senator Sebree : How does your State business compare with your
interstate business on your road?
A. I really don't know ; if you wish the statistics I will have them
made up tor you.
Senator Sebree: I will ask you, since the passage of the interstate
law, if you have not raised, the railway companies of this country,
their rates very materially from water competing points ?
A. I have been so busy since the first of April that I have not
looked at 10 tariffs oil the line of our own road.
Senator Sebree : Isn't that a fact that they have raised their rates
very materially for all these water competing points ?
A. That is what I have read.
Senator Sebree : That is in the interest of the railroads, isn't it ?
A. No, sir.
Senator Sebree : Don't that increase the earnings of the road ?
A. No, sir.
Senator Sebree : It simply drives the business away from them
and it goes by the river ?
A. Yes, sir.
Senator Sebree : Haven't the river transportation companies
raised along with the railways ?
A. We find they keep them low enough to keep the boats pretty
well loaded.
Senator Sebree: Has not river transportation been raised at these
water competing points apace with the raising of the rates by the
railway companies ?
A. I don't know that it is a fact, but I had occasion to ask a line
of boats for a rate on a large traffic tj;iat was coming from the north for
New Orleans and they would not give me a rate to exceed three weeks
ahead.
Senator Sebree : Although the rates have been raised by the rail¬
way companies at these water competing points, they have not been
lowered correspondingly at the non-competing points ?
A. I think the average to the non-competing points has suffered
a reduction although the points in competition with water have to be
advanced.
287
Senator Sebree : Under the interstate law ?
A. Under the interstate law, yes, sir.
Senator Sebree : Have they reduced the rates at non-competing
points since the taking effect of that law ?
A. Asnear I can ascertain from what I have heard and read the
average non-competing rate has been reduced. I will say as far as the
rates from East St. Louis east are concerned, every rate has been re¬
duced perceptibly.
Senator Sebree : In this State, as a matter of fact, has not the
railway companies raised the rates at the non-competing points as well
as at the water competing points ?
A. I will say that our rates have not, and from what Mr. Newman
and Mr. Smith said, they have somewhat lower rates if I understood
them correctly.
Senator Sebree: You endeavor at the water competing points to
compete with river transportation. How much lower a rate do you
carry it at than you otherwise would?
A. We don't pay any attention to them.
Senator Sebree: Don't you fix your rates so as to compete with
the river?
A. In a few special months we reduced the rate, because the
river was taking all of it, but we took the same traffic for any station
this side.
Senator Sebree : In the winter time you raise the rates at these
points, don't you ?
A. I don't know what they will do this winter, but I will say in
the last six years there is only one or two commodities, very heavy ar¬
ticles such as nails and cast iron water pipes, where they have made a
rate of 12^ to 15 cents when our tariff was 30, that we have done that.
Senator Sebree : Isn't that the practice of railway companies in
the winter time when the water competing points are frozen up and
unnavigable that you raise the rates ?
A. I will say as far as I know that the other roads do that.
Senator Sebree : But you think yours does not ; you have some ap¬
prehension about, not the integrity of the railroad commissioners of
this State, but you seem to think their judgment is insufficient to regu¬
late the railways with regard to the tariff?
A. I would say the result of their figures show that they have not
studied the question out, not that they were not perfectly sincere and
honest.
Senator Sebree: You illustrate their lack of judgment by giving
an instance of their having a lower rate on flour than wheat, and a
lower rate on agricultural implements than on the raw material ?
288
A. I didn't say anything about agricultural implements ; I made
the assertion that there was a rate made on the manufactured article
*
less than on the raw material. I referred to wheat and flour.
Senator Sebree : Why is it that they are incorrect in having lower
rates on flour than wheat, on account of the superior value of 100
pounds of flour to 100 pounds of wheat ?
A. Our rates are the same, our rail rates.
Senator Sebree: But I am speaking of the conduct of these rail¬
way commissioners?
A. I don't know who made this rate, I don't know that the rail¬
way commissioners made the rate ; I think Ï found it in Senate Bill
No. 4.
Senator Sebree : Have you seen the rates sent in by the railway
commissioners?
A. Yes, sir ; I think I have it in my pocket.
Senator Sebree : How do you like that ?
A. I don't like it at all ; I could give you the result of that sched¬
ule of rates in a second.
Senator Sebree : I would like to have you do so ?
A. That would mean on our road from St. Louis and from Chicago,
and on every local station on the line of our road that takes those rates ;
it would cause a reduction in first class of 16 cents ; second class of 11
cents; third class, 6 cents ; fourth class, 4 cents; and 3 cents on third
class; and that would not only affect our road,but every road south of
the line of the North Pacific railway.
Senator Sebree: Have you seen the rates in the proposed Clay-
comb Bill No. 4 ?
A. Yes ; and that is the one where the flour rate is lower than
the wheat.
Senator Sebree : You think that rate is too low ?
A. I do.
Senator Sebree: We have a maximum rate now established by
law; do you pay any respect to it ?
A, If I understood the commissioners correctly yesterday, we
conformed to that rate, sir; so we must like it whether we want to or
not.
Senator Sebree : Suppose from my town a man comes to you with
twenty-five cars of cattle ; if that train is unbroken and goes on to St.
Louis, you can ship that at a less rate per car than you can the same
number of cars on a way freight?
A. That is true.
Senator Sebree: Do you think there ought tobe any difference
per car in through freight, then, and local, as you might call it?
289
A. The difference has never been made ; the cost is really more
on the local than on the through train ; there is aplace where we give
the local man the benefit of the through rate.
Senator Sebiee : There has been some talk here about where they
have two railroads ; when there is business enough for one doesn't a
new road develope the country and increase the tonnage, and don't it
naturally follow that they ought to reduce the rate because a new road
comes in ?
A. I don't know about that ; it develops the country, but they
can't make a field yield eighty bushels to the acre where it only yielded
thirty before, just because a new road comes in there.
Senator Sebree: What do you think about fixing the rate for
Missouri roads, with reference to the rates established in Kansas, Iowa
or Illinois?
A, I am not familiar enough with the railroad laws of those States
to give an opinion on that.
Senator Sebree : Do I understand you oppose fixing maximum
rates by law ?
A. Yes, sir.
Senator Sebree: You want the companies to fix their own rates ?
A. Yes, sir.
Senator Ball : Have the railroads in the West a classification that
they use jointly ?
A. We have a classification we use on, I think, thirty six or thirty-
eight western roads ; what we call the western classification ?
Senator Ball: Now, if the legislature fixes maximum rates and
establishes the same as a law, ought not those rates in your opinion to
be based upon that ciassificatian ?
A. We think so ; we think it is a good one, or we would not use
i t we think it the best there is.
Senator Ball : Have you seen the rates in Senate Bill No. 1, as
fixed by Mr. Ripley ?
A. I have not, sir.
Senator Parcher : Inasmuch as your road runs through Missouri
and Illinois, I would ask you what, in your judgment, would be a fair
diflerence in the rates between the two States, taking the aggregate
business done in this State and Illinois ?
«
A. I really am not in a position to answer that question ; I would
have to look through the tonnage statements of the two States before
I could answer that. We do a very large traffic from East St. Louis
that comes from the southwest. Our tonnage is very heavy over in
R M—19
290
Illinois ; we get all we can of this southwest territory, and also what
we can that comes in on the Missouri Pacific system, not only on the
Missouii division, but also the Illinois division, from all over the west¬
ern country.
Senator Farcher : Now, when you sit down to make a Missouri
rate, and fix it at a certain amount, you have some reason in your mind
for the conclusion that you arrive at?
A. If I understand correctly, we use the rates made by the com¬
missioner in Illinois.
Senator Parcher : For Missouri ?
A. That is my understanding.
Senator Parcher : Your rates are not the same in Missouri as in
Illinois ?
A. No, sir.
Senator Parcher : Then you add a certain per cent, to apply to
Missouri ?
A. Yes, sir, our rates—what we call our incerstate rates — are
based on the rates from St. Louis to Kansas City, across the State ,• that
is my understanding. I don't make the tariifs myself.
Senator Parcher : About what percentage do you add to your
Illinois rates for Missouri?
A. I have no idea in the world. I can get the tariffs and send
them here, or give you any explanation that is necessary ; it would be
a pleasure for me to do it.
Senator Parcher : Supposing the difference is twenty-five per cent,
between the two States, why would you fix it at about twenty-five per
cent. ?
A. Not knowing how it is fixed, I am not in a position to answer.
Senator Ball: How do you determine what is a reasonable rate
for making up your tariff sheets ?
A. The basis of rate making—there is so much competition be¬
tween the different railroads, that they are based really on the rates
made from the different common points.
Senator Ball : Do you or not make them up on the net or gross
earnings of the roads ?
A. No, sir.
Senator Ball : Have not the earnings of the road something to do
with the increase or diminution of rates ?
A. I am not in a position to say that on any class, but on a few
classes it may. Now, you take a case of failure in crops, and wheat
will go up fifty cents a bushel, as it has done, it is pretty hard to ad¬
vance our rate; while on the other hand, if there is a very large crop,
the railroads are forced, in order to move that traflhc, to go below their
established rates.
291
Senator Ball: You said, a moment ago, to Senator Ball, that in a
case you cited, where he received a shipment of lumber at a less rate
than the regular price, that the railroad comp any would not get the
benefit of that, but that either Senator Ball or the consumer would
get it. Is that really true?
A. I didn't say the consumer got no benefit of it.
Senator Ball : Either the consumer or Senator Ball got it?
A. Yes, but that is entirely foreign to the matter of rates, or any¬
thing that I know of, because I don't know what the consignee would
do With that money. I don't know whether the shipper would keep it
or the consignee.
Senator Ball : For my purpose, it is immaterial whether one or
the other keeps it. Isn't it true that if a railroad practices that sort of
discrimination in fayor of Senator Ball, the rates generally, throughout
the road, will have to be higher than they otherwise would be?
A. No, sir ; it is such action as that, though, that causes all this
legislation, and in time will cause bankruptcy to any railroad.
Senator Ball : You simply expect to get a reasonable return on
capital invested.
A. We try to.
Senator Ball : If you do work at less than cost, do you not make
somebody else pay in a different locality by raising the rates ?
A. No, sir; the record don't show that.
Senator Ball: Does the salaries of officers enter into the expense
account of your road ?
A. 1 don't know, sir.
Senator Ball : Does the matter of the payment of interest on the
bonds and the floating indebtedness of the road enter into the matter
of expense ?
A. 1 am not in a position to say.
Senator Ball: Is it not probable that the interest on the floating
indebtedness, whether it be fictitious or otherwise, has to be paid out
of the earnings of the road, and the salaries of officers are taken into
account, and that the rates are made sufficiently high to cover them?
A. The rates are made high enough—as high as they can to
move traffic. Now, the roads that were built since 1873, they are not
perhaps in Illinois, but 1 could name possibly half a dozen that do
not pay interest on their stock or floating indebtedness, and possibly it
is all they can do to pay their employes.
Senator Ball : My purpose was to ascertain how you came to the
conclusion that Senator Claycomb's maximum rates are too low, or
how you came to the conclusion that the rates made by the commis¬
sioners are too low. Have you based that on the assumption that the
292
railroads must first pay whatever .salaries they have to pay and pay
the interest on this floating indebtedness, and other expenses than the
actual ones ?
A. It might be that, for a new road starting in, that would not
move so much traffic, a rate that might otherwise do, would be entirely
too low, and then they might make a rate that would make a road run
behind on their expenses.
Senator Sebree : What position do you occupy on the Chicago &
Alton ?
A. l am assistant general freight agent.
Senator Sebree : Do you have anything to do with making out
the rates and tariflFs ?
A. No, sir, I have not.
Senator Sebree : Are you familiar with the workings of your
road under the Illinois law, and do you know what that law is, relative
w
to rates, that the commissioners make out the rates for the difl'erent
roads ?
«
A. I understand so.
Senator Sebree :* I want to ask you how your railroad gets along
under that law, and under the orders made by the railroad commis¬
sioners ?
A. We have no trouble, sir, on our road as far as I know. •
Senator Sebree : You have not found any difficulty in complying
with the orders and with the rates that they make out ?
A. I am not in a position to say that we really comply with their
orders.
Senator Sebree: Don't you know that it is a fact that you do
A. No. I donfi. I have never¡heard any complaints, so I presume
we must do what is right—I will take that back. I have had com¬
plaints where I have tried to take large amounts, five or six hundred
cars at one time, from St. Louis to Chicago, and the commissioners
notified us that if we made those rates again, they would open them
up on the entire line of the road, so we stopped taking any more trafiic
at those rates.
Senator Sebree: Do you find that there is much difficulty in the
line of the railroads inducing the commissioners to raise the rates in
that State ?
A. I never met one of the commissioners, sir, so I don't know.
I don't know any of them.
Senator Sebree: You are not familiar, then, with those matters?
A. No, sir, I am not.
Senator Sebree : How long has your road observed the orders of
the commissioners in Illinois ?
293
A. I really don't know now. I just asked that of the commis¬
sioners, I think yesterday, or day before. If we conform to their
rates, and I understood them to say yes.
Senator Se bree: You don't seem to be familiar with the manage¬
ment of your road in this respect ?
A. I don't have charge of the local business at all.
Senator Sebree: What part of it do you have charge of?
A. All through business north, east and west from St. Louis.
Senator Sebree : In that through business from East St. Louis to
Chicago, you work under the orders of the commissioners, don't you ?
A. We work under the Illinois rates.
Senator Sebree : They are the rates fixed by the commissioners?
A. I never saw the commissioners' rates, but I presume that they
are.
Senator Sebree : Isn't it a fact that your, road works very
smoothly with the commissioners and the people of Illinois, and that
both are satisfied with the law ?
A. We tried to do that, not only with the commissioners, but
with all our patrons.
Senator Sebree : And don't you bring into this State the same
principles of business that you adopt in Illinois ?
A. Well, I hardly know what that covers. If you mean trying
to do what is right, I say yes.
Senator Sebree: And those principles are based mostly on the
Illinois law, as that is the parent road ?
A. You are referring now to rates ?
Senator Sebree : Yes ?
A. I don't think the rates in Missouri are based on Illinois rates.
Senator Sebree : I understood you a while ago to say that they
were made on those rates, but were higher.
A. If I understand it, the Missouri rates are based entirely on the
commissioners' rates.
Senator Sebree : You observe the commissioners' rates, then, in
this State ?
A. That is my understanding ; that is what I understood the com¬
missioners to tell me yesterday.
Mr. Bridges : Some of us would like to have a question answered
which may have been answered during our absence. We want to
know what is the purpose and object of this system of rebates.
A. It is this: there are, say, four or five roads in Kansas City.
Under agreement each road was entitled to a certain per cent. What
I call a strong road, that is, a road that would haul most of the traffic,
to have peace and harmony and fair rates, rather than ruinions rates.
294
would give a certain per cent* to a weaker line, and the weaker line, to
hold the per cent, of business would have to pay a rebate to hold its
proportion, and they would ver^^ likely try to run ahead, too, and then
the other road that was entitled to it, and was a strong road, would be
running behind its allotment, and they start in and pay a rebate, and I
say I am very much opposed to it.
Mr. Bridges : Well, sir, that may explain the reason why they re¬
bate, but does it answer the question? If you give back ten dollars
when you get to St. Louis, why don't you just charge forty instead of
fifty, and not give it back?
A. Well, in the first place, the $50 with the $10 rebate should
never have been made.
Mr. Bridges : But why was it made, was it done to avoid a con¬
tract, or to keep the price that you charge a secret from other shippers,
or what was the pqrpose ?
A. It was done to beat a competitor out of that traffic.
Mr, Bridges: Couldn't you beat him out of that traffic just as
well by charging him $40 originally.
A. They would go around to a shipper and say, "we will give you
$10, anyhow."
Mr. Bridges : If you can avoid pooling by this system of rebates,
you may enter any number of pools and violate them in this way?
A. If a law is passed maintaining rates and fixing heavy penal¬
ties for violating them there would be no pools.
Mr. Miller: I want to ask Mr. Wann to explain to us how it is
that the operations of the interstate commerce law affects the rates
between points within this State ? My understanding of the law is that
it applies exclusively to freight carried from one State to another, but
from the statements made by gentlemen before this committe, it seems
that the law affecls the rates between one point and another in th'e
same State ?
A. I think the only reason that that statement was made here
was from the fact that they felt satisfied that the same kind of a law
would be passed here, and they wanted to have the tariffs in line with
their other rates.
Mr. Miller : Are you not at liberty on your road, so far as the
interstate law^ is concerned, to charge a higher rate between Louisiana
and Kansas City than between St. Louis, Mo., and Kansas City ?
A. Yes.
Mr. Miller: You could make a higher rate ?
A. I don't know that we could.
Mr. Miller : Why should the interstate commerce law require the
295
same rate should be made from East St. Louis and St. Louis to points
in Missouri on your road ?
A. The interstate law does not necessarily do that; we have
always done that.
Mr. Miller: Is it the understanding of the railroads that com¬
merce becomes interstate because in carrying .it from one point to
another in the same State it passes through a part of another State ?
A. No, sir.
Mr. Miller : There is a distinction now existing against the city of
Louis by making East St. Louis a common point on Missouri business,
not only on your line of road, but on lines of road which terminate at
St. Louis and extend directly west. Does the interstate law force that
upon the railroads, or is it the result of the traffic situation ?
A. It has been that way since I have been connected with the
Chicago & Alton, and I don't know how long before.
Mr. Miller: Is it necessarily implied by the operations of the in¬
terstate law that it should be so?
A. I don't know that it is. Our people, I believe, took the posi¬
tion when we built into East St. Louis that we would not charge more
from East St. Louis than we would from St. Louis, which forced the St.
Louis proper lines to extend their rate to East St. Louis.
Mr. Miller : Are you familiar with the making of rates ?
A. I have made some, in fact a great many, years ago. Our tariffs
are all made in Chicago.
Mr. Miller : What are the elements considered in making them
up—cost and profit and all that sort of thing?
A. I don't know that it is considered at all, sir.
Mr. Miller : Don't they have to consider the capacity of the road
tp carry freight, and the amount it has to carry in order to pay a
profit ?
A. It depends upon the location of the territory, and what the
traffic is; how the rates are based and made. Mr. Newman explained
yesterday that he was forced north of Sedalia, for instance, to make
the same rate that obtained at the Wabash crossing at Moberly ; now
in that instance the other road made the rate for him.
Mr. Miller : If the road meets with competition along its line, it
forces its rate down, but doesn't it have to consider the general volume
of its traffic and unjust its freight at other places so as to make a suffi¬
cient sum of money to maintain the road ?
A. Yes ; and an illustration of that, is our stepping out of the
Louisiana business, we couldn't afford to make those rates there, and
we stepped out on account of our other territory.
298
Mr. Miller ; Then a traffic manager does have to take into consid¬
eration the physical condition of the road, the character of its business
and the distance he has to haul it, in order to adjust his rates for all
business, so as to make enough money to maintain the road?
A. Yes, sir.
Senator Olaycomb : The railroads in Illinois are divided into two
classes, are they not ?
A. I think they are.
Senator Olaycomb : I want to ask you, if you are familiar with
the rates fixed by the Illinois commissioners that cover your road,
class A?
A. I am not just now ; I can get them for you in a few moments.
Senator Olaycomb : I wanted to ask you, if you know whether or
not those roads in class A, are charging up to the rates fixed by the
commissioners, or whether they are operating underneath those rates ?
A. I think our rates are the full commissioners' rates.
At this point, the following letter was read:
Jefferson Oity, June 1,1887.
Hon. H. W. Johnson, Chairman Committee on Internal Improve¬
ments :
Dear Sir—There was a meeting of the general freight agents last
evening, for the purpose of running over such schedules as are con¬
tained in the bills already introduced, and especially for examining
the schedule of rates reported by the commissioners to your committee,
and upon a careful examination of these schedules, especially the one
reported by the commissioners, they found that it was a very unsafe
and dangerous schedule, as they claim, and one that would be ruinous
to the railroads. They will make a schedule of rates to-day and would
be glad to call it to the attention oí the committee, in some way. The
representatives of the railroads here, including these freight men,
would be glad to have a conference between the railroad commission¬
ers and these freight men, with a hope of being able to agree on a
schedule of rates, to be delivered to the committee, as they believe
this would be more satisfactory to the committee, and would be more
likely to meet their approval.
I will esteem it a courtesy if your committee will suggest to the
commissioners a desire to have a conference between the freight men
and the commissioners upon the matter of rates.
If you concluderto do so, please do so at an early hour to-day, so
that I may telegraph the freight men, and have them here to-morrow
morning.
Yours truly,
H. H. TRIMBLE.
297
Senator Parchar : I move that the railway commissioners of the
State be requested to hold a conference with the respective freight men
of the various roads, for the purpose of reaching a definite and just
conclusion with reference to rates.
The resolution was passed.
The Chairman : Gentlemen,! will now introduce Mr. John O'Day
of the St. Louis & San Francisco railway.
Mr. O'Day then spoke as follows :
Mr. Chairman and Gentlemen of the Committee : I have not
followed the example of my brothers who have preceded me and pre¬
pared a written essay on the subject under consideration, but come
here as the representative of one of the lines of railway constructed
through the southern portion of the State to present to you our views
on the subject of railroad legislation, and discuss the question whether
any necessity exists for the enactment of additional laws to govern
common carriers in this State.
You have been convened in extra session for the purpose of enact¬
ing railroad laws, and your fir^t duty, I suppose, is to examine the laws
already on our statute books and determine whether, in fact, a neces¬
sity exists for passing additional railroad laws ; and if it appears, after
such examination, that our statutes are inadequate, I think there is not
a railroad company in this State which will object to the enactment of
additional laws; 1 know the company which I represent will not. The
question then arises, are the laws now on our statute books sufficient
to govern and control the railroads in this State? There are many
lawyers on this committee. By referring to article 11, chapter 21 of
our statutes, we find that the legislature,in its wisdom, after the adop¬
tion of our present Constitution, enacted a code of railroad laws, fix¬
ing maximum rates and prohibiting discriminations and extortions of
every name or character. I can safely say that there is not a State in
the Union that has as strict a code of railroad laws prohibiting dis¬
criminations and extortions as the State of Missouri. Since the pass¬
age of this general code of laws, a Hardin, a Phelps and a Crittenden
have filled the office of Chief Executive of our State in about the order
named ; various general assemblies have met and considered those
laws and deemed them ample and sufficient. There has not been an
annual message sent by the Governor of this State to the legislature
of this State that has not said something on the subject of railroad
legislation. The railroad laws of our State have been considered and
digested by the representatives of the people in the legislature during
all the time since the adoption of our present Constitution, and they
have been found sufficient. If they are not now ample and sufficient,
some great emergency has arisen within a very brief period which has
298
changed the conditions of the railroads of the State and of our affairs
so that new laws are required. If there has been a political or finan*
cial earthquake, or any change in the condition of the people of the
State which has produced this necessity for additional legislation, I
have failed to observe it. T do not believe there is a business man or
shipper in the State who is not fully protected by the laws already in
existence. If you desire to prevent extortion, turn to your statutes
and you will find there a provision declaring it unlawful to discrimi¬
nate in favor of or against any shipper, or to make an invidious dis¬
tinction between shippers in any manner or form, and for every act of
discrimination there is imposed a penalty of not less than two hundred
and fifty dollars, and which penalty may run as high as a thousand
dollars, and can be recovered on information by any county attorney in
the county wh.ere the offense is committed ; and the party wronged and
aggrieved, in addition to the penalty, which is higher in proportion to
the offense than the penalty imposed upon natural persons for violat¬
ing the rights of others or their duties to the public, may recover in
an action at law three times the amount of the overcharge, together
with all damages which may otherwise result to the shipper by the un¬
lawful act of the railway company. Do you want him to recover ten
times the amount of the damage sustained ? What State has devised
any law that provides that for any wrong which an individual or
natural person may perpetrate, he shall pay more than three times the
damage done? Yet in this State we have a penalty in addition im¬
posed, and the railroads have acquiesced and the business interests of
the State have prospered. If that is not a sufficient penalty, what sum
is? Discriminations of all characters are prohibited under a penalty
of being required to pay three times the amount of damage indicted.
Is there a lawyer on this committee who has ever found any trouble in
securing a judgment against a railroad company where there had been
discrimination under existing laws? The only difficulty he finds is
that it is too easy to recover judgment. I do not impugn the motives
of jurors in making haste to find verdicts against railroad corporations.
It speaks well, probably, for humanity ; it shows that the jurors sym¬
pathize with the weaker; that when a case is brought before them
where the strong is charged with having discriminated against the
oppressed or weak, they become sensitive and reach conclusions a little
hastily, and it takes but slight evidence to induce them to return a
verdict against the railroad company, so that frequently appellate
courts, in administering justice, have felt compelled to reverse these
verdicts and judgments, and to say to the court below that such judg-
ments cannot stand. Were I sitting on a jury, I fear my sympathies
would influence me to act as other men do ; therefore, I do not say this
299
to impugn the purity of the motives by which jurors are actuated in
ßuch cases.
But the query arises, are the maximum rates in this State too
high ? I think it will be conceded by every road in the Slate that the
maximum rates now fixed by our statutes in many cases are not
charged by the railroads. Take, for instance, the rates charged on
wheat and a great many other things, the roads do not charge the max¬
imum rates fixed by the statute. This can be verified, and shows that
the railroads are not disposed to take advantage of the shippers be¬
cause they are permitted to charge higher rates than are actually ne¬
cessary ; railroad companies do not necessarily charge thé highest rate
allowed by the statute ; they are governed by principle :n fixing rates.
But it is said, we must have legislation fixing rates, and, judging from
the current oí the interrogatories that have been propounded here to
the gentlemen representing the different roads, the opinion prevails
that our rates must be govefrned by the laws of Illinois, or that what
are fair and reasonable rates in Illinois would be fair and reasonable
rates in Missouri. [ will come directly to that point, and I shall con¬
tend, and I hope satisfy you, that what is a fair and reasonable rate in
Illinois, under existing circumstances, is not a fair and reasonable rate
in Missouri, and that rates under which railroad corporations in Illi¬
nois may prosper, or at least earn enough to pay operating expenses
and interest on their bonded indebtedness, with fair dividends on their
stock, and which enable them to maintain their roads in good condi¬
tion, if applied to Missouri roads would within six months place every
road in Missouri in the hands of a receiver. What is a fair and reason¬
able rate ? There must be some fixed principle to govern what is a fair
and reasonable rate, and how is it reached ? As I understand it a fair
and reasonable rate is governed by the cost of the plant and
the cost of maintaining and operating the road. These factors
which go to determine what is a reasonable rate, are dependent upon
the character of the country through which the road is constructed, and
the cost of operating the road is fixed to a certain extent by the volume
of business done by the road. You will find that it is not the road that
charges the highest rate for the transportation of freight or passengers
that is the most prosperous; but if you turn to statistics showing
the history and business of the roads in the United States and examine
their reports of earnings and tonnage, and th^ rate per ton per mile and
per passenger per mile, you will find that it is the poor roads—the
roads with a meagre business and which declare no dividends, that
charge the highest rate? You ask me why? My answer is, because
the country through which they run does not furnish them sufficient
business ; they have not the volume of business. A trunk line which
300
has a large volume of business can, at ten per cent, net profit, realize
a better income than another road may at fifty per cent, net profit.
How does Missouri compare with Illinois? Illinois is located im¬
mediately east of the river; it extends from the lakes down to the
junction of the Ohio with the Mississippi river; it is a large state, con¬
sisting principally of a prairie country, level and smooth, well devel.
oped and one of the richest agricultural States in the Union, having
natural advantages for the construction of railroads. Illinois has pour¬
ing over its great channels of commerce the products of not only Missouri»
Iowa, Wisconsin, Minnesota and Dakota, but a large portion of the traffic
of Mississippi, Louisiana, Arkansas and Texas, and a good portion of New
Mexico, Nebraska, Arizona and the States and Territories on the Pacific
slope; all fiowing over the railroads in Illinois, that is all of it that is
bound for the seaboard points or points east of the Mississippi river,
thus swelling the traffic of the Illinois roads. Under these circum¬
stances m ly not the Illinois roads carry freight for fifty per cent, of
what the Missouri roads can, and still prosper ? The Illinois roads have
fifty per cent, more local traffic than the Missouri roads. The Missouri
roads get a portion of the business of Kansas, Colorado, New Mexico
and a little from Arizona and Nebraska. Missouri does not get all the
business of the territory mentioned because we come in competition
with the Chicago, Burlington & Quincy, the Chicago, Rock Island &
Pacicfic and other roads in Kansas and Nebraska, which carry a large
portion of the tonnage and passengers of the territory mentioned
through Iowa into Illinois and thence to Chicago or via. Chicago to the
seaboard. We recffive only a small portion of the Texas business be¬
cause there are other lines connecting with the Illinois Central, and
the Huntington lines running into Texas with its eastern terminus on
Chesapeake bay, which carry the principal business of that State.
Now, I ask you, how can you, as legislators, measure Missouri by the
same "standard in the matter of fixing rates to be charged per ton per
mile that you measure Illinois.
Then again, let us see what is the relative cost of operating a rail¬
road in Missouri as compared with the cost of operating one in Illinois.
It may be that the topography of Missouri, north of the Missouri river,
will bear some resemblance to the State of Illinois, though even that
portion of Missouri is more broken than Illinois, still it is somewhat
similar to the beautiful,irich prairie country of Illinois, but Missouri
south of the river bears no topographical resemblance to the State of
Illinois, and there is a vast difference in the cost of constructing
a railroad in the two States. In this matter lam willing to take
the opinion of Gen. Harding, president of the board of railroad com¬
missioners of this State, whom I believe to be an honest, honorable
301
man, and although I have not consulted him, yet I am satisfied he will
bear me out in the statement that you can build a railroad through the
State of Illinois for fifty per cent, less than you can build a railroad
from the city^of St. Louis to the Indian Territory line on the western
boundary of the State of Missouri. Why, then, should the Missouri
roads be governed by the same rate which is established in Illinois?
Can a Missouri road afford to transport freight or passengers for the
same rate that an Illinois road does when it is demonstrated that a
railroad in Illinois can be operated at from 25 to 30 per cent, less than
a road in Missouri south of the Missouri river can be operated. You
ask why an Illinois road can be operated cheaper than a Missouri road ?
Because in Illinois they have light grades, and few or no curves, the
greater portion of the line being a tangent. Take the road that I repre¬
sent, the St. Louis & San Francisco railway, from about twenty miles
from St. Louisi what is the character of the grades and curves, and of
the work which was necessary in order to construct the road ? Fifty
per cent, of it for 200 miles was graded through solid or loose rock*
You are aware of the difference in cost of excavating loose or solid
rock and earth. Not five per cent, of the grading in the State of Illi¬
nois is either solid or loose rock. Every cubic yard of solid rock ex¬
cavated will cost a dollar, and of loose rock not less than fifty cents,
while in building railroads through a prairie country the excavation of
earth is done with steam shovels or scrapers, and costs from 14 to 17
cents per cubic yardi The history of the railroads in Missouri shows
that a mile of railroad in Missouri south of the Missouri river will cost
twice as much as in the State of Illinois, and the co^t of operating the
Missouri road, in consequence of the heavy grades and sharp curves, is
from 25 to 30 per cent, greater than it is in Illinois. On the 'Frisco road
in Missouri, we have ninety ton consolidated engines, perhaps the
heaviest engines west of the Mississippi river. I do not think there is
such an engine on an Illinois road. On one of our heavy grades of
110 feet to the mile, we cafn move with one of these largè engines, at
most 16 or 17 cars. The same engine on the Illinois Central railroad,
which traverses a level, prairie country, will move from 50 to 60 cars,
and at the same cost to the railroad company that we move 16. Why ?
Because the same amount of coal is burned, which is.one of the ele¬
ments taken into consideration in establishing the rate ; the same wages
are paid to the engineer, fireman and brakemen, because they are all
required on a train whether it consists of 16 or 60 cars, so that you will
see the difference in the cost of operating a road in southern Missouri,
in a mountianous and broken country, and in Illinois or any other
prairie country, where the grades are reasonably light and the curves
few and far between. Then why should the Illinois rates be taken as
302
a standard of what should be charged in Missouri, if oui tonnage is not
one-third as great, (and I will show that it is not), if the cost of the
plant is fifty per cent, greater, and if the operating expenses are twenty-
five per cent. more. If this is true, I ask the gentlemen who are advo¬
cating the establishing of the Illinois rates, why should it be done ? If
these are the facts, it cannot justly or equitably be done ; the Illinois
rate cannot be a fair rate in Mivssouri ; it must result in bankrupting
the Missouri roads if it is established in this State. -
The road which I represent has a line in Kansas, a continuation of
the Missouri line. Kansas is a good deal like Illinois on the surface»
although not so rich and productive a country. We have an extension
of our road running to Wichita and Halstead, Kansas. The same engine
which will haul only 16 cars on grades of one hundred and ten feet,
which we have in Missouri, will haul fifty cars in Kansas. We do not,
in fact, use the same engine in Kansas that we do in Missduri, we have
a Missouri mountain division on which we use the consolidated engines.
In Kan sas we have a lighter engine. In Kansas we can move the same
quantity of freight at 25 per cent, less cost to the railroad company
than we can in Missouri. •
If there is any force in the argument that Missouri should have
the same rate as Illinois, then why should not Illinois establish the
same rate as Pennsylvania or New York, or the New England States ?
I have never until now heard it suggested that the rate established in
one State must be an equitable rate in another State. It will be
instructive to consider the rates charged by the diflerent roads and see
whether there is a* uniform rate established. Does a Pennsylvania
road charge the same rate as an Illinois road, or as the New York Cen¬
tral, Boston &'Albany, or the Old Colony charges? I have made a
comparison between the rates charged by a number of roads in differ¬
ent States, the volume of business done by them, etc., taking as my
authority the last volume of Poor's Manual. I have attempted as much
as possible to group the roads into southern, southeastern, eastern,
western and northwestern roads. I will take as the first the 'Frisco,
because of its location and the character of the country it traverses, a
great portion of it being mountainous and broken, and the country
through which it runs being sparsely settled, furnishes little business,
the towns on the line being few and far between, and because it
charges the highest rate charged by any trunk line in Missouri.
The 'Frisco was constructed originally from Pacific to Vinita, in the
Indian Territory, it being a part of the Atlantic & Pacific railroad. It
was bonded at its actual cost. I was then, am now and have since
1868, been connected with it. When General Fremont purchased it
from the State, it consisted of sixty miles, which had been operated
303
during the war by the government. The iron on it was worn out and
the road generally out of repair and practically valueless. After Fre¬
mont purchased it from the State, the mortgage on it was foreclosed ;
eastern capitalists purchased it and constructed it from Rolla through
southwest Missouri and into the Indian Territory. Within four years
after it was purchased, and by the time the road was fully completed
to the Indian Territory, the mortgages were foreclosed and the road
again sold, the second mortgage bondholders buying it, surrendering
up their bonds and accepting preferred stock in lieu thereof to the
amount of several million dollars, losing not only the principal but the
interest, and taking their chances that the stock would be worth some¬
thing in the future.
The following are the average rates per ton per mile charged by
the 'Frisco :
In 3886 the entire tonnage of the line proper, consisting of 1,041
miles, was 3,185,562 tons ; the entire number of tons carried one mile
on that line was 246,379,627 tons ; the rate per ton per mile for carrying
freight was 1.43 cents. The entire number of passengers carried by
the road, local and through passengers during the year 1886 was 636,-
890; the average rate per passenger per mile was 2.63 cents. This is
the highest rate charged by any road in the State, unless it be some
little branch of fifty or 100 miles in length. By a comparison of these
rates with the rates charged by railroads in other States, we can deter¬
mine whether or not the people of Missouri have been oppressed by
the railroads. I will say that the 'Frisco pays dividends on only four
and one half million dollars of its stock—a little over one-third of the
second mortgage bonds, which were surrendered by the bondholders
and for which they took stock, and yet to day, under the rate named,
it is only able to pay interest on its bonded indebtedness.
Compare the rates charged by the 'Frisco with the rates charged
b}'- the Kansas roads, taking the best road in Kansas. The Atchison,
Topeka & Santa Fe railroad carried in the same year 1,849,577 passen¬
gers, or more than three times the number carried by the 'Frisco;
2,602,156 tons of freight, or about four times the amount carried by the
'Frisco. This Kansas road which carried three times the number of
passengers that the 'Frisco did, charged 2.60 cents per passenger per
mile, while the 'Frisco charged 2.63 cents. Thus you see that a road
doing three times the business and which did not cost one-half as much
to construct as the 'Frisco, charges almost as much per passenger per
mile as the 'Frisco. The average charge for transporting freight on
the Santa Fe per ton per mile was 1.80 cents ; on the 'Frisco it was
1.43 cents, or 3.37 mills less per ton per mile.
Now let us take the Union Pacific railroad: On that road the
304
average passenger rate per mile is 2.75 cents ; the average freight rate
is 1.49 cents per ton per mile, although the tonnage of the road is more
than treble that of the 'Frisco.
Let us now look at the Gulf and Mississippi valley group of rail,
roads : First, we will take the Chesapeake & Ohio railroad, extending
from Chesapeake Bay and forming a part of a transcontinental line to
San Francisco, ( a part of the Huntington system). We will take that
portion extending from Louisville, Kentucky, to Memphis, Tennessee,
which is a very good country, one which I think will compare favorably
with any in our State. On that line the average rate per passenger per
mile is 2.4:7 cents, and the same proportion is maintained on freight—
it being a little less than the rate charged by thè 'Frisco, while its ton¬
nage is more than three times as great.
Missouri north of the river approximates more closely in its to¬
pography to Arkansas than to Illinois. It is cut up by the Ozark
mountains and their spurs, the northern boundary of which is the Osage
river. The 'Frisco line, from a point near Pacific, winds along the back¬
bone of the Ozark range until it reaches the summit at Springfield and
then descends into the valley of the Arkansas at Fort Smith, which is
not quite the southern boundary of the Ozark range, the Arkansas river
cutting its way through the mountain at this point. So far as geo¬
graphical location and the topography of the country is concerned, and
the cost of constructing and operating railroads, the roads south of the
Missouri river bear a stronger resemblance to those of Arkansas than
they do to those of Illinois. We will take the best road in that
State, the road from Little Rock to Fort Smith, which runs up
the valley of the Arkansas river, the Nile of this continent,
rich and fertile, a good cotton producing and agricultural coun¬
try in every sense of the word; producing all the cereals and veg¬
etables, and enjoying, if anything, a better climate than we have ; 1-et
us see whether the people of Missouri are robbed, outraged and crushed
by the rates charged by her railroads as compared with rates charged
by the Little Rock & Fort Smith Railroad Company. The Little Rock
& Fort Smith railroad is a trunk line 176 miles long running from Fort
Smith east to Little Rock. The average passenger rate per mile is
4.82 cents ; the average freight rate per ton per mile is 2.49^cents, or one
cent more than the 'Frisco charges.
We will now take the Kentucky Central Railroad, which is a good
road, running through a beautiful country. On this road the average
rate per passenger per mile is 2.39 cents ; the average rate per ton per
mile for freight is 1.99, being greater than that on the 'Frisco.
Let us now take the Illinois Central Railroad, which is the finest
road in the State of Illinois, running from Chicago to Cairo, with vari-
305
oils branches, it drains a great portion of the southern trade; it has a
line direct to New Orleans and in connection with the St. Louis, Ar
kansas & Texas ßailroad drains Arkansas & Texas, with its own line
running directly through Tennessee, Mississippi and Lauisiana. Let us
take this line and see what its tonnage is : Total number of passengers
oarried one mile, 129,037,769, or more than twice the number carried by
the'Frisco. Total number of tons of freight carried one mile, 623,369,-
124, or four times the tonnage per mile of the 'Frisco. Rate per pas¬
senger per mile, 2.21 cents, the 'Frisco rate being 2.63 cents. Freight
per ton per mile, 1.31 cents ;'FriscG, 1.43, while the 'Frisco, has not one-
fourth the tonnage ; its road cost fifty percent, more to construct, and
the cost of operating, even with the same volume of business, would
be 25 per cent, greater.
I will now take the eastern roads and see the proportion : Take
the New York Central, which at five per cent, net on its business can
make more money than any Missouri road at fifty per cent. As the
volume of business increases the charges on these roads decreases, and
must do so, otherwise the rate would not be reasonable. Now the
New York Central is only 999.20 miles in length, not as long as the
'Frisco including its branches, yet it carried 428,397,774 passengers one
mile, or more than seven times the total number carried by the 'Frisco,
and 2,137,824,205 tons of freight one mile, or about ten times as much
as the 'Frisco during the same year.
The Pennsylvania railroad carried 568,664,914 passengers one mile,
and 4,446,470, 51 tons of freight one mile, or more than twenty times
the amount carriel by the 'Frisco.
Let us examine a few roads in New England: The Old Colony
railroad, an old road and traversing a good country. Passengers car¬
ried one mile, 121,174,681, or about four times the number carried by
the'Frisco. Freight moved one mile, 60,134,191 tons. On this road
the average freight rate per ton per mile is 2.93 cents, or thirteen mills
more than the'Frisco ; the average passenger rate per mile is 1.79
cents, about six mills less than the 'Frisco, notwithstanding it carried
four times the number of passengers. Why, then, say that the people
of Missouri have been oppressed by the railroads ? Is it shown by the
rates charged in other States ? The answer must be no.
The Boston & Lowell Railroad : Number of passengers carried one
mile, 79,668,680; freight moved one mile, 122,955)300 tons. Average rate
per passenger per mile, 2.04, the 'Frisco rate is 2.63 cents ; freight, 1.77 ;
the Frisco rate is 1.43, the Boston & Lowell railroad company charg¬
ing .34 mills more.
Next examine some Texas roads. Texas is a beautiful country,
R M—20
B06
doubtless maoy of you have passed through it and know that it ismucb
easier to build railroads in Texas than in Missouri. We are building
roads in that State no w, and we can build Ihein much cheaper than in
Missouri. We will take the Texas .& Pacific Kailway. Number of tons
carried one mile,/124,6P2#58 ; nurnber of passengers carried one mile..
25,031,832; average passenger rate per naile, 5,82 cents, more than
double what the 'Frisco chafaos ; average freight rate per ton per mile,,
3,1 cents, double what the 'Frisco charges. , , ;
, Examine the Houston &^Texas Q^ntral Railroad, which is the old¬
est railroad in the State, running from Houston and Galveston through
fihe most fertile portion pf Texas to Dennison, let us see what it
^charges; .. ..
Number of tons of freight carried one mile,;68,781,220 ; passengesr
,carried one mile, 21,234,684 ; average passenger rate per mile, 2.75
.cents—a gi^ater rate than the Wrisco charges Ireighfi rate per ten per
mde, 2.83 cents—also higher than the; 'Frisco rate by oiieand a fifth
iCents.^. ; . ....
. I will now call your attention to some of the northern roads.
, Take thö Wisconsin Central Railroad, one of, the best roads in that
.State, and see how the people of Missouri have sufiiered as compared
with the rates charged by that line : Total n umber of passengers car-
ried one mile, 14,613,586; total number of tons of freight earrred one
mile, 43,338,991; average passenger rate per mile, 2.98 cents; average
freight rate per ton ; per mile, 2.lt cents—a much highei^ rate than
The;'Frisco.:.nh arges.
I will now take Iowa, and we should not be cou trolled by the Iowa
rates in this naatter,: because it cqsts more to construct a railroad in
,Misspuri than it does in Iowa, and the:Missouri; roads cannot be oper-
-ated as cheaply ; then, too^ as an- agncultural .State, Iowa^ ;i^^ superior
to Missouri, I will take tlie railroad which runs through the center,of
The State—a rich agricultural section—the Burlington, Cedar Rapids
lÄ Northwestern Railroad, which runs from Borlingtoú, Iowa, to Albert
Lea, Minnesota. The average rate per passenger per mile is 2.44 cents ;
The average rate per ton per .mile is 1.18 cents.
Now examine the .rates charged by a railroad immediately east.
Take the State of Michigan—a trunk line, the Detroit, Grand Haven &
,Mdwaukee, running from Detroit to Grand Haven, doing a through
business : Average passenger rates per mile, 2.64 cents—^more than
tho;'Frisco charges ;:R?eigtht rate per ton per mile, 1.33 cents, one mill
Tess;thanThe'Fiifcovebarges.., .\ ^
Now, gentlemen, I ask you if, considering the cost of constructian
and operating a Missouri road and the tonnage carried by it, is the Mis¬
souri rate not as low as that of any State in the Union ? I believe it is,
307
^considering the cost of construction and maintaining the road and the
arnoant of business done. The tendency in rates in Misouri has been
downward. The railroads have been disposed, without any exception,
to reduce rates to the lowest possible standard, and thereby avoid the
necessity of legislation on the subject, which may anta go ni^ze capital
and retard the development of the State, yon should not place any
f Jaw on onr statute books which will drive capital out of the State or
^confiscate the road$ already constructed or render profitleBs the money
;4nvesteddn-;them.. j,. i.:\- i
My attention has fieen called to seme of the?billsiwhich are.before
you, and I have,prepared a tabulated statement of the rates proposi^d
; to be fixed bydhem, and I say to you that there is not abi 11 introduced
hero which if enacted into a law will not within sixinonths place every
railroad in the State in the hands of a receiver. I will consider Sen-
îator Glaycomb's bill first ; however, there is littleior no difierence be-
j^tween the;rates fixed in Senator Glaycomb's bill and dhezcchednle of
rates proposed by the commissioners. I should judge the same person
(devised both schedules. There is here and there a feaction of a cent
ddfierence between the ratesdi:Jted in the one or theother.^ I have Itere
la sicbedule:showing the rates proposed to be adopted^ together with sl
comparisonpf those rates with the rates established in Towai Illinois
and Kansras, and 1 find that the rates proposed are thirty-five per cent,
less than the rates at present charged by the 'Frm^^
per cent, will come outlof the net earnings of the road,^ and the net
' earnings pf the Missouri roads, in niy opinion, do not epual thirty five
per cent ; so that if you reduce the net earnings thirty-fivepercent. or
even 20 per cenfi there is nota road in this State, that within sixmdnths,
will move a wheel except under the orders of a court; for; the reasoh
that aadei^ thp rate so proposed to be fixed, it will be impossible
them to meet their fixed charges and pay operating expenses; It is
not a difficult: matter to figure this out. Yon can :take the report of the
railroad comniissioners, and from the net earnings deduct thirtyffive
per cenijof theigrpss?earnings; for it allcomes out Of thé net earnings^
as the cost of operating and maintaining The road mmains the same
whateyer rate is charged, and you will see the regultv If yon deduct
thirty five percentt from the net income^ in nearly every instance it
fWipes out the whole of the net earnings. . Thét conimissioners' rate and
those fixed in Senator Claycomb's bill allow higher ratés; fori the first
thirty five miles than are now charged by the railfoads^ hut when they
get beyond thirty-five miles they decrease on an average from 25 to 40
per cent.
I will not occupy your attention with this schedule of rates, but I
will state that under the rates proposed, not a railroad in Missouri can
308
pay operating expenses and fixed charges. Senator Ball's bill is a little
better, although there are incongruities in it. It gives a little better
rates, yet they are such that if adopted the railroads will default in the
payment of the interest on their indebtedness and go into the hands of
a receiver.
There has been something said here about the mileage of railroads
in the different states and the percentage of increase ; and it has been
stated that Illinois has prospered under her law ; I deny this. I think
I can prove conclusively that she has not. On the contrary, Illinois
has suflfered by her law. The increase of the mileage of railroads in
Illinois since 1873 has not been as great as the percentage of increase
in Missouri, and the percentage of increase in the railroads of Kansas
has been four or five times as great as that of Illinois, showing con¬
clusively that invidious legislation discourages the investment of capi¬
tal. It does not require any great force of reasoning to see that capital
is discouraged by hostile legislation. Capital is timid. When a man
has accumulated money by industry, frugality and energy, he generally
knows how to take care of it. Capitalists are not foolish enough to
invest monev unless there is a reasonable assurance that there will be
a fair return for it, and if public sentiment is constantly warring against
the allowance'of a fair interest on the money invested in any enter¬
prise, it is natural that capitalists should seek to avoid the State in
which such sentiment exists.
The aggregate mileage of railroads in Missouri on January 1st,
1887, was 5,054; in 1876 it was 3,146 ; increased mileage, 1,808 ; percent¬
age of increase, 57.
It was stated here that there are 15,000 miles of railroad in Illinois.
That is incorrect. There are only 9,579 miles of railroad in that State.
In 1876 there were 7,285 miles, being an increase of 2,291 ; percentage
of increase, 31 ; while the percentage of increase in Mis30uri is 57.
Iowa in 1887 had 7,907 miles of railroad ; in 1876, 3,953 miles ; increased
mileage, 3,968 ; percentage of increase a little over 100. The mileage
of the railroads in Kansas in 1876 was 2,238 ; in 1887 it was 6,059 ; in¬
creased mileage, 3,821 ; percentage of increase, 170.
The increases in the mileage of railroads in Iowa and Kansas over
that of Missouri is owing chiefly to public sentiment in these States and
to legislation which invited and does not repel the investment of capital
in such enterprises.
The committee here adjourned, it being noon.
309
AFTERNOON SESSION.
Mr. Chairman and Gentlemen of the Committee:
I had about concluded all I desired to say on this subject at the
time of your adjournment, but as the State of Illinois is taken as the
standard of excellence by the advocates of railroad legislation, I thought
I would refer a little further to the beneficent influence of legislation
on the railroads in Illinois and show how they have prospered under
the Illinois statutes.
By referring to the report of the railroad commissioners of the
State of Illinois during the period in which this law has been in force
and up to this time, you will find that more railroads in that State have
been placed in the hands of receivers—more in number and in miles—
than in any other State in the Union. Why? Because they were im¬
poverished by the influence of those laws. Investors placed their
money in these roads in the hope that they would receive the usual
and ordinary interest paid on such investments. Under the influence
of the statutes enacted, and which are now sought to be enacted in Mis¬
souri, they have been forced into the hands of receivers. I have a
printed list of them here, twelve in number, and I will name them :
Cairo, Vincennes & Chicago; Champaign & Havanna; Gran^
Tower & Carbondale ; Havana, Bantoul & Eastern ; Illinois Midland ;
Indianapolis, Decatur & Springfield ; Lake Erie & Western; Louis¬
ville, Evansville & St. Louis; New York, Chicago & St Louis; St.
Louis Coal Railroad Company; Wabash, St. Louis & Pacific ; Toledo,
Peoria & Western.
Now, how many were there in Missouri that went into the hands of
a receiver during that time ? Only two. How many in the State of
Kansas? Not one.
•
I suppose it will be said that this was not due to the influence of
unfriendly legislation. Perhaps not entirely, but it certainly had a
controlling influence in bankrupting these roads and rendering profit¬
less the capital invested in them, and resulted in great detriment to the
State of Illinois.
I have passed over this subject, commented on it and given the
reasons why legislation similiar to that of Illinois is not desirable in
Missouri, and I think I have shown the reasons why it should not be
adopted as a rule of action governing railroads in Missouri. I wish
simply to add that each and every statement that I have made in rela¬
tion to the tonnage of the railroads mentioned can be verified by Poor's
Manual, save and except the 'Frisco line, which is taken from our last
annual report.
310
Now as to power being conferred on the board of railroad commis¬
sioners to establish rates, as is done by thé Illinois statute, I say it
should not be done for two reasons : it is unwise and it is impractiGi
able. The experience of our sister States deraonstrates that it is unwise
ior instance, take the older States. In the New England States there
are boards of railroad commissioners, but they are merely advisory ;
they make reports of griëvances or complaints to the legislature annti-^
ally or bi ennially. Ohief among these boards in point of excellence '
is perhaps that of Massachusetts. Laws similar to that oflllinois were
enacted in New York, Michigan, Minnesota, Iowa and Wisconsin ; these
laws were contested in every phase both in the 8tate and Federal
courts, and after being declared valid and a legal exercise of the leg¬
islative power were repealed in the States named as detrimental to
the best interests of the States named. The law which at present
stánds upon bur statute books iwS a copy verhatim et literatim of the law
which was repealed in Wisconsin. Iowa also tried the experiment'
and found it impracticable, finally repealing the law: and so has every
State in the Union except Illinois and Georgia, and by rejecting the
principle of the Illinois law we simply place Missouri in line with every
State in the Union except the two mentioned.
I have a compiled report giving the different laws of all the States'
that have adopted railroad legislation, and the force, effect and powers
of the commissiohers of each. It is unwise to delegate power to the'
cominissioners to fix rates ; it will discourage the investment of capitaF
in thé State. No business man vviirinvest his money in a State where'
the absolute control of the property in which it is invested is taken'
from the righful owners and placed in the hands of three men who have"
no interest in the property whatsoever ; to whom it makes no differ¬
ence whether it earhs sufficient maney to pay its fixed charges and'
operating expenses, or is forced into bankruptcy or not. I do not impugh"
the honesty or upright intentions of the State board of railroad com¬
missioners of Missouri ; I believe they are as honest and consciencious
as other men; but their power will be of a semi-political character ;
there willbe the pubiic with various complaints, some may be well
founded and just, but the vast majority will doubtless be without foun- '
dation ; there will be men who may desire to influence the commission¬
ers; men who may desire political preferment and who, by pandering
to the prejudices of persons who may have imaginary grievances and
who make complaints against railroads, seek to convince the people
that they can be of benefit to the community, and thus ride into office ;
such men will attack railroads and point out the great and growing-
evils that they pretend exist in our midst, and thèy will make com¬
plaints to the railroad commissioners. These are the men who make
aix
tb? they ard^exy^pt to inftiiedcé the actioiiii
oi,Xho-ho^î°4 of X4}äro^diComnaiösiDder& to al grelater or leás! ex-tent. Ii
a^kfyoo woûlcii this cdmmittle éotegateXoia -boardí Goniposeá- of thxedi
pensons i th0 powoï: to : Xeglilate^ tho;^ chargé ■ for ^ 1 érhber, ^öaeries no^t
drugs, the power to fix wages in any trade or for /ány clasé of ^nadnf im
this Sat© ?; Lfis there ariy ínaéhrber of fteiSiCOö^ -wihol wcmMrunfler-
take to do that? Yet the public is as much interesteààtinfhoise thrngsl
asthey are 1Ö the chargesjmadef byjtheIraiir0adê.înXr-a saátísfiedí that
no member of this committee desires to do anything which will
courage the ihyestPrenXof m (Statesot/prer^eht âheide^éiop-
ment oí its resources ; then why delegate this poNéerîto the board ofi
TióI^adréomíWiesáon^sí ífot th4tll:h^e iaaiy peteonàl objectiô^ tè the
present boardor iaPy ipeorbe it#{f I believeétSsas;good as any boàiil/
thgl could be elec^eidv^od thafctee membersiof the board/ ar@ : as- anx¬
ious to do right as any that could be selected; but I say it i^ a^idangélf^i
•ous thing to delegate; shchffpowst ltddho board ofirailrc^dT cèmimisâion-
er^^de^dr not rh tbab ithé m railroad proper^ of the ;IS(iafe:,iíwhich
apoupte toigboot ope^fifteedth of ithe assessedrvaluationof the propertyi
of the State, should be placed under the charge and rnaáa^memfrof^
threenmen whoihaye hptHadollardfdhteresfcfih itii IdoinotibelieveXhat
policy,: tIie int^e&t8inf,,teéiStete7#ôf th^pBopte-^derhaBd it^ ; I i i i
^ y Ms to tbeiothetiqite^tionsXnvolyed in-jthe ,malters=beidre you : thé)
long and short haul and poolingi-the rmilroads h^e but little ihterestv?
aJfhougir on ithe long audi short hauLquestiou I difler from ^ many of thé i
Tailroad mon :yftoi have addtess^ olo think f here^ are : in stanoesi
where rallrogdO:'are aompeJted/byílbrcé df circumstancesf oLchafge á)
fgreatep rate/ídrta lessiittoïT ifo^ m greater diltanci^f and that iii . somei
cgsesttbisi is beneficialiboth tdxtt^eiShippernahdi the Stated I Railroadst
dofthisfonly a imattar of iäecessilyv^in oasei where iitetfaéy didmott
they J^odld fosé thé! buéínés^iadd thete islholinjuatiöe in íddingisoi be« i
cau^j whateyer iairailroad earns as amet: profit is so ñinch addedi to itsii
income, and to that e^^tent lit is ehabled tdl reduce its rMes¿ ? 1 : f ; i ' )
f V Roolingds vtrttaally átián e X care; noïMngvjibouttit/ How^r
eyérv ini my opinion^ poolihg generally-has a goddéfíeot, andlwe hatei
f roquent insitahcès in our o #n ; S tate^ which i sho Wî it he disastron a eflOects ;
of not haiting^ia.pj(ix)l- Still as-this question; is virtually settled by ithe3
inters täte coin meree billv ^ I shall not say I any thing further^ on that;^
ipoint.:-,U 1 y i U ■ y - i- ti 1,1 "l." íV; I'f ft.? ■'I-yl'-
i nlniOoncluaion^ MissOuri has within itMli the elements neeessaryXor
makiefbe grandest and richest iStatedh theiilMiohi ; mouiifcaMs of iromi
granite and marHe,. inexhaustible: fields of? coalyizinc and lead, and I
large forests of pinetahdbab^ albuFaitinig the in^stmenttOf capitalina
the construction of railroads in order to develop and transport these
312
minerals and timber to the market and give employment to tens of
thousands of honest and industrious laborers, and thereby utilize and'
develop the now hidden resources of our State. It would be criminal
to prevent the unfolding of the resources of the State and retard its
growth and prosperity.
Senator Allen : About how many miles of railroads are there ini
the State of Illinois ^
Mr. O'Day : Nine thousand and some miles on the first of Jan¬
uary.
Senator Allen : About how many miles of railroads are in the-
hands of a receiver ?
A. I have not added them up ; I can give ^ou the numbers ; you'
will find that in the railroad guide, but the number is large.
Senator Allen : About what proportion would that bear to the
9,000 miles ?
A. I should think it was one-ninth or one twelfth.
Senator Sebree : What are the circumstances under which a raif
road of necessity charges more for a short than for a long haul ; please
give us an illustration ?
A. I will take the Omaha business, which has been discussed
here in the case of the Missouri Pacific. Omaha—by Kansas City to-
Omaha—is the long line, the long line through from St. Louis. Now^
Omaha business is seeking two great commercial outlets, Chicago and
St. Louis, and go to the seaboard from one or the other. The Missouri
Pacific line was not built to Omaha for the purpose alone of getting
Omaha business, or that business that would come to St. Louis direct
and on to the seaboards. It was built as a through line to Kansas City
for its local business, and also a through north and south line from
there for the general trafile of Omaha. They got to Omaha and came
into competition there with the Rock Island & Pacific, the C., B. & Q.,.
and other roads which are the short lines to Chicago that fix the rate to
Chicago. The Missouri Pacific find that if they got any of the freight
for their line they would have to make a schedule of rates ; they have
got the line, and it has cost f25,000 or S40,000 a mile to build it^
and they have got to meet their interest and their fixed charges, and so
on, their maintenance of way, cost of operating, etc., and they have
got to make a rate that will take that business. The other runs are
the short lines to the commercial metropolis of Illinois, unless they
make a graduated rate and charge more for the short haul to places^
between Omaha and St. Louis than lor the long haul, lor this particu¬
lar character of business, we will lose it entirely. Their average net
earnings on their business may be 85 per cent., but on this low rate their
313
net earnings may be from five to ten per cent. If their earnings were
all reduced to five or ten per cent, the road would go into the hands of
a receiver. And if they didn't take that Omaha business they would
lose that five or ten per cent, net earnings on that amount of tonnage,,
so I say it is for the interest of every shipper on that line, whether at
the long or short haul station, that the Missouri Pacific should do that
business, because it draws that business to St^ Louis and gives it to
build up our own State, and gives employment to our people and adds
to our wealth and prosperity, and it helps every shipper in addition to
this, that it places in the coffers of the Missouri Pacific five to ten per
cent, net earnings on that amount, in the end thereby'-increasing its gross
and net earnings, thereby increasing its tonnage, and as these are in¬
creased it is able to reduce its local rates, and if it has a sufficient
quantity of this long haul business it can reduce its local rates 25 or 50
percent. ; it all depends upon the quantity and the volume which it
gets, and I say it is not injustice to any shipper for it to do it. I do not
think any court governed by principles of common law, which should
be engrafted into every statute which provides that there should be no
unreasonable discriminations under like circumstances and conditions.
I don't think any court would say that that was an unjust discrimina¬
tion under like circumstances and conditions. 1 don't think any court
would say that the man who paid 25 cents from Kansas City was in¬
jured because the Omaha man had double the distance for 20 cents. I
don't think there was anything unreasonable or unjust to him in it. In
fact, the road was helped, and the State which breathed it into exist¬
ence by its statutes was helped by building up its resources and by
adding to its wealth.
Senator Sebree : As a practice among railroads, charging more
for a long than a short haul, is it the desire among the railroads to do
that, or is it the result of competition ?
A. It results principally^ from competition between cities and
competition between roads ; it is principally forced because of some
other line coming there on a shorter route, and the long line being
forced to accept the short line's raté.
Senator Sebree : Is the influence of these competing trade centers
upon the railroad that which brings about that result, or do the roads
practice that of their own free will ?
A. Not of their own free will ; the general laws of trade bring it
about; that cannot be changed. Grain or produce has a certain fixed
price in Chicago or St. Louis; there is a difference between those
places; the short line has the advantage in hauling to Chicago; here
the long line is in competition, and if it brings any wheat to St. Louis,
it must reduce that rate and meet the Chicago short line rate.
314
Senator Sebree : Did the legislature fix rates in Iowa and fix'
them quite low ?
A. The legislature fixed rates in Iowa.
Senator Sebree : But did not authorize the commissioners to fix:
them?
A. You are talking now about the law that was repealed, not the'
present law. The present law does noi fix rates nor delegate the power
to the commissioners.
Senator Sebree: How about Wisconsin ? '
A. Our legislative statute is copied from the Wisconsin statute ;
there is not the crossing of a t " or the dotting of an i difíerencé"'
between them.
Senator Sebree : There don^t seem to be any difficulty about that
law. We are preparing a law authorizing the railroad commissioners^'
to fix rates below the maximum rates. Now, has that hitherto injured'
railroads, or obstructed the building of railroads, or embarrassed the-
emigration of capital to this State, and if it has not done it before, would^
the repetition of it have any different efi'ect ?
A. I think the laws now on our statute books have retarded the
development of the railroad interest of Missouri ; in fact, I know it^
has ; for eighteen years I have been connected With railroads, and for'
that length of time, starcing in with sixtymine hiiles on a road whictf'
now controls several thousand; and I know it because I have beeii'
brought in eontact with men who have sought to invest in railroads in '
Missouri, and to áid us in building and extending that line, and the'
first thing they would ask would be,^'What are your laws, and what is '
our power over this property we put our money in ?" and time arid
again I have written opinions on the law and have had opinioiis of
Other lawyers explaining it in order that they might be submitted tO-
investors. Time and again I have Had copies of them made and sent to'
London and Paris and Amsterdam and Frankfort, in order that it
might be submitted to bankers and capitalists, and time and again has
come the answer, ''Can't yoil have this law changed," or "this provi¬
sion altered ?"
Senator Sebree : Who do you think is the most capable party for
fixing rates, the legislature, or cannot the legislature intelligently fix^
the rates ?
A. I think this body, if the laws on our statute books, in their
judgment, are sufficient,, is capable of doing it. I thin 11 t
certainl}^ confer with the various traffic men of the différent roads atidi
hear what they have to say and take their reasons for it and arrive at'
a correct conclusion. Some of the rates now on our statute books are '
}
too high, and the railroads have voluntarily lowered them ; such, for '
315
instance, as wheat, I know it is on our line 25 per cent, less than the
statutory rates. In 99 cases out of 100 my experience has been thát
the markets and public sentiment and competition regulate rates.
Senator Sebree : Don't y:)u think we need some farther legisla^
tion to facilitate the prosecution of those who violate the laws ?
A. For ten years I have seen the statu!es of Missöuri applied as
to violations of law by railroads, and I think they are efficient and fur¬
nish all the damages that any State does.
Senator Sebree : And in regard to discrimination and this rebate
question? ■
A. I think there is not a statute in thé United States that is more
stringent than the railroad legislation in Missouri.
Senator Sebree: In the present law, how would you get à railroad
into court ; according to la\vyou must serve à notice on the president
of the company, and we don't find thé president in thé State vér^^
^ A. If your statement Was correct^ probably legislation would be
needed; but I think vou are mistaken. The statutes declare certain
acts misdéméanors, and' our general statutes provide how a penalty^
shall be collected by indictment, and how enforced, ^
Senator Sebree: But how are you going to get service on thé
defendant ? ? •
A. The cofporatioii is required by law to have its general office^
in the State and serve Us there even in that character of process ik'
good, but then our statute provides that the officer doing this shall be
liable to a penalty, and it may be recovered by indictment just liké'
síny individual.
Senator Sebreè : I would like to ascertain thé section of the stáU-
lite which provides any method of getting the cofporation into court?
' ' A. The corporation W in court ; indict a corporation for a mis¬
demeanor and it is in courtyand you servé the writ on any of its officers.'
Senator Sebree: We cannot do it without U law ?
A. We have a law as to how process shall be served on them.
Senator Sebree: But, as I have remarked, the difficulty in this^
estate is, that you cannot find them in this State?
A, Are you not mistaken about that ? if the chief Officer is abseUty
then it can be servé<I on certain other officers.
Senator Sèbree: ! think not; our Supreme Court lately adjusted^
that question ?
A. If that is true, then pass a law making service on some station
agent service on the corporation. They should not be exempt from
the process of law any more than any private individual.
316
Senator Sebree: Then the railroads cannot object to the necessarjr
and proper remedial legislation necessary to enforce the law.
A. 1 know of no railroad that does object to it, or their represen¬
tatives, that objects to be placed upon the same footing with any nat¬
ural person.
Senator Sebfee : Now, about pooling ?
A. I don't think pooling is of any importance now with the Fed-^
eral legislation on the subject; 1 don't think there is a pool in exist¬
ence. The 'Frisco never did belong to a pool, except one or two local
ones.
Senator Sebree: You think a pool could not occur wholly within?
the State?
A. Not in Missouri; they are competing with too many lines out¬
side. Missouri is peculiarly situated ; we have a few lines in Missouri
that do a local traffic, such as the Missouri Facific and the 'Frisco,
whose interest it is to haul to St. Louis ; but these other Chicago lines,,
which own lines in Illinois as well as in Missouri, their interest is to
get the long haul ; if they cannot get it, they will take the shorter one.
Now I have no doubt that the road which my friend, Mr. Sage, here
ably represents, 90 per cent, of its traffic is through business, so far as
Missouri is concerned, and it would little affect him one way or another,
what law you may pass ; indeed, I think, myself, the more stringent
law you might pass the better for his line, as it would drive the traffic
onto the through lines where their rate is unrestrained, except that they
shall be equal rates under like circumstances, and the graduation shall
be the same scale.
Senator Sebree: This interstate commerce law has resulted in the
railroads putting up the freights, has it not, to competing points, and
at water competing points?
A. I will only speak now, except by rumor, of our own road. We
have not done so ; we have reduced our rate.
Senator Sebree : Or the local rates ?
A. They have not been advanced on the 'Frisco; our local rate»
have not raised, as I stated ; our schedule reduces it a little ; I have
our schedule here, and you can compare it with the one in existence
prior to April 1st.
Senator Sebree: It is frequently charged that the railroads in
Missouri charge a rate that will yield a percentage, not only on the
capital invested, but on the watered stock also ; is that true ?
A. I don't know any road that has any watered stock ; I know the
'Frisco has no watered stock. We started in with a capital stock of
^30,000,000, with sixty-nine miles of road, with a charter to build les»
than four hundred miles. Our capital stock is $30,000,000 yet, and we
317
have trebled the road, and we have got money as best we could, with¬
out increasing our capital stock; I am opposed to watering capital
stock; I think all railroads are; it isa great injustice to the stock¬
holder.
Senator Sebree : After a pretty extensive examination of this
interstate commerce law and the report of the commission, I have dis¬
covered they all agree on one proposition : there must be a greater or
less degree of flexibility about the management of railroads, and that
hat can only be maintained through the intervention of railway com-
nissioners ; they all decided, with a singular unanimity of opinion,
hat it could only be done through an agency of that sort.
A. They may testify to that; but I think they failed to testify
hat it could be done by delegating the power to the railroad commis¬
sioners to fix rates. I think they only say that the railroad commis¬
sioners shall hear complaints and report on abuses, and leave it to the
legislative department to right those grievances, and if in their opinion,
additional laws.
Senator Sebree: You think it would be best just to have the com¬
missioners clothed with advisory powers ?
A. I think so; both for the State, the shippers and all interested.
Senator Allen: You gave us an illustration of the long and short
haul as to the three cities of St. Louis, Kansas City and Qmaha ; now,
what I want to ask you is, does not the long and short haul, in the in¬
stance cited by you, discriminate in favor of St. Louis against Kansas
Dity, if the rates from St. Louis to Omaha are the same as to Kansas
City, does not that of itself prevent Kansas City from competing for
the Omaha trade ?
A. No, it does not. Kansas City has a great advantage in its
source of supplies for its merchandise. I remember being at a conven¬
tion of railroad officials in which I tried to get them to change the rule
in relation to the supplies for Kansas City, as it has some decided ad¬
vantages over St. Louis in some particulars, although in some it has
not. Now, I know Kansas City has a decided advantage over my
home, Springfield, which, by the way, we think is quite a commercial
center, and also over any town cn our line ; and we tried to get
that rule modified so as to give us the benefit in part, and I attended
this meeting of the Western Association at Chicago, accompanied by
the president of the board of trade of St. Louis. The 'Frisco made a
tight to change that basis so as to hold our own, and we got it to a
small extent. I could give a stronger evidence of the long and short
haul than I have.
Now, within a year there has been a California war. At that time
we had a running arrangement over 143 miles of the Southern Pacific
318
from Mojave to San Francisco. The Union Pacific^ and Central Pacific,,
and Northern Pacific, and Canadian Pacific, and the Huntington; line,
and the 'Frisco, and the Atchison, and the Atlan tic & Pacific attempted
to meet the v/ar. We were fighting the Huntington lines. We had to
go over 143miles of their road, but we were determined to maintain
our part of the business at all hazards. A certain portion of the trade
fiad been going over our line, people there had been dealing with busi¬
ness houses on our line and afterwards would continue to do so, so
that we were determined that that business connection ishould be kept
up and not permitted to be broken, fearing if it should be we would
lose the business in the future and the business houses in St. Louis andt.
other points along our line would lose it. So we met their rate and
Mr. Huntington, of the Southern Pacific, said : "This is in violation of
your running arrangement with us over this 143 miles, and I will charge
you the local rate instead of the agreed one." The local rates for that
143 miles amounted to treble the through rate for all the 2,5,00 miles to
San Francisco, and we had to take the money and send it to the, agent
of the Atlantic & Pacific at San Francisco and have him pay the differ¬
ence in the freight. When we billed it through, say at five cents a
hundred, or whatever it was, it would reach the Huntington line gt Mo¬
jave and they would charge fifteen cents, so that the shipper could not
get his goods without he paid fifteen cents more than fie contracted for
with US. This was in order to force business off pur line onto his owp^
JBiit it,was a war for existence and we sent the money along and had
pur agent pay over to the Huntington line the extra iifteen cents a
fiundred, or whatever it wus.
Now, in that instance, we not only did not get operating expepses,
but paid money out of our pocket, and lost it for the purpose of main¬
taining the business pf our line and not permitting it to be broken up
and tiriven frcm our trade centers on our line with whose prosperity
we were identified. That, of course, is a more extreme case, but it is a
striking one. . ; . ^
Senator Sebree : Wedl, I want to get a little nearer home ?
A. I have given an instance in your own State.
Senator Sebree : Well, just wait a moment until I finish my ques¬
tion and then you can answer. In this connect ion you said it was a
great benefit to St. Louis—this rate which allowed St, Louis to get that
trade,? . _ ; ^ ^
A. A great benefit to the State.
Senator Sebree : Now, I would like tp ask in that connection what
benefit it would be to Kansas City ?
A. I will tell you what benefit it would be, to Kansas City. If
.fiiansas City is affected by the IpQal rates of the ,Missouri Pacific fine„
319
and if by getting this business its tonnage is iuGreased and the Missouri;
Pacific's gross and net earnings, it thereby in that proportion enables
it to reduce the local rate to Ivansas City.
Senator Sebree : The next i^neslion I don't know but what you
have answered already. Under what circumstances or conditions can
Kansas City compete for the Omaha trade, taking into consideration
the facts as given above ?
A. I don't know what the rate is from Omaha to Kansas Oily, the
local rate, but I presume it is much less than the rate from Kansas
iCity to St. LouiS;; but I presume that Kansas City lays down its goods
do the wholesale mefch.ant and the jobber and the manufacturer in
Omaha at about ten per cent, in freight above what they bad it foi
from St. Louis. That is, that the excess of charge from the freight from
seaboard points, the basis of supplies to Kansas City, is not over one-
half in excess—not over one-half the local rate between Kansas City
and St. Louis. Therefore, you are able to compete with St. Louis for
that business, because it costs St. Louis, twenty-five cents to get it to
.Kansas City, and you have it there at twelve and one half cents and
you have the benefit of the remaining twelve and one-half cents at
Kansas City,
I will tell you another case of the long and short haul. The
'Frisco and Guli road forms a through line to Kansas City. The
Missouri Pacific line is 283 miles. The 'Frisco and Grulf line-^
we have twm lines—rwe form one by,Springfield and one by Girard,
Kan sas—either of those two would be about 440 miles. Now, if
the long and short haul principle is enforced, the Gulf and the 'Frisco
have to stay out of Kansas City and do none of its business between
:8t. Louis and Kansas City, because if we are not permitted to charge
for hauling 440 miles the same rate as the Missouri Pacific charges for
>283 miles, we cannot get any of that busiaess, and if there is legisla¬
tion on the long and short haul we have got to step out because we
cannot aííbrd to haul the other 400 miles—-to regulate all our business
at that rate. Therefore, we have got to keep out of that business, and
^abandon the field to these direct lines to Kansas City, ^d I don't think
by our abaadouiog that field that Kausas City will be bettered or that
the State of Missouri wiU be bettered, or that any shipper will be bet¬
tered. lo fact I think they will be iojured, and therefore I think that
we should be permitted to charge a . greater rate for a short haul than
tor the longer one in such cases,; I think^ it is; fonthe benefit of Mis¬
souri that it should be permitted.
Senator Sebree : You think to pass a law im regard to the long
and short haul would be 4etrimental to Kansas City ?
A. I think probably it would. ^ J coald cite some Instances where
320
Kansas City is competing down in our territory where the long and short
haul might injure them. It as a thing that cuts both ways and some¬
times it is against one city but in another instance it is in its favor, but
so far as the State is concerned I think it is to its interest.
Senator Sears : In your opening statement to-day you said that
we had sufficient laws in regard to railroads in the State, and that you
considered the laws fair enough. Is it not the fact that there is not a
railroad in the State of Missouri that comply with our present statutes ?
can you reier to one road that does it ?
A. I don't know of any serious complaint of a noncompliance. I
don't know of any complaint on the line of the 'FriscD. I am not
watching other lines, or investigating their business particularly,
have enough to do to look after our own, and I know bi^t one
opinion for 300 miles and more from St. Louis to Seneca—330 miles.
I know but the one opinion prevailing all along, " we have got enough,
we have got all we want." In some commercial communities where
they are devoted to commercial business more than agricultural pur¬
suits they passed resolutions asking for the repeal of those laws we
have on our statute books, as intelligent communities and as indus¬
trious and prosperous as you will find.
Senator Sears : Well, do you think because your road cost a great
deal, and charges high rates, that the whole remainder of the State of
Missouri should be imposed upon ?
A. No; and I don't think that the people along our road are im¬
posed upon.
Senator Sears: Well, you paid high prices to build it?
A. We paid high prices to build it because of the nature of the
country there, but I resided at Springfield twenty-two years ago when
we paid eleven dollars for a barrel of salt, when we were raising more
wheat in that country than we consumed at home, but when it cost us
more money to haul it to market than it was worth.
Senator Sears : And you are not posted as to how the other roads
are treating shippers ?
A. I havd some information as to how they are doing, and I
have some information of public opinion along other lines. I meet
prominent business men, merchadts and farmers, and I think as a gen¬
eral rule they are contented and satisfied, and that there has been a
great fuss made over nothing. That is the way I get it. Senator.
Senator Hazel : Mr. O'Day, you believe these railways are public
highways, don't you ?
A. (Laughing.) Yes, in the sense that you mean, I do.
*
Senator Hazel : You think they are common carriers ?
A. I think they are common carriers.
321
Senator Hazel : You have no objection to a law correcting abuses,
have you ?
A. None in the least.
Senator Hazel : You have no ejection to a law preventing unjust
discrimination ?
A. None in the least.
Senator Hazel : You have no objection to a law preventing ex¬
tortion?
A. None, if there is any.
Senator Hazel: You have no objection to a law which prevents
rebates and drawbacks ?
A. None.
^enator Hazell : And you have no objection, or have you to this
General Assembly fixing maximum rates ?
A. None. If those on the statutes do not suit and you fix those
that do, I believe you will do it properly and fairly.
Senator Hazell : Then the only objection you make to a general
railroad bill is that it should not involve the long and short haul prin¬
ciple ?
A. No.
Senator Hazell: Nor empower the commissioners to fix rates
within the maximum rates ?
A. No; you have misunderstood me, too. If you put in the long
and short haul clause I don't care so much, for it amounts to but little.
' V
I think it would be more important for us, however, for it would cut us
out of a little business as far as our line is concerned, but we can
look elsewhere for traffic.
Senator Hazell : Now if the legislature fixes maximum rates un¬
der the second clause of the 14th section of article 12, don't you think
as a lawyer that the legislature could authorize the commissioners to
regulate the charges upon railways in reference to that question ?
A. There is a difference of opinion on that question among law¬
yers. I think the legislature has no such power; others think other¬
wise. I think the people when they adopted that constitution intended
that their servants, the legislators, should fix the rates, and not dele¬
gate it to some one else. I think if you appointed me your attorney in
fact to execute a deed for you that I coald not delegate the power to
execute that deed to any one else. If the people have appointed you
to represent them and fix those rates, you act as their agent, as their at¬
torney in fact. And I do not think the power lies in you to delegate
the duty to any one else.
R M—21
322
Senator Hazell : A power of attorney is not generally executed
for the purpose of correcting abuses ?
A, The principle is the same in my opinion. Tue power of attor¬
ney directs me to represent my principal in certain things. The Con¬
stitution appoints you to represent your principal, the State, and you
cannot do that by delegating it in turn to another. The State says it
shall be done in accordance with your views—you shall do it yourself.
however, there is a difference of opinion about it, although I think un¬
der our Constitution, which differs from some of the others where that
power has been exercised, such as Georgia, I believe, you have not the
right to delegate this power.
Senator Hazell: If you differ in your opinion from the opinion of
the General Assembly on that question, they could do no harm in enact
ing this law ?
A. Certainly not.
Senator Hazell : I believe you laid down in your speech the prin¬
ciple that rates should be governed by the amount invested, the char¬
acter of the country through which the railway ran, the tonnage car¬
ried, cost of operating the road, and I understood you to say that
freights could be hauled in Kansas for 25 or 30 per cent, less than in
Missouri ?
A. About that, yes.
Senator Hazell : Dou you haul freights over that line in Kansas for
any less rate than you do in Missouri ?
A. I think not; I think the rate is about the same, or a little
higher in Kansas. My first statement is correct ; you can haul a hun¬
dred thousand tons cheaper in Kansas, but the volume of business is
not quite as great as it is in Missouri, and therefore, the rates are a lit¬
tle higher.
Senator Hazell : You excuse yourself, then on the volume of busi¬
ness?
A. I said first the cost of the plant, the cost of operating it, the
volume of business and so on were the chief elements to be considered
in fixing a reasonable rate.
Senator Hazell : I understood you to say that in Pennsylvania
they charge about 1.3 cent per ton per mile more than you did on the
'Frisco ?
A. No; you misunderstood me.
Senator Hazell : What dia you say ?
A. I didn't say that.
Senator Hazell : What did you say ?
A. I didn't state what they charge in Pennsylvania.
Senator Hazell : Didn't you give that in your statement ?
323
A. No; I think on the Pennsylvania system east of Pittsburg it
is about 8 mills on the ton, but they make ten times more money than
the 'Frisco would on three times that rate, because of the volume of
business.
Senator Hazel! : You spoke about the great amount of tonnage
that ran over the State of Illinois ; wouldn't the tonnage increase in In¬
diana ?
A. Not so much; there are one or two lines running through In¬
diana whose tonnage is higher than those in Illinois, buta portion of In¬
diana lies too far south for that too be the case.
Senator Hazell : There would still be a material increase in Ohio?
A. Yes.
Senator Hazell. Now if the increase of tonnage decreases the
rate, how far would this continent have to extend east before we get
reasonable rates ?
A. I think we have reasonable rates commencing right in Mis¬
souri now and extending clear to New York. We have reasonable rates
at home, out in Kansas and Colorado, and New Mexico, where they
charge ten cents a mile, and where they charge ten times as much as
we do for freight. On a little short line it is reasonable to make those
charges considering the character of the country and the volume of
business. We used to consider it reasonable when we paid ten cents
a mile on a stage, and walked half the distance, carryiny a rail to pry
it out oí the mud when it stuck.
Senator Hazell : I believe you said your road first organized nine¬
teen years ago with $30,000,000 of capital. Thé present 'Frisco road is
the original southwest branch is it not?
A. Well, it is part of it.
Senator Hazell: That road was sold to John C. Freement, wasn't
it, by the State for $300,000 ?
A. There were sixty-nine miles of that road sold when they could
not run a train over it over ten miles an hour.
Senator Hazell : Just answer my question, please.
A. I don't know what it was sold for.
Senator Hazell : You remember it was only $325,000?
A. I think, that being so, he paid that much too much for it.
Senator Hazell : He could not take the road ?
A. No, it was not worth anything.
Senator Hazell : And the State of Missouri gave it to a company
on condition that they would construct additional miles of road?
A. You are mistaken, the South Pacific railroad company bought
it and paid for it.
Senator Hazell: How much did they pay for it?
324
A. I forget the amount ; they didn't pay much for they didn't buy
much ; the iron was not fit to use and there was not a tie on it.
Senator Hazell : Who did they buy it from ?
A. From commissioners representing the State, sixty-nine miles,
more or less, from Pacific to Rolla. It had been used by the Govern¬
ment during the war and they had not put a tie or anything on it ; there
was not a depot, and it would take you a day to run from Rolla to
Pacific, and you would have to hang to the seats like everything to
keep from being shaken off.
Senator Hazell: You paid about $300,000 for it, didn't you ?
A. The San Francisco, do you mean?
Senator Hazell : Yes ?
A, No, sir; we didn't buy it then ; we purchased it from the
South Pacific.
Senator Hazell : What did you pay to the South Pacific?
A. I forget ; it constructed the road to Springfield and we bought
it all, paying several millions of dollars for it.
Senator Hazell: You don't know how many ?
A. I could get it exactly down in the Secretary of State's office
where the deeds are on file, but I don't want to trust my memory now.
Senator Hazell : 'Do you know how much money you have ac¬
tually expended in constructing the 'Frisco ?
A. I could give you the exact total if you would give me a little
time, I could give you each and every item, but I don't carry them
with me. I can only give you the aggregate now. If you want it I
will furnish you with a detailed statement of each and every item.
Mr. Drabelle: In regard to the long and short haul provision, for
instance, we have in St. Louis, to make it plain, a great many pressed
brick companies ; they have the same at Kansas City. Now it was de¬
monstrated the other day, that from St. Louis out 100 miles on any of
the lines, take for instance the Wabash, the rate is less than it is be¬
tween Montgomery City on the same line 100 miles distant ; in other
words, the local rate between two local stations is not so great as the
rate between a large terminal station and a station out an equal dis¬
tance. If that is true, supposing that at Montgomery City thev have
fire clay and can make brick there as cheaply as at St. Louis or Kansas
City, and the local rate from Montgomery City to Mexico, or any other
place, is twenty-five per cent, higher, isn't that a discrimination against
Montgomery City, or any other local point in Missouri in favor of a
large city ?
A. It would look that way somewhat; there may be facts that
would explain that, although I don't know what they are.
Mr. Drabelle : Is it not the tendency to concentrate all these large
325
manufacturing concerns, or businesses, in the large cities and take
away from the State, outside of the large cities where they have these
natural resources, rights that they ought to have under the laws ?
A. No, I do not think that is the purpose of the railroads. On the
contrary, I think it is the converse. We want to distribute manufactur¬
ing institutions and plants along our line, and we have been trying to
ioster them, and I think the other roads do it; it adds to the business
of the roads.
Mr. Drabelle : I am not discussing the purpose of the roads, I am
asking about the fact.
A. The course you mention might have that effect.
Mr. Drabelle : If the facts are as has been fully demonstrated
that the local rate is 25 per cent, more would not that absolutely pro¬
hibit any intermediate point from engaging in competition with the
large cities ?
A. The local rate from St. Lyuis, say to Troy, is 25 per cent, more
than the through rate from St. Louis to Kansas City?
Mr. Drabelle : No, sir; I say that the local rate between St. Louis
and a station 100 miles distant is 25 per cent, less than the local from
Montgomery City 100 distant from there.
A. 1 think there is some mistake about that; that will explain
that, but there might be some reason for a difference, and a good one^
too, but not for as great a difference as that.
Mr. Drabelle : At St. Louis we are not like they are at Kansas
City. We are willing for the intermediate points in the State to get
some of the advantages as well as the others. I wanted to show by
this that there is a reason for the adoption in our law here of a long
and short haul clause. If the State of facts given is true I will ask you
if in your judgment we ought not, in justice to these intermediate
points, have such a clause in our law ?
A. Injustice to St. Louis and Missouri I would not have it.
Mr. Drabelle : I take into consideration the fact that we are to
legislate for the people of Missouri and not simply for St. Louis or
Kansas City.
A. I think there is a mistake about that case, but I will tell you
another instance of the long and short haul. A heavy percentage of
the business at Joplin is lead and zinc and also over at Galena, and we
have some this side of Joplin. At Joplin it is run by the Gulf and the
Missouri Pacific and Frisco. At other points it is reached by the'Frisco
alone, such asGranby. Now lead and zinc are used in St. Louis and
Joliet, and at Peoria and LaSalle, and probably several points in Illi¬
nois, and there is brisk competition for it. Sometimes we carry it at
the mere cost of transportation or about that from both Joplin, which is
326
the long haul, and Galena above. We do it for the purpose of keeping
that trade to our line for the purpose of bringing it to St, Louis and
keeping its furnaces going and supplied. Then the Illinois roads want
to do the same thing. They run to Kansas City and want to get that
business and keep the factories running on their line. The result is
as these particular products have to come from those localities that
there is a brisk competition and it is carried very low. Now we have a
zinc mine this side 60 miles and we charge more there, but if we
charged the same rate there that we would at Granby we would be
compelled to abandon that business. As it is, we make a little profit
and the men bring it in to St. Louis and sell it, and buy merchandise
with the proceeds and carry it back so that he makes something on
that and we benefit ourselves some, and benefit the State as well as it
keeps business moving in that locality, and if this long and short haul
clause was adopted we would have to abandon that and the roads that
would not be affected by that, in other States, the C. B. & Q., or the
Chicago & Alton would take it over into Illinois and the factories in
St. Louis would be closed for want of zinc.
Mr. Drabelle : My purpose was simply to see whether or not it
would work.
A. I think it would work a detriment although we really care
nothing about it ; I think the general public and the manufacturing
interests of the State would be deterred. It is my view of it, although
I have no objection to your adoptin git.
Senator Sparks : You stated that in your opinion the legislature
had no authority to delegate this power of fixing maximum rates to
the commissioners? If we had the power to delegate the power to
these commissioners to modify or regulate this maximum rate, would it
be a benefit or a hardship ?
A. I don't think you could do it, the power to modify is a delega¬
tion of the power.
Senator Sparks : How would it be if they had the right to sus¬
pend the operation of it?
A. I would not* say as to that ; it seems to me if you fix a maxi¬
mum rate, and delegating power to the commissioners to suspend it,
that would not be a violation, but simply a failure to enforce or pro¬
vide for a maximum rate.
Senator Sparks : I believe you made the statement a moment ago
that in one of the States the powers of the commissioners were merely
advisory ?
A. Yes, I have a report here on the matter.
Senator Sebree: We find in the commissioners' report of this
State that almost all the roads pay no attention to the rates that they
327
make under our present statute. I would like to know whether your
road is one of those that do not observe the commissioners' order in
that respect ?
A. If this is one of their rates, this last one given by them, I pre¬
sume it is because if we did observe it we would be in the hands of the
receivers in ninety days.
Senator Sebree : I didn't ask you about this last one ?
A. I am not personall3^ informed as to that.
Senator Sebree : But I want to know if your road obeys or has
heretofore obeyed the orders and rates fixed by the commissioners
under the statute. You know there is a statute now which gives the
commissioners the power to reduce a maximum rate ?
A. I could not say ; those questions are not called to my at>ten-
tion ; it is not a part of my business ; I am sometimes consulted on
such matters as to the propriety or policy of doing certain things, but
unless they are called to my attention they might obey or disobey them
and I not know it.
Senator Sebree: You don't know in fact then, whether your road
has so complied or not?
A. I know of no schedules they have made up for our road and I
know of no failure to comply.
Senator Sebree: You know the statute provides no penalty in
case you do disobey
A. That may be—well, no, if the commissioners have power to
reduce the maximum rate then that becomes the rate, and to charge in
excess of it is an unlawful rate and an exorbitant one, and the statute
does provide a penalty for an excessive rate.
Senator Sebree : You think then that there is a statutes providing
that the commissioners have the power to inñict a penalty?
A. There is a penalty and the commissioners have the legal right
to enforce it.
Senator Sebree : Is there anything in the statute that would cover
that?
A. I think myself, if the power exists it is covered by the general
statute prohibiting the charging of an unlawful rate and the providing
penalties for it. But we have no objection to penalties for that.
Senator Sebree : I understood that you ascribed the fact of the
railroad being in the hands of receivers in Illinois and the lack of rail¬
road building of late years to the law ?
A. I think you understood me wrong. I didn't say it was solely
due to that. I think it infiuenced it.
Senator Sebree : That is what I mean ?
A. I think it did.
328
Senator Sebree : And you directly stated that the Missouri law
certainly kept capital out of Missouri and had done it?
A. It has retarded the building of railroads in Missouri to my own
knowledge.
Senator Sebree : How about the law of Kansas ?
A. The law of Kansas did at first in that State, till they became
acquainted with it and became satisfied with it, and the spirit with
which it was enforced. And now I say if in Kansas they had no rail¬
road law, there would be more miles of railway built.
Senator Sebree : They are building more under the present law
than any other State ?
A. They are. Kansas is literally a net work of railroads, while in
Missouri we have in about two-thirds of the area of this State about
one-fourth as many as they have in the same area in Kansas.
Senator Sebree : You think then that such a law as they have in
Kansas would not be objectionable to capital in Missouri ?
A. I think we would get along under it, but any law—I don't care
what kind, if you were to propose changing our laws and making them
better and easier on the railroads than they are to-day, I would say
^'no, we have lived ten years under this law ; the investors know all
about it, they have had opinion after opinion upon it by lawyers, and
know what it is, let it stand so. It would take years again to satisfy
them."
Senator Sebree : You would not object, then, to such a law as they
have in Kansas, so far as your railroad is concerned ?
A. I would not accept the Kansas law in toto because I have not
got before my mind each and every section of it. But the operation
of the Kansas law has been very good, we have had no trouble, no com¬
plaints, no discussion, no fixing of rates by the commissioners.
Senator Sebree: Your objection to legislation seems to be princi¬
pally the giving of any powers to the commissioners except advisory
powers ?
A. That is one of them, and the other is if you should fix a maxi¬
mum rate it ought to be a reasonable rate, one which the smallest road
in the State could live under, and then the others could reduce it to
suit their lines.
Senator Sebree: I would draw your attention principally to the
power of commissioners. Would you object to the commissioners in
this State having such powers as those of Kansas ; I believe their
powers are merely advisory ?
A. No, I think it is proper and for the benefit of the roads that
there should be some one to advise with them and to report grievances
329
and wrongs to somebody to redress them, and that they should make
such a report tp the Governor or. a board should pass on the report, and
if there is a wrong have it redressed.
Senator Sebree : Is that your idea of the extent of their powers
in Kansas?
A. That is about the way they operate.
Senator Sebree : Your road extends into thajt State ?
A. Oh, Yes, sir.
Senator Sebree : Aren't you familiar with the law of that State ?
A. Yes, sir ; I was, in the main, at one time.
Senator Sebree : I will ask you if the law there does not give the
commissioners the powers to reduce the rates of the railroad ?
A. I would say if it does that they have not done it. The roads
fix their own rates and submit them to the commission. I know that
we have had no strife—I have never appeared before them.
Senator Sebree : And are not the rates fixed by the commissioners '
prima facie evidence of their justness ?
A. As finally approved by the commissioners, it does.
Senator Johnson of Madison: I wish to ask you a question in re¬
gard to the percentage of difference in the maximum rates for third
class roads, as to what it should be to protect their interests, and as to
how such a thing would do ?
A. You could approximately approach something like justice to
them in that way probably, that might be a feasible plan.
Senator Johnson. State to the committee, if you can, what, in
your opinion, would be a reasonable difference between first and sec-
ondclass roads, through and other than through lines ?
A. It woùld be hard for me to make any statement that would be
of much value to you, because the trunk line rates—the Wabash, Mis¬
souri Pacific, Chicago & Alton and 'Frisco—would not be fair to them
all, or, omit the 'Frisco, because of the character of the country trav¬
ersed by it. You have to take into consideration the volume of busi¬
ness, the cost of doing it and everything else.
Senator Johnson : Do I understand that you argue before this
committee that different rates should be fixed for through lines doing a
general traffic in the State from the local lines?
A. Yes, they couldn't live under the same rate.
Senator Johnson : Then there is no basis of maximum rates that
the roads could be allowed to charge that would be just to the two ?
A. No, you misconceive me. I say if you were to fix a maximum
rate under which the Missouri Pacific might live, that rate might not
sustain the Wabash because the Missouri Pacific have trebled the ton¬
nage that the Wabash have. It would depend upon the tonnage. One
330
line may do six times as much business, and the other could not live at
the same rate.
Senator Johnson : Do 1 understand you to say that competition
between these great through lines made them charge nearly the same
rate ?
Â, That is one of the elements which reduce ratea to what is
reasonable.
Senator Johnson : If that is the fact, that that competition com¬
pels them all to charge about the same rate, why cannot a maximum
rate be fixed that would be just to those through lines, if they all really
charge about the same rate?
A. A maximum rate, if adapted to cover all lines—first class roads
can be approximated to something that is nearly right, as you say, but
one of the advantages to a road in fixing their own rate, approved by
a board of commissioners and so on, is that scarcely any road wants to
maintain the same rate for six months. Changes in business and fiunc-
tuations in the markets and in the products of the country all have to
do with the rates.
Senator Johnson : Then you could not now, as a matter of opinion,
state what the reasonable difference between first and second class
roads should be ?
A. I might state a gross sum that would be ample to cover it.
Senator Johnson : But I mean a percentage?
A. I could state a percentage that might be ample to cover it.
Senator Johnson : What, in your opinion, is a reasonable percent¬
age of difference between first and second class roads ?
A. I would take the Missouri Pacific and the 'Frisco. The 'Frisco
could not subsist without it got thirty per cent, more than the Missouri
Pacific.
Senator Johnson: Then take the difference between first and
third class roads.
A. Well, it would have to be greater. If I was fixing it I would
fix it on gross and net earnings per mile, and vary the percentage as
the gross and net earnings varied—but I don't know what you term
third clasp.
Senator Johnson : I assume you divide all the roads into three
classes, making the first class all through lines without regard to their
earnings, the second class all important roads that are not through
lines, and the third class the weak roads ?
A. Well, the weak roads would have to pay double, I will take
such a road as Mr. Houck's and the Cuba & Salem road, (St. Louis,
Salem & Little Rock), it would be more than double.
331
Senator Johnson: I understand from your opinion, that unless the
maximum rate is fixed away beyond a reasonable price for freight, it
could not be a reasonable maximum rate ?
A. No ; to cover all lines, it would have to be fixed at what would
be away beyond a reasonable rate for the best lines. If you were to
make one rate to cover all the roads, it would have to be away beyond
what was reasonable for the heavy roads doing a heavy tonnage.
Senator Sebree here read Sec. 14, p. 192, and Sec. 18, p. 193, of the
Kansas Statute, as follows :
Sec. 14. In all cases where complaint shall be made in accordance
with the provisions of section 18, hereinafter provided, that an unreas¬
onable charge is made, or that the rates charged for freight are unjust,
unreasonable or extortionate, and the board shall find such complaint
to be true, they shall require a modified charge for the service rend¬
ered, such as they shall deem to be reasonable, and shall certify their
finding to the managing officer of the road against which complaint is
made ; and the rates so determined by the board to be reasonable, shall
be, by the railroad company affected thereby, accepted, and posted up
in a conspicuous place in each depot on the line of its road that may
be designated by said board ; and such rates so found, shall, in all ac¬
tions arising in any court in the State, be taken to be reasonable com¬
pensation for the services for which they are provided, until the con¬
trary is proven ; and all compensation demanded or received by any
such railroad company in excess of the rates so determined by the
board, shall in any such action be taken to be unjust, unreasonable and
extortionate, until the contrary is proved. All cases of a failure to
comply with a recommendation of the board of commissionèrs shall be
embodied in the report of the board of commissioners to the Governor,
and the same shall apply to any unjust discrimination, extortion or
over charge by said company or any other violation of this act by such
company.
Sec. 18. It shall be the duty of said commissioners, upon the com¬
plaint and application of the mayor and council of any city, or the
trustees of any township, to make an examination of the rate of freight
tariff charged by any such company, and of the condition or operation
of any railroad, any part of whose location lies within the limits of
such city or township, and if twenty five or more legal voters in any
city or township shall, by petition in writing, request the mayor and
council of such city or the trustee of such township, to make the said
complaint and application, and the mayor and council or the trustee
refuse or decline to comply with the prayer of the petition, they shall
state the reason for such non-compliance, in writing upon the petition,
and return the same to the petitioners; and the petitioners may there-
332
upon, within ten days from the date of such refusal andreturn, present
such petition to said commissioners ; and said commissioners shall, if
upon inquiry and hearing of the petitioners they think that the public
good demands the examination, proceed to make it in the same manner
as if called upon by the mayor and council of any city or the trustee
of any township. Before proceeding to make such examination in
accordance with such application or petition, said commissioners shall
give to the petitioners and railroad company reasonable notice, in
writing, of the time and place of entering upon the same. If, upon
such an examination it shall appear to said commissioners that the
complaint alleged by the applicants or petitioners be well founded,
they shall so adjudge; and they shall then and there decide what is a
reasonable charge for such freights, and shall inform the corporation
operating such railroad company of their adjudication within ten days,
and shall also report their doings to the Governor, as provided in sec¬
tion six of this act, and shall certify to such complainants the result of
such adjudication; and such adjudication shall be prima facie evi¬
dence of what is a reasonable charge in all actions for such service.
A. That is as I thought. It is advisory, and the court determines
what is a reasonable rate. It all goes to the court.
Senator Sebree : Just as I showed it to you in House Bill 620 in
one of those sections ?
A. I don't think there is any objection to that.
Senator Pare her : Relative to the section in the present statutes
giving the commissioners absolute power to reduce rates, I wish to ask
you if there is a reasonable penalty attached thereto and power to en¬
force it ; whether it is not probable that the constitutionality of that
section would be tested at once with full confidence that it be declared
unconstitutional ?
A. I don't know that it would be "with full confidence." If they
reduced the rate unreasonably it would be tested undoubtedly.
Senator Parcher : As a matter of fact, it has been almost inop
erative ?
A. Well, I do not agree with you that there are no penalties now
to enforce it ? I think the general penalties applying to overcharges
applies to that and covers it. If they have power to reduce it, then
any charge made over and above is an overcharge and subject to the
penalties of an overcharge.
Senator Parcher: As a matter of fact, the railroads of this State
have paid but little, if any, attention to their orders in that regard ?
A. I don't know that myself. We had no litigation growing out
of it.
333
Senator Parcher: You don't know that the San Francisco road
ever paid any attention to it ?
A. Not that I know of.
Senator Parcher : You believe, as an officer representing your
corporation, that even if the commissioners of this State were empow¬
ered to fix a rate, and simply making \h2Xprima reasonable, that
that would be unconstitutional ?
A. I do.
Senator Parcher: If that was merely made prima facie, a prin¬
ciple which you would approve were it in Kansas ?
A. You say, if our statute makes it only prima facie evidence?
No ; I believe it might be proper on on that ground—
Senator Parcher (interrupting): If we would do that simply to
get you into court and make the opinion of these quasi expres^ these
commissioners,facie evidence of reasonableness to that extent,
do you believe that would be unconstitutional ? As a matter of course,
t
then I take it—
A. (Interrupting): Just a moment, Senator—
Senator Parcher : I take it as a matter of course that you regard
this section of our statute giving the commissioners absolute power to
reduce and fix a rate—that you don't care the snap of your finger for
it, as they have no constitutional power to do anything about it ?
A. That is my opinion, that they have not. Still, I care the ''snap
of my finger " for such legislation, even if void, would have a bad
effect on the State.
Senator Parcher : What laws have we on the statute books that
militate against the development of the State?
A. The very section you refer to has been inquired about repeat¬
edly by investors, and opinions have been asked upon it, as to whether
that did not delegate the power to the commissioners to fix the rates
and take it out of the hands of the railroads and their owners. That
is the principal point they are interested in—the matter of rates—it is
the earning power of their property and who are to control and regu¬
late it that investors are principally interested in.
Senator Parcher : Now I understand that you would approve of
laws denouncing extortion, discrimination, rebates and drawbacks?
A. Yes; extortion and discrimination both. One term covers
them all.
Senator Parcher: How are we going to get at what is extortion?
We have no statute defining what is a reasonable rate?
A. What is extortion is determined by the court where a contro¬
versy arises. Here are the facts which justify the fixing of a reason¬
able rate—the cost of its plant, tonnage, gross and net earnings, cost
334
of operating, cost of the product, the locality in which the rate is
made. If under those circumstances the road is charging unreason¬
ably, that is, over and above what is necessary to pay it for the money
invested, operating expenses, and so on, and a sufficient margin of
profit, then the rate is unreasonable and the court will so declare it.
Senator Parcher : What is your objection to the railroad commis¬
sioners being considered experts, which they ought to be after three,
five or six years' experience, and to their naming what in their opinion
IS a reasonable rate, and standing as arbitrators between you and the
people, they naming it a reasonable rate and you having the right to
go into court and the court finally determining which is right?
A. That is as objectionable as having them delegated absolute
power to declare what is right as that might bring up litigation and
create dissatisfaction with shippers and all parties in interest.
Senator Parcher : Two years ago this winter, I believe, there was
scarcely an advocate here of maximum rates. Then the disposition
was to keep to the Illinois law. Last winter there were but few advo¬
cates of maximum rates here and it didn't take shape. The bills here
on that principle were fought and defeated. Then the opinion seemed
to be that it would be better to have a prima facie reasonable rate so
it could be taken into court, and the -prima facie evidence of reason¬
ableness be overcome by you with your testimony that it was reason¬
able. And all those things were objected to just about as strenuously
as the present legislation.
A. I don't remember making any objection to it. If I did it has
passed my memory.
Senator Parcher: Take England that passed three hundred
railroad bills before they finally settled down to the bill that has
worked satisfactorily for the last 14 years. Isn't that rather in favor of
giving the commissioners power to control these rates ?
A. No ; and I disagree with you that it gives eminent satisfaction,
and besides, what would give satisfaction in England would not give
satisfaction here. The character of the business is entirely different.
What would be a good and wholesome law for a railroad in England
would not answer our purposes at all. I hope we are not going to
abandon Illinois and go over to England ! (Laughter.)
Senator Parcher: We are going wherever we can get any evi¬
dence.
A. Now, I want to stay in the United States.
Senator Parcher : Well, I will go through England and Belgium,
if I can find anything there.
A. In Europe the government control railways, they do in Ger¬
many and in France, and I believe at one period there was govern-
335
ment control in England. I do not suppose anyone would advocate
government control in the United States. If they would we would be
very glad to see it. And we would hand the railroads over to the
United States at 25 per cent, less than our road cost us.
Senator Parcher here referred to the cases of extortion in
Northwest Missouri, referred to heretofore, and Mr. O'Day gave about
the same answer, saying that he did not know the circumstances in
the case, and that it may or may not have been extortion, and that
from the statement made it was not necessarily extortion, and that the
question was still open whether the charge was more than a reasonable
rate for that service or not.
Senator Castleman: Mr. O'Day, you instituted a comparison be¬
tween the tonnage and the earnings of the Frisco road, and various
roads in the United States. Will you tell me why you did that ?
A. To show that the rates charged by the Frisco under all cir¬
cumstances were reasonable, and that the oppression which it is
complained exists in Missouri on the part of the railroads, is not well
founded.
Senator Castleman : Was it for the purpose of showing that it
was not well founded, as to the San Francisco road, or that it is not
well founded as to roads generally in the State of Missouri ?
A. For the purpose of showing it was not well founded as to
roads generally, for the reason that the Frisco charges the highest rate
per ton per mile probably of any line running east and west through
the State.
Senator Castleman : Have you the tonnage per mile of all the
roads in the State of Missouri ?
A. I have a book which contains it.
Senator Castleman : Have you made a statement of it ?
A. No, I have not ; only of one or two.
Senator Castleman: Have you a statement of the earnings per
mile of the roads in the State of Missouri ?
A. No, except as contained in Poor's Manual.
Senator Castleman : Have you made a statement of the tonnage
per mile of the roads in Kansas ?
A. No, I have examined the statements of the chief roads there,
and 1 took the best roads in the State, the largest and most prosperous,
and used that for the comparison : the Atchison road.
Senator Castleman : You did not take the tonnage of all of the
roads in Kansas ?
A.. The tonnage of all the roads there, and the rate per ton, would
be a great deal higher. I take it, than the road having the highest
tonnage.
336
Senator Oastleman : I am asking you simply as to facts ?
A. Well, I didn't take all the roads in Kansas. You will remem¬
ber there are more than two roads in Kansas.
Senator Oastleman : It does not matter what I may remember, it
will save time if you will just answer the question. I will try and
treat you respectfully, and hope you will me. Did you take the ton¬
nage of the roads in Kansas ?
A. Only the roads I have read. I have examined the tonnage of
each and every road.
Senator Oastleman : Did you take the earnings of the roads in the
State of Illinois ?
A. Well, it seem singular that I am required to answer that.
Senator Oastleman : You are not required to answer it, sir; you
can refuse if you wish.
A. No, I will do it ; but I have read to you the tonnage of each
line that I took, and there was one line in Illinois, three lines in Kan¬
sas, and so many lines in each State, and those were the only lines the
tonnage and earnings of which I have commented upon before the com¬
mittee.
Senator Oastleman : Then you did not take the earnings per mile
of all the roads in the State of Illinois ?
A. I did not, before this committee, but I considered and exam¬
ined each line in each State, its earnings, rate per ton per mile, rate
per passenger per mile, quantity of rolling stock employed, its cost and
• «
operating expenses, and the net and gross earnings.
Senator Oastleman : You made no statement you could furnish
to this committee ?
A. No ; because it is all in Poor's Manual.
Senator Oastleman : You spoke of the Kentucky Central road;
where does that road run from?
A. I think it is from Lexington or Louisville to Nashville.
Senator Oastleman : The Kentucky Central road runs from Louis¬
ville to Nashville ? it luns from Cincinnati or Covington, don't it ?
A. Well, you and Mr. Poor don't agree on that, and I am taking
him a^ being the authority.
Senator Oastleman : How do you know that ?
A. Because I have copied from him. Oh, yes; it does run from
Covington, Kentucky. I was mistaken in that and you are correct.
Senator Oastleman : Do you know anything about the country it
runs through?
A. I have been over the road. Portions of it is a verv rich coun-
try.
Senator Oastleman: How much of it?
337
A. Oh, well, I couldn't say ; I was only passing over it ; I should
think it would average fair country, representative of a grand and
very wealthy State. It is a north and south line, and its loci traíRc
is, therefore, only a small percentage of its business.
Senator Castleman : It is 90 miles from Covington to Lexington,
isn't it ?
A. The length of the road is 398 miles.
Senator Castleman : Not from Lexington to Covington ?
A. That, as I understand, is the line that runs through Paris.
Senator Castleman : Now, you spoke of the roads in Illinois
which had gone into bankruptcy, and gone into the hands of receivers,
^nd you had a list in your hand. -Will you let me see the list.
A. It is taken from the ^'Railroad Register.'' I have given the
list, but my list is incorrectly copied. (The list heretofore given in Mr.
O'Day's speech is the corrected list.)
Senator Castleman: Will you let me see the list from which you
made your statement ?
A. I ought to get a book from which I made the statement.
Senator Castleman: You have the list from which vou read ?
«y
A. I have a list but it is incorrect in some particulars, but I didn't
read from it there.
Senator Castleman : Whether it is correct or not, Mr. O'Day, will
you let me use it ?
A. Yes, I will get the correct list.
Senator Castleman : Now, the first here is the Cleveland, Delphos
St. Louis; when did that go into the hands of receivers?
A. There are all the roads that went into hands of receivers in
1885.
Senator Castleman : These all went in in 1885.
A. That is what Mr. Poor says.
Senator Castleman : Now, Mr. O'Day, speaking of the powers of
the legislature, will you tell me whether in your opinion, as a matter of
fact, sections 12 and 14, article XII. of the Constitution of Missouri are
grants of power to the legislature by the people ?
A. I cannot recollect now the exact language of them. If you
would read them I could give you my opinion on it, I might not be
able to teil you whether they were.
Senator Castleman : When you illustrated your own opinion by
'Speaking of the powers of an agent to execute a deed under a power of
■attorney as exemplyfying the powers of the legislature with regard to
the commissioners under the Coustitution, did you understand that
these w^ere grants oí power ?
R M—22
338
A. Yes, it circumscribes their power-
Senator Castleman : You think that these are limitations of tha
power ?
A. I think that they are limitations of the power.
Senator (Jastlernan : Let me ask you to read section 12 and then
explain to me what you mean by saying that that is a limitation of the-
power of the legislature?
A. This simply says that there are certain abuses which you
should correct by legislation.
Senator Caslleman : You would not then call that a grant of
power ?
A. In its making it incumbent upon the legislature to accomplish
a certain act by passing a law.
Senator Castleman : Then if it is not a grant of power it cannot
be a limitation upon the power?
A. Indeed no one claims that there is any limitation on the right
to fix long and short hauls. I have not heard it.
Senator Castleman : Now section 14 says that the railways here^
tofore or hereafter to be constructed in this State are hereby declared
public highways, and railroad companies are common carriers. Isthat.
a grant of power?
A. That is a declaration of a common law principle.
Senator Castleman : In other words, those provisions are simpler
declaratory, are they not?
A: No, the one on the long and short haul is not declaratory of sl
common law principle.
Senator Castleman : Now The General Assembly shall pass-
laws to correct abuses and prevent unjust discriminations and extor-^
tions in the rates of freight and passenger tariffs on the different rail¬
roads in this State." You would not call that a grant of power, would
you ?
A. No.
Senator Castleman: That is not declaratory, but it is mandatory?
A. This power exists without that.
Senator Castleman : Then wherever the power is denied to the leg¬
islature, the legislative power, she has it, under our Constitution, under
the general grant?
A. Where it is not denied directly, or by implication, she has it..
Senator Castleman : Now I want to ask you a question in regard
to what you said of the Kansas law. You said you had no objection to-
the Kansas law in its present shape ?
A. Yes, we have no objection out there, no trouble. I have read
each and every section of it.
339
Senator Oastleman : You heard the provisions read this morning?
A. I did.
Senator Castleman : And you said you had no objections to them ?
A. No objections.
Senator Castleman : And you do not think the roads have suffered
under the Kansas law ?
A. 1 know they have not in Kansas. I have not heard of a single
case coming into court.
Senator Castleman : And it has not prevented the building of
roads, and has not retarded it?
A. No, I didn't say that.
Senator Castleman : To what extent do you think it has re¬
tarded it?
A. I couldn't say that, all I know is this, and my source of infor¬
mation is talking with capitalists ; we are endeavoring to procure men
to invest in Kansas, and in conversing with them I draw out certain
objections of the investors. Some will urge that as an objection, but
very few. We try to reconcile them to the law.
Senator Castleman : Now, if I understood you, you said that inas¬
much as the provision in the Kansas law simply made the fixing of the
rate by the commissioner "prima facie evidence, you thought it was ob¬
jectionable ?
A. Yes, it only changes the burden of poof.
Senator Castleman: And you think it would not be objectionable
in our laws if it is not in Kansas ?
A. I have no objections to it.
Senator Castleman: Then did you object to Senate Bill 293 last
winter?
A. Well, now, if I remember what Senate Bill 293 was, I could
say whether I objected to it; I couldn't say ; the bill I objected to, at
least what I thought I was objecting to, delegated legislative power to
the board of railroad commissioners to fix rates. That right was ton
conclusive.
Senator Castleman : Which bill was that?
A. My understanding was that there were two bills which sub¬
stantially embodied that.
Senator Castleman : Nos. 620 and 293?
A. I wouldn't say.
Senator Castleman : What is your recollection of it?
A. I have but little recollection about it.
Senator Castleman : Well, give us your little recollection, if you
please.
A. Well, my little recollection is this : That there were two bills
340
pending before the legislature, both of which delegated the power to
the Board of Railroad Commissioners to fix rates, and run matters just
about as they pleased, and that their j iidgment and conclusion as to rates
and other things was final and conclusive on the railroads and the
courts, and that there was no redress from them but bankruptcy. That
was my little recollection.
Senator Oastleman : If you had been under the impression that
the provision with regard to the fixing of rates in those two bills to
which you refer, was simply that the railroad commissioners might
make a schedule of rates which should be prima facie evidence only
of its justice and reasonableness, you would not have objected to the
bill ?
A. I cannot tell what I would have done last winter, and it would
be very little use to go back and give you my opinion of what I had
done six months ago.
Senator Oastleman: We will decide the use if you will be kind
enough to answer the question ?
A. I don't know what I would have done.
Senator Oastleman : What would you do now on this simple ele¬
ment of the bill ?
A. If there was no other element in that bill which interfered
with the direction of the roads, placed them in charge of the board of
commissioners, made their charge absolute, made them the dictators of
the railroads, I would say while that may be a very foolish thing to do
we will trust to the courts, and we will litigate it there.
Senator Oastleman : You think that would not be objectionable
in the bill itself?
A. I don't think it would be an unanswerable objection, we could
get along with that.
Senator Oastleman : You would not find fault with the bill
simply on that ground ?
A. I might find fault with it but I wouldn't oppose it simply
on that ground.
Senator Oastleman: You mean you would not object to its be¬
ing passed?
A. No.
Senator Oastleman : Now, Mr. O'Day, one bill passed the Senate
here last winier, possibly you may remember ?
A. I heard so.
Senator Oastleman: Did you hear that one passed the House and
came back to the Senate?
A. I probably did by rumor.
Senator Oastleman: Only by rumor ?
341
A. Well, I would not say that I remember when it passed ; I was
here about two weeks towards the latter part of the session. I may
have been here, but I do not recollect.
Senator Castleman : The bill which passed the Senate and went
into the House, did you object to the provisions of that bill which
authorized the commissioners to make rates?
A. I don't remember what we objected to, and I could not state
what were the objections. If a business matter comes up and is set¬
tled and disposed of, I always allow it to go out of my recollection.
Senator Oastleman? You are always looking to the front?
A. Yes, sir; I have an old garret in which I file away dead issues,
and I hope that it may take fire and burn up some time.
Senator Castleman : Yes, we all hope so, that all the garrets would
which contain them.
Mr. Timmons : Mr. O'Day, I understood you to say this morning
that we have in this State about the most stringent railroad laws of
any State in the Union?
A. I think you are correct; I intended to convey that idea.
Mr. Timmons : In what respect do you mean that they are the
most stringent?
A. They provide severer penalties for their violation. For in¬
stance, discriminations or extortions, synonymous terms, which make
me lose $10, make me pay $10 more than I should, or than some other
party would under the same circumstances, enable me to sue the com¬
pany and recover $30, three times the amount of the overcharge, and
the State may, by indictment, recover a penalty of $250 or so, so that
I am paid $30 for $10, which was wrcmgfully charged me, and which
a fine was wrongfully filched from me, and the costs, and there is also
imposed of several hundred dollars and costs.
Mr. Timmons: If the statutory rate from Springfield or Lamar to
St. Louis is $50 a car for cattle, and you charge the shipper $60 per car
what remedy has that shipper?
A. The first remedy is if we charge him $60, that I will repay it to
him with interest, but if he is not satisfied with that and he wants to
.
hurt us more than the $30 and costs, he can have the authorities at
Springfield add to the public school fund by having an indictment
against the agent that made the charge and collected it, and he will
pay a fine of not less than $250.
Mr. Timmons : I am only asking for what relief is provided for the
shipper, not as to the penalty that goes into the school fund?
A. Well, he can sue the railroad company for three times the
amount and recover it, and then enforce the penalty in addition to
that.
342
Mr. Timmons : Is not tlTat the penalty, not for violating the statu¬
tory rate, but for charging more than the rates fixed by the commis¬
sioners ?
A. No, sir; I litigated that entire question, and if you will see
the case of Owens vs. The San Francisco road, in 83 Mo., you will see it
was a suit brought for alleged overcharges, for three times the amount.
The court held there was no overcharge, and we beat them simply on
the question of fact.
Mr. Timmons: If you charge a shipper $2 more than the statutory
rate, then you say you can recover $8 from the company ?
A. Yes, sir; and the costs.
Mr. Timmons: That is his only protection?
A. That is a great protection for him, that and the penalty, for it
don't make any difference to the company who gets the money if they
have to pay it.
Mr. Timmons : I will ask you if it is not true that, by your goin|
to law and courts in the State, you could make it not worth the com¬
plainant's while ?
A. Well, that is a good deal of a verdict to get. If I could make
300 per cent, on money I would like to invest it at any time.
Mr. Timmons : I would ask you if the only recourse in that section
referred to is not that the railroad company shall forfeit their right to
collect the charges from him ?
A. No, I remember it from this case being litigated, and I re¬
member every phase of it, and whether this was enforced by the legis¬
lature or not, and the Supreme Court, in its opinion, said that the legis¬
lature passed upon the Constitution and enforced it.
Mr. Timmons : Do you think that the giving of the shipper a
simple remedy of three times the—he doesn't get three times the
amount charged ?
A. He gets three times the overcharge.
Mr. Timmons : Do you think that that is a sufficient protection to
the shipper.
A. It is the largest protection I know of given to any one against
the injustice or wrong doings of his neighbor.
Mr. Timmons: Do you think the laws of Missouri are more strin¬
gent than the laws of Illinois ?
A. Well, there is a fine proposed there of not less than f250.
Mr. Timmons: I asked you if you thought the laws of Missouri
more stringent than the laws of Illinois ?
A. In that particular they are.
Mr. Timmons: If the laws of Missouri are more stringent upon
the railroads than the laws of Illinois, why should railroad companies
343
and railroad men object to the introduction of the Illinois law in this
^tate ?
A. We object to your putting us into Illinois shoes. They are
not fitted to us. You have got a bigger boy than Illinois, and a gar¬
ment that will fit Illinois will not fit Missouri, but still you want to put
him into it.
Mr. Timrnons : We will except rates, and only refer to their
legislation.
A. If my memory serves me right, the Illinois law delegates the
power to its commissioners substantially, I may be mistaken now.
•
Mr. Timmons: You are aware now of the fact that the Missouri
'Constitution is like the Illinois Constitution on that question, are you
not?
A. I don't know; it may be substantially the same.
Mr. Timmons : Isn't it verbatim ?
A. I couldn't say ; I have been over this question but I couldn't
say now.
Mr. Timmons : Aré you aware of the fact that the constitutionality
o/ the Illinois statute has been decided ?
A. Oh, yes, I arn aware of it ; both the warehouse cases and the
railroad cases—the Illinois Central case.
Mr. Timmons: Those roads all recognize the constitutionality of
the Illinois statute.
A. I think they do.
Mr. Timmons : Why would you have any objection to our adopt¬
ing the Kansas laws for regulating railroads ?
A. I don't think there is any great objection to the Kansas laws-
We get along very well.
Mr. Timmons: So far as your knowledge now goes, you would be
willing that the State of Missouri should adopt them ?
A. I don't speak for any road except the 'Frisco.
Mr. Timmons : So far as your knowledge goes now, you would be
willing that this legislature should adopt substantially the Kansas
laws ?
A. Yes; it would be better than the laws you propose. I think
that we wouid be better oil' without any.
Mr. Timmons: You think it would be well to repeal what laws
we have and not have any?
A. I thick it would be a good thing to repeal the existing laws.
If you would, the value of stock would go up twenty-five per cent.
Mr. Timmons : What would become of the shippers ?
A. And the rates would go down twenty-five per cent.
344
Senator Sears : I don't want to forbid anyone else from asking
questions, but 1 was going to suggest that we proceed with some other
witness.
Mr. Sebree: I want to ask Mr. O'Day if his company, at thif^
time, charge more for shipping a car load of produce from Verona, in
Lawrence county, than from Carthage, in Jasper county ?
A. We do not.
Mr. Sebree : I was told last fall by a shipper at Verona that it
cost him fifteen dollars more for a car over the 'Frisco road from hia
place than it did in Carthage, over the same road, from St. Louis.
A. The shipper is mistaken; and if you will verify that fact by
the receipt, I will pay him back three times the amount we over¬
charged him, and we won't have to have any suit about it, either. I
have no doubt such reports occasionally come out.
Mr. Sebree: There is another thing I wanted to ask, and that is^.
whether or not your road got a good big donation of public lands ?
A. The old southwest branch of the Southern Pacific, in 1852, got
a donation of lands.
Mr. Sebree : Did your company get it ?
A. We never got an acre of land from anyone. The 'Frisco never
got a dollar of bounty, or township, county or State money, nothing
but the money of private investors.
Mr. Booth : I would ask you if penalties in the State of Kan¬
sas, the law of which, generally, I believe you approve, are not rather
higher than those of the State of Missouri, with respect to the very
same matters to which your attention was directed by Mr. Timmons ?
A. If you think I complain of the penalties of this State, I think
you misapprehend me, for I do not, nor does any other road, I think
I think they are just what they should be. It is in the nature of smart
money, but there is no complaint against the penalties. I did say,,
however, that the laws are more stringent in Missouri than in any other
State, the penalties are more ample.
Mr. Booth : You stated that, in Missouri, the shipper was entitled
to three times the amount oí the overcharge, and that there was a pen¬
alty of $250 to a thousand dollars. Now, is it not true that in Kansas
the shipper may ask triple damages, the same as here, and that for any
violation of the provisions of their railroad law, the company is re¬
sponsible in a penalty of from one hundred to five thousand dollars ?
A. If it is so, it is not my memory. If that won't hold them
in line, no sum you can put there will hold them ?
Mr. Booth : The penalties in Illinois start out at about five, don't
they ?
A. Yes.
345
Mr. Booth : And raise continually ?
A. Yes, sir.
Mr. Booth : There is not much ground, then, for the complaint
that the penalties here are exorbitant ?
A. We do not complain that tho penalties are exorbitant. I have
never known of a road violating them. We haye had one suit, whicb
was decided from court to court, and which was decided unanimously
in our favor, and it is the only case I know of on the books. If there is
any other, it has passed from my recollection and from my observa¬
tion, and I examined closely, and I invested our laws and all the laws
in the other States, and 1 have not found any other case. We do not
complain. And if we violate that law, I don't think the shipper will
ever have to go to law with us.
Mr. Booth : Would yon have any very serious objections to the
railroad legislation of this State raising the penalties?
A. Well, it makes a discrimination, and makes it look as if the
railroad men were being prescribed, as if they were a class of outlaws^
and were not entitled to much credit or consideration at the hands of
the legislature, as if they did not discharge their duties as men in the
State, as though the hand of the public had been raised against them,,
setting them aside as if the mark of Cain was placed upon them. I
object for that reason, for I think they are a class that do as much to
advance the public welfare as any other class in the State. They are
engaged continually in building new lines, and building up the coun¬
try, and building factories, and giving employment to her population,
and bringing in schools and churches, and improving the country. I
have been here twenty-two years, and the country has been improved
vastly by the railroads. I would not want to stay in it, if it had not
been for them ; they are the advancers of civilization.
Mr. Booth: Did you hear Mr. Newman being interrogated with
respect to his fears that railroad legislation, such as is contemplated,,
would develop or retard railroad building in this State, and having his
attention called to the present laws, and the query made of him wh}'-
those laws had not brought about the disastrous effects which he antic¬
ipated ? And his saying that they had not done so for the reason that
they had been disregarded because there were no penalties ?
A. If he made such a statement, he is entirely mistaken. He is^
not a lawyer, and I do not suppose he ever read the Statutes ; but you
are, and you know that there are ample penalties.
Mr. Booth : I beg you pardon, I must object to your stating what
I know.
346
A. If you are a jud^e, I think you would hesitate before you
would impose more than a thousand dollars fine ; you would say, I
will try him on that. His hand is deep enou.2:h in his pocket as it is."
The Chairman : Gentlemen, I now introduce to you Col. Houck,
of the Cape Girardeau & Southwestern Kailway.
statement of me. louis houck.
Mr. Houck Mr. Chairman Gentlemen of the Committee:
I desire to say in the first place that I am much obliged to you as
well as the Senate for the courtesy of the invitation to address you
upon a subject in which to a certain extent I am personally interested,
without being charged with coming here and employing underhanded
or clandestine means to influence your legislation. I come here not as
the representative of a foreign corporation, not as the representative
of capitalists residing in New York or Boston or elsewhere, not as the
agent or attorney of absentee owners, but I come herr^ before you as a
Missourian to ask at your hands the protection of capital that has been
invested by Missouri ans in a railroad enterprise ; and I come here, as I
have already stated, in pursuance of the invitation that you have so
ikindly and so generously extended. I desire to say that I represent a
road fifty miles long, beginning at the Missouri river and running west ;
a road situated in southeast Missouri ; a road running through a terri¬
tory that is sparsely inhabited ; a road passing through a timber coun¬
try, and one which was constructed for fifty miles through a solid belt
of woods with only the exception of four or five farms ; a road that was
constructed in a territory where, at the time that I built it, there was
not a single town or single log house, or a single school, or a single
church along its line; a road that was constructed by the necessities
that were forced upon us. The people of Cape Girardeau had sub¬
scribed $300,000 to build a railroad. They had made a failure of it. A
part of the roadway was there and had been lying in the woods for
twelve to fourteen years useless. They wanted a railroad. We tried
to get foreign capitalists to build it. We wrote letters in every di¬
rection. We interviewed capitalists, we offered them the money that
we had invested, and we tried in every way possible to have that rail¬
road built. We did not succeed. Public opinion, to a certain extent,
and my own inclinations, being a large property holder in that terri¬
tory, compelled me to take hold of that enterprise in order to secure
and afford our town its benefits as well as to develop the material re¬
sources of that section, which I knew were great. I commenced to
build that railroad and after I began to build it I was like the man that
caught the wolf. 1 had the road and it was dangerous to let it go and
347
^dangerous to hold on ! I had to move ahead. Now, I am in this rail¬
road business to a certain extent temporarily. I may say to you I have
no desire to remain in that business in view of the general prejudice
that has been engendered in this community and State against railroad
men. It seems to me to be considered that if a man has engaged in
the railroad business he is prima facie, a robber prima facie a
public enemy. Now, so far as my road is concerned I have labored
under tbe delusive idea, so it seems, that Í was conferring a benefit upon
that section of country. I had labored under the idea that in building
up that section of country I was entitled to some credit, but it seems
to be thought that railroads, these great modern agents of civilization,
in the opinion of most men, in the opinion of many men in Mis¬
souri, are not the agents of modern civilization and progress, but are
the enemies of the people that are trying to oppress and rob them.
Now if the railroads are inimical to the progress and prosperity and
development and growth of this State, and will swallow up the enter¬
prises of this State, I am willing that my railroad interests shall per
ásh. Because my landed interest in that country (and it is large,) can
be preserved to me as well as my liberties, and I am as much inter¬
ested in the preservation of them and the securing of them to my peo¬
ple as I am in the railroad.
Where many of you live your country is traversed in every direc¬
tion by railroads. So far as southeast Missouri is concerned, we have a
territory of 20,000 square miles, and in that territory we have 700 miles
of railway. That is to say, one mile of railroad to about 30 square
miles of territory. W^e have a country there intersected by mountains,
by forests, by swamps and by valleys, and geographically we are off of
the main line of railways.
In 1852 when the State of Missouri expended large sums to expe¬
dite the construction of railways, St. Louis and northern Missouri sc¬
oured the lion's share. The State of Missouri, my secTon of it at that
time, prosperous in the possession of great slave properties and doing
well, consented that the State aid should be extended to those locali¬
ties. But the war came on, slave property in that country was lost,
and the country was ravished from one end to the other. Since 1868 my
people have been making efforts to secure railroad connections, and to
•secure, as it were, through lines through that part of the State. In one
respect we have succeeded. We have through lines running through
from north to south, but we are off of the great through lines running
east and west, and which are the controlling lines ; and, topographically,
we are in a section of country that now almost makes it impossible for us
to expect to secure through lines running in those directions. Neces-
i^sarily, from the location of our country, geographically as well as
348
topographically, we are going to be dependent upon local lines. Now^
who is going to build those local lines for us? The country is sparsely
inhabited, as I have already stated. Who is going to develop that
part of the State? And I claim, gentlemen, that you are all interested
in the development of that part of the State. It is one of the greatest
sections of the State of Missouri ; and no man that is familiar with it,,
no man that knows what varied resources it has and who knows its
manifold advantages, can doubt that it is equal to any part of this
State in its natural resources. I say you are all interested in the de¬
velopment of that section, and how are we going to get railroads there,
at least while we live—because it makes no difference to us what will
happen after a while when we are dead? What the people of southeast
Missouri now want, is a system of laws that will enable them to secure
railroads while they live, in our time, and not in the time to come..
What we desire and what we ask is that this body will pass no law that
will have a tendency to retard the building of roads in our section.
Now, what is it that will retard the building of roads in our section ?
You may ask, will a law against discrimination retard the building
of roads in our section, I say no. You may ask, will a law prohibiting
rebates and drawbacks retard the building of roads in our section, I
say no. You may ask, will enacting a law prohibiting unjust prefer¬
ences retard the building of roads in your section, I say no. Then you
ask, what law will retard the building of roads in your section ? And I
say my judgment is based upon experience and what it takes to build
roads in our section, and I say a law which will turn over the roads of
the State of Missouri or the railroads of that section into the hands of
commissioners to fix rates upon after they are built, will prevent us
from securing capital to build local roads. I hold that in that section,
no man in his sense, will invest a dollar in those local roads when he
knows that by the fiat of the commissioners or of any one outside of the
legislative body of the State of Missouri, the earning capacity of the
property, that he may have constructed or built, may be destroyed or
wiped out entirely.
What we ask and what I think southeast Misouri needs, so far as
this matter is concerned, is a fixed maximum rate, a rate with which
we can come before capitalists, showing them what the earning capac¬
ity ot the property will be alter it is constructed, showing them our
natural resources, showing them the timber resources, the mineral and
the granite, and then saying the rate that we are allowed to charge is
a rate fixed by law, not changeable. And with such a law as that I
think we can hope to succeed in securing additional railroad facilities,
not through the iostrumqntalities of great trunk lines, but through the
effort of our own people who reside in that section. Because we have
349
in southeast Missouri, now, three local railroads built by local capital¬
ists» One, my own road, the largest ; another, the road, the Des Loge
& St. Jo, a lead mine road, thirteen miles long,, and the other road the
Current Valley road, about ten miles long. These three roads are in¬
dependent roads, owned by people in that section, built by people in
that section to develop the natural resources of certain localities in
southeast Missouri.
Now I say, and I do not wish to be understood as being in any way
dogmatical, that it is my opinion that a rate fixed by the legislature, a
maximum rate, is that which will secure us the greatest prosperity in
our section.
In regard to maximum rates and in regard to the policy of
maximum rates, you all know there are two rules in this coun¬
try, there are two ideas that prevail in regard to railroad leg¬
islation : one the Illinois idea, and one the Massachusetts idea.
The one, the Illinois idea, followed in the State of Illinois, in
Georgia, and in California; the other, the Massachusetts idea, followed
substantially in Vermont, in Connecticut, by the National Legislature
at Washington, by Iowa, by South Carolina, by Virginia, by Kansas,
by Massachusetts, and perhaps one or two other States. The one is the
idea that the railroads are connected with the interests of the people,
that railroads are ruled by business men, that they know their own in¬
terest, that they know how to develop a country, that they are in¬
terested in the development of a country, and that the people's interest
and the railroads! interest is identical. The other idea, the Illinois
idea, seems to be that railroads are to be treated as public enemies.
Now I have taken the trouble to look over the Illinois law and see to
what the effect has been of that law in Illinois, and I find that 2,110
miles of the railroads of that State are in the hands of a receiver,
2,199 miles, I find in addition to that, that 379 miles of the railroads of
that State are run at a loss, that is, that over 2,500 of the railroads of
the State of Illinois are in an insolvent condition. Now the roads that
are in that condition are local roads, are roads that run from some small
point to some other small point, they are roads that are situated in a
great measure like the road that I own in conjunction with another
gentleman or two, running from one local point to another, and I find
by reference to the reports in Illinois that the railroads that have pros¬
pered are trunk lines, main lines, in that State running from the great
commercial centers of foreign States to Chicago, but that every local
road in the State of Illinois, without a single exception, according to this
report, every local road in the State of Illinois without a single, solitary
exception, is in an insolvent or bankrupt condition, and I have the II-
350
linois report here to bear me out in what I say, as well as Poor's
Manual.
I find furthermore, and the facts will bear me out, that since the
enactment of that Illinois railroad law in 1874 in southern Illinois, and
bj^ that I mean that section of the State of Illinois south of the Ohio &
Mississippi railroad, that in all of southern Illinois, and southern Illi¬
nois is situated a great deal like southern Missouri, not more than
twenty-four miles of new railroad have been built. That is from 1874
to 1887 twenty-four miles of new railroad have been constructed in that
territory. That has been the eifect of the Illinois law.
I do not deny that railroads have been built in northern Illinois,,
but I do say that most of those railroads that have been built there are
through lines, and I furthermore contend that these through lines can
afiford to run through that State if they had not a single depot in it in
northern or central Illinois. That they can make money if they can
just get the right of way and run through it without stopping ; be¬
cause it is the business that they get elsewhere which enables them to
live and to make money.
In view of these facts, I ask you what can we expect with a law
enacted in the State of Missouri similar to the law in Illinois? What
can we look forward to in southern Missouri? What public man com¬
ing from there can go home to his constituents, to the enterprising, in¬
telligent, far-seeing business men of that country, and claim that he
has exercised proper judgment, claim that he has protected ai>d ad¬
vanced the interests of his people by saying I have secured the enact¬
ment of a law that will paralyze and deaden all enterprise in your sec¬
tion?
He would sign his political death warrant!
The people in our section now know what they need. They know
because they see what has built up northern Missouri. They know that
every four miles in northern Missouri has a mile of railroad. They
know that the farmer of northern Missouri at all hours of the day and
at all hours of the night can hear the whistle of the locomotive. They
know that the farmers in northern Missouri can within five miles ot
any place in that State haul their produce to a warehouse or depot and
thus secure speedy outlet for their products; while they themselves are
debarred from developing their great natural resources from the very
lack of these railroad facilities. And these people that know these
things, who are the property owners of southeast Missouri, are watch¬
ing their representatives from their part of the State to see that no
harm is done to them and that no incubus to the development of their
material recourses is placed upon the statute books, and I say that
while we are interested in our section of the State in the enforcement
351
of the Constitution, while we want to see the Constitution enforced in^
letter and spirit, and while it is also our desire to see the pledges of the
Democratic platform redeemed, at the same time we do not propose
that our material interest shall be destroyed and our progress impeded'
by a half a century.
Now, another matter: I have taken the trouble to examine some
of the rates that are proposed here with reference to the trunk lines.
I have ray own rates that I am charging now on my railroad, and I
desire to show what they are. You can take any one of the bills and
see the difference between them, and I claim that these rates, gentle¬
men, are reasonable rates on my road, constructed as it is, are reason¬
able rates.
I charge on first class goods for five miles eighteen cents; on sec¬
ond class, sixteen; on third class, fourteen; on fourth class, thirteen;
on fifth class; eleven; for ten miles on first class goods, twenty cents;
second class, eighteen ; third class, sixteen; fourth class, fifteen ; fifth
class, thirteen ; for twenty-five miles, first class, thirty; second class,
twenty-eight; third class, twenty-six; fourth class, twenty-five; fifth
class, twenty-four; for fifty miles,first class, forty; second class, thirty-
eight; thirrd class, thirty-six; fourth class, thirty-öve; fifth class,
thirty-four.
Now, gentlemen, these are rates which are almost twice as much
as any rate you gentlemen propose to give to third class roads. Now
are they reasonable? You will see, if you look at any of these bills
at the commissioners' bill, at Mr, Claycomb's bill, at Senator Ball's
bill, that the charges that we make here are out of all proportion to
the charges that are proposed to be established for us. Now, I claim
that these charges are reasonable. There is not a man on my railroad
that complains of these charges—not a man on my railroad.
I will now show you the amount of tonnage that 1 carry: I carry
2,000 tons, and the railroad report will show it; 2,000 tons of freight fall¬
ing in these classes, and I carry 60,000 tons of freight falling under the
car load rate, and my car load rates, I will* say, are not interfered with.
I do not charge any more than it is proposed to give ma for car load
rates, and I believe in many instances I charge less, but on first to fifth
class I make these charges on 2,000 tons. 'Now, I have on my road in.
all, about ten stores; the first place where I haul is twenty-five miles
from Cape Girardeau, for that whole distance of twenty-five miles I
have no business falling within those classes. Then four miles beyond
I have one store that gets some of these classes; then eleven miles-
be3mnd I have another store; and then at the end of the road I have
another store—at the end of the road I have two more stores.
None of these even complain. They are satisfied. Why? I am su
352
through line from St. Louia; that through line is the Anchor Line and
my road. The Anchor Line takes these goods, first, second, third,
fourth and fifth class, to Cape Girardeau for on an average of fifteen
cents, that is the rate on these goods that follow in those classifications,
that is the average charge made by the steamboat companies, as there
close competition in that business, ranges from fifteen to twenty cents,
unloaded at Cape Girardeau. We transfer these from the levee to our
warehouses and our depots, and add the steamboat rates, and our
people out there, by reason of this river that runs by our town, and
upon which I rest for my railroad traflSc, are enabled to get goods from
St. Louis, one hundred and fifty or sixty miles, even with my rates,
and running through this country that I have described to you, at fity-
five to sixty cents per hundred pounds, and they are satisfied; and,
gentlemen of the committee and Senators, we cannot afford to haul
that for any less.
Now, in another bill that is before this body, we find this pro¬
vision: "And in computing the amount to be charged, collected,
demanded or received for transporting any article under the provisions
%
of this act, whether transported by the pound, by the barrel, by the
ton, or by the car, the distance shall be computed from the point where
the property to be transported was first received by any railroad in this
State to the point of destination in this State, without regard to the
number of independent lines of railroad it may have to pass over to
reach the point of destination." It is in Mr. Claycob's bill and in a
good many other bills, for they are pretty near all alike. In other
words, it is proposed we are to make the railroad which I own, a part
of the railroad that I cross,.to wit : the Iron Mountain railroad, owned
by the Gould system; that is what it amounts to; it says, in computing
the amount to be charged—and here is the schedule of rates fixed for
185 miles, for first class goods, 52 cents ; and in computing the amount,
if the goods start from St. Louis—-and I desire the senators to bear the
fact in mind, that I have an independent line, a water and a railroad
line from St. Louis to this territory that my road traverses, and it
enables me to lay down these goods at the far end of my line at forty-
y
five to sixty cents a hundred, and we have this act here which provides
that this Iron Mountain and myself shall be considered as one railroad
with reference to this rate, "and in computing the amount to be charged,
eollected, demanded or received for transporting any article under the
provisions of this act, whether transmitted by the pound, by the barrel,
by the ton or by the car, the distance shall be computed from the point
where thé property to be transported was first received by any railroad
in this State to the point of destination in this State." Now take this
act and let it be the law and where do I stand? Where does the Cape
353
Girardeau & Southwestern Railroad stand ? One hundred and fifty miles
to DeSoto, thirty-five miles to the end of my road, fifty-two cents, ad¬
justed on a mileage basis, would give me eleven cents a hundred about,
or eight cents a hundred. Now, what does that mean? That means
that the capital that is invested in my railroad shall be wiped out of
existence and that my railroad shall be turned over to Jay Gould, and
I say that a law like that ought to be entitled An act to confiscate
the local railroads of the State of Missouri in the interest of the exist¬
ing trunk lines, and to thereb}^ prohibit the building of small local lines
by Missouri people."
All I ask, gentlemen and Senators, is to be protected against being
absorbed by the great railroad corporations that lay around me. Now, in
regard to the maximum rate given I have here a statement that I copied
of the Iowa commissioners. '^In our opinion," say the railway com¬
missioners of Iowa, ''the time will come," and I desire to call your at¬
tention, gentlemen, to the fact that Iowa passed a law in line with the
Illinois law in 1870 or 1871, afterwards that that law was repealed and
a more liberal one enacted following out the Massachusetts system, and
the people of Iowa, or the commissioners elected by them, take occa
sion to say this, and if it is true as Lord Bolingbroke says, "history is
philosophy and teaches by example," then I say the example of Iowa
ought to be before you, gentlemen, representing the people of Mis¬
souri, because the history of that State ought to be an example to the
people of Missouri. And the history of railroad legislation shows that
from the time that law was enacted until it was repealed, railroad build¬
ing in that State was paralyzed, and now they say : "In our opinion
the time will come when the people will see that the true rule by which
to treat railroads will be to give them the widest and freest liberty to
adapt their rates to their varying circumstances and the growth and con¬
stantly changing conditions of the people ; that all the special rates
made in accordance with the necessities of the cases demanding them
to be as public as the time cards, and, when this liberty is prostituted
to favoring places or persons, such ought to be the subject of investiga¬
tion by competent commissioners."
That was the result that the people of Iowa came to, and that they
express in the report of their commissioners. That they had tried the
experiment of establishing an iron-clad maximum rate or an iron-clad
law by which maximum rates were established by, and the whole rail¬
road property of the State oí Iowa was turned over to three commis¬
sioners.
I believe, gentlemen, that that is all I have to say, and I thank you
for your courtesy in listening to me.
R M—23
354
Senator Claycomb : I understand the gentleman to say he is
through?
Mr. Houck : I am, and I am perfectly willing to answer any ques¬
tions.
Senator Olaycornb: I perhaps would not have desired to ask any
questions, but Mr. Houck has referred to my bill and perhaps it is best
I should ask a question or two. I desire to state, before asking a ques¬
tion of him, that I believe it has generally been conceived by the com¬
mittee, and perhaps by the Senate generally, that Mr. Houck's road
was to be exempted from legislation in any way. (Laughter.)
A. Well, that is all right, then.
Senator Claycomb : Mr. Houck, I desire to ask you if that road is
being injured to-day by the legislation which we have upon our statute
books ?
A. Ko, sir.
Senator Claycomb; I will ask you, then, why this phraseology
that you refer to in this bill would be any more detrimental to your
road than the language in the statute, " in computing rates of freight
according to the provisions of this article, the distance shall be com¬
puted from the point where it is received in this State, notwithstand¬
ing it may pass from one road to the other." Is not that about the same
thing?
A. I can tell you very easily, Sentor; we don't do it. (Laughter.)
Senator Claycomb: You wouldn't do it under this bill, either?
A. (Continuing.) And the law is not enforced. The Iron Moun¬
tain and myself both charge our local arbitrarles.
Senator Claycomb : If you would follow your rule under thiâ bill
you would not be hurt, would you?
A. Of course we wouldn't be hurt; that is square.
Mr. Kelly : Have you examined the rates as recommended by the
Commissioners ?
A. No, sir; I have not.
Mr. Kelly : They are about the same as those of Mr. Claycomb's
bill ?
A. Yes, sir.
Mr. Kelly : You say you carry first class freight on your road 50
miles for 40 cents ?
A. Yes, I believe I do.
Mr. Kelly : Now, the most of the freight you carry is first class,
isn't it?
A. No, sir.
Mr. Kelly : A large amount of it is first class, isn't it ?
355
A. Not very much. The people don't dress as fine down there
they do elsewhere. We take down more groceries, etc.
Mr. Kelly : The rate recommended by the commissioners for first
class for 50 miles is Si cents, and 1 believe it is the proposition in most
oí these bills to allow 25 per cent, in addition to such roads as yours.
That would make your rate 42^ cents instead of 40 ?
A. Yes ; now take the 2d class.
Mr. Kelly : That wouldn't hurt you much ?
A. Not on the first class.
Mr. Kelley : Well, the rate recommended by the commissioners
for 2d class is 27 cents ; your rate is 38 ; it would lower that a little?
A. A good deal.
Mr. Kelly : Add 25 to that and it would make it about 34 ?
A. Yes, sir.
Mr. Kelly: And that would be about 4 cents under on second
class, and about two and one-hálf over you rates on first class freight ?
A. Yes.
Mr. Kelly: That is, under these rates you would have an advan¬
tage of 2^ cents over your ordinary rates on first class, while you would
fall off 4 cents on 2d class ?
A. That's right.
. Mr. Kelly : That would not injure your road much, would it ?
A. Now, take the 3d class.
Mr. Kelly : Well, I have gone down far enough ?
A. No, take the 3d class ; take Senator Claycomb's bill, 52 miles
for third class reduced down to 22 cents from 36 cents. On,4th class,
reduced to 16 cents from 35 cents ; on 5th class reduced to 11 cents
from 34 cents ; and I desire the Senators to bear in mind that most of
the goods that we carry out there fall into that latter classification;
that we do not carry many goods of the Ist class. We are hurt by the
reductions in the 3d, 4th and 5th class.
Mr. Kelly : Mr. Houck, how is it that you carry groceries and dry
goods, boots and shoes, and such freight as that ?
A. We have got a classification down there of our own.
Mr. Kelly : You don't follow the joint western classification down
there, then ?
A. No, sir.
Senator Oastleman : Mr. Houck*, I wanted to ask you a question
which may not be very material in relation to a bill, but which may be
important as a matter of public history. You spoke of the railroad
managers in this State being thought—I don't remember the phrase¬
ology—robbers, highwaymen ?
A. Public enemies ?
356
Senator Castleman: Yes, public enemies. Where do you find
that that impression prevails in this State?
A. I say in the public press.
Senator Castleman : Oh, it is only in the public press ?
A. It is not only in the community, but it is in the public press,
and that represents the State, and moulds public opinion, and is sup¬
posed to be public opinion.
Senator Castleman : But I have not seen them so characterized in
the public press. Is it the general opinion in you section of the coun¬
try that that is the character of railroad managers ?
A. No, sir; I don't think it is; but I believe this about it, Sena-
^ tor, that it is public opinion there as to every road but my own road.
Senator Castleman : I suppose they got the impression, sir, ÍTom
your fear that the Iron Mountain was going to swallow you?
A. Well, I don't know what they got their impression from. I
know this. Senator, and I believe you read the public papers as well as
I do.
Senator Castleman: I don't think I can, sirj I am sure I do not
when you say that is what they contain ?
Ao I read the public papers, and see the expressions of public
opinion as expressed in the papers, and the constant claim is that rail¬
roads oppress and rob the people. And an article lately appeared in
the Popular Science Monthly discussing that very subject, vwith which
I suppose you are familiar, asks that question in reference to that gen¬
eral and prevalent belief ''Are Railroads Public Enemies?" It seems
to be a general opinion.
Senator Castleman : I understood that you said railroad men, in
your argument. Of course, if you had spoken of corporations, it prob¬
ably would have been quite unnecessary to discuss the matter?
A. I said this: I stated frankly that, in view of the public view
with reference to persons engaged in operating railroads, that I
had no desire to remain in the railroad business, because, in
public opinion, railway men and railways were looked upon as com¬
mon enemies and public oppressors, if not robbers. That is what I
desired to say, and I believe I substantially said that.
• Senator Castleman : I hope you have not found that impression
prevailing among the members of the legislature?
A. I don't think so; but tiihe will show. [Laughter.]
Senator Sebree: Col. Houck, have you any objection to the legis¬
lature empowering the commissioners to fix a rate, and that it should
be only prima facie evidence, and not the absolute?
A. Yes, sir; I claim that if that is to be done, it ought to be done
on the principle laid down in the Kansas law. I have the Kansas law
357
before me. The Kansas law, in the first instance, leaves to the rail¬
roads the right to fix the rates.
Senator Sebree: And does not allow the commissioners to do it?
A. No, sir; but it leaves it to every railroad; and the reason for
that is this—and I think the Senator will agree with me about that
matter—that every railroad knows its own wants, the people residing
along that railroad are supposed to be, or ought to be, the friends of
that railroad, bécause, if the railroad is managed upon proper princi¬
ples, it will endeavor to build up every local interest upon that line,
because the prosperity of the people means the prosperity of the
road. Now, if, as is done in Kansas, this legislature gives to the rail¬
road the power to make its own rates, that is, if it does not establish
maximum rates at all, or if you establish maximum rates, make them
so high that the railroads can go below them, because if they are not
high enough for that they are really also the very minimum rates that
the railroads could charge—I say if these rates are so established, and
then a community interested would make complaint to the commis¬
sioner, the matter be heard, investigation had, all parties appearing
before it, and then the commissioner decide what was a reasonable
rate, and then make it prima facie evidence, I believe that that would
be fair. But to give the railroad commissioners of this State the power
to make rates for for five or six thousand miles of railroad that they
cannot knoy?' about, why, to make prima facie evidence would be
doing more than is done by the actions of the most arbitrary bodies.
Senator Sebree: Yon want the legislatule to make maximum
rates, and allow the roads to make their rates below that?
A. Yes, sir; and then, if they are still too high, let the people
afíécted complain to the commissioners, have a hearing, and then get
a decision, and let that be prima facie evidence, as is provided in
Kansas.
Senator Sebree: Now, upon reflection, do you think there is any
difference in the proposed law in Missouri, in regard to the power of
the railway commissioners to fix the rates, attaching to their actions
iho prima facie evidence of the Kansas law. If Ç^ansas, as you ré-
inarked, allows the railway companies to fix their own rates, but if the
commissioners, upon complaint, charge the railroad company with
having charged too much, if they do not comply with their request^
then they institute a suit, and it becomes a question of fact in court
whether or not the rate charged by the railway company is the correct
rate, or the rate which the commissioners say they should have charged
is the correct one—do you think there is any difference in effect in the
Kansas law and the proposed Missouri law on that question?
A. Yes, sir. Take, for instance. House Bill No. 620. Now, under
358
the provisions of that bill, there is no certainty of the rate from one
day to another. The absolute power of fixing these rates is conferred
upon commissioners. We have no assurance that these rates will exist
for a month or â day. Then, you punish for extortion, and if the rail¬
road company should conclude to resist, and does it in court, the first
offense is a fine of not Jess than $5,000, the next from $5,000 to $15,000,
which virtually amounts to a confiscation of a railroad ; in Kansas the
prima facie evidence is made by the commissioner, faJîen to court,
and, if the railroad is found guilty, three times the amount is allowed
as compensation, as well as attorneys' fees, etc.
Now, I say that the proposed law here is so severe that it would
virtually bankrupt a railroad, especially my little railroad, before we
would have time to test it in the courts, whether or not these charges
were reasonable. That is the difference in our law.
Another objection is that the commissioners are given the entire
power to fix the entire schedule of rates, while in Kansas it is only to
investigate particular instances as they arise from time to time, when,
after mature investigation and having heard all parties, it only becomes
prima facie evidence. But you notice that this is very sweeping ; it
says that these three men shall make a schedule, and that shall be
prima facie evidence that it is absolutely right.
Senator Sebree: I think that the Georgia and Kansas laws,
whereby the commissioners are clothed with powers of an advisory na¬
ture, are the best laws for this question that I have seen.
A. I believe that the people of Massachusetts, Connecticut, Yer-
mont, Iowa, and those States where the laws on the Massachusetts plan
prevail, are better satisfied ; there is a more harmonious relation be¬
tween the people and the railroads, and the people of those States in¬
vest in the railroads and becpme the owners of railroads more than in
any other States. The trouble of the people of Missouri is that they do
not own the railroads themselves ; that the railroads of Missouri are
owned by absentees, people and capitalists, and owners not of the
State of Missouri. Capitalists of the State of Missouri are in such fear,
as it were, in regard to legislation, that.they look upon investment in
railroads as dangerous.
And my idea is that there ought to be a harmonious relation es¬
tablished between the railroad and the people, and that public senti¬
ment and public opinion ought to control the railroads just like it con¬
trols everything else. Individuals are controlled by force of public
opinion, the terror of late has very little effect upon reasonable and
honorable men.
Senator Sebree : I would ask you if there is not a statute now cov-
359
ering quite elaborately all these grounds of complaint against rail¬
roads?
A. Certainly.
Senator Sebree: And the addition of some penalties and a more
practical mode by which the railroads could be prosecuted, you think
would be well ?
A. I think so. But you remember of a time when there were 150
capital offenses in England. When hog stealing was punished with
death. We all know the severity'' of the law is not the thing; it is the
certainty of it ; and my idea is that, if the legislature of this State
passes a maximum rate for the various railroads, and then gives the
*
commissioners a power similar to the Kansas power, to investigate par¬
ticular instances, with power to cite the railroad before it, and then
make a decision by them prima facie evidence, that a good deal of
this trouble could be obviated.
Senator Sebree: Suppose we say that the rates fixed by the rail¬
way commissioners should remain the rates in this State until the
meeting of the next General Assembly—attach to it the element of
permanency ?
A. Well, if you would leave my road out, of course I would have
no objection. (Laughter.)
At this point, upon motion of Senator Oastleman, the committee
adjourned until to-morrow morning, at such time after 0 o'clock as the
Senate will have adjourned.
MORNING SESSION—June 2,1887.
W. M. Sage was called before the committee and made the follow¬
ing statement :
Mr. Chairman and Gentlemen of the Committee : I wish to state
that I represent the Chicago, Rock Island & Pacific railroad, the line
running through the States of Illinois, Iowa and Missouri. Our earn¬
ings aggregate between eleven and twelve millions in a year, and our
earnings in the State of Missouri are about one million and a quarter.
Of these earnings the greater portion are entirely on the through rate
360
from freight originating in Missouri, going to other States, and freight
from other States coming to Missouri. We are not, therefore, so much
interested in the local tariif as the railroads whose representatives
have already been before you. But it so happens, gentlemen, that the
rates that you make from the city of St. Louis to Kansas City in a
measure regulate all the rates in the State, as far north as Saint Paul.
The Chicago, Rock Island & Pacific, the Chicago, Burlington &Quincy,
and the Chicago & Alton roads run from Chicago to Kansas City. The
two former roads also run to Omaha. The distance from Chicago to
Omaha and Chicago to Kansas City is almost the same. We, there¬
fore, endeavor to make the rates from Chicago to Omaha and Kansas
City as nearly similar as possible, for the reason that these two cities,
Omaha and Kansas City, are great distributing points for the
country farther west. Again, St. Louis comes in; and we
agree with the St. Louis roads that the rates from St. Louis
to Kansas City shall be less, the distance being less from
St. Louis to Kansas City than it is from Chicago to Kansas
City. We are obliged to do that. We are obliged to do that because
the roads from New York and seaboard points make rates, without any
opinion from us, to Chicago and to St. Louis; and the short distance
from New York to St. Louis doesn't go through Chicago—we are a lit¬
tle too far north. The consequence is the shippers in Chicago pay on
first class freight twenty cents higher than the shippers in St. Louis do
to Kansas City. On fourth class freight the Chicago shippers pay five
cents more than the shippers at St. Louis. This is caused in a measure
by the fact that the distance from New York to St. Louis is not very
much greater than to Chicago. The first class rate from New York to
St. Louis is eighty-nine ^cents; to Chicago it is seventy-five cents.
Clearly, therefore, the jobbers in Chicago cannot make it on the dis¬
tance tariff entirely, from the fact St. Louis is nearer to New York than
by via. Chicago. Again, as we make the same rate from Chicago to
Omaha and Kansas City, St. Louis naturally wishes to sell there, and
we accord her the same differential rate to Omaha and Kansas City,
our object being to place those two distributing centers on actually the
same terms. Omaha has roads running southwest through the States
of Nebraska and Kansas. Kansas City has roads, on the other hand,
running north into those States, and both wish to sell the retailers in
those States. Again, they both wish to ship into Colorado and the west,
and the object is to give both points the same advantages. I give you
these reasons to show why Omaha and Kansas City are put on exactly
the same terms. The gentlemen thought yesterday that Kansas City
was discriminated against because the rates from St. Louis to Omaha
were the same as to Kansas City. But I am not aware—the gentlemen
361
might explain it to-day—I am not aware that Kansas City expects to
sell goods in Omaha proper, but it does expect to sell in the territory
northwest of Kansas City and for that reason is entitled to the same
rates* Now, it is true the proper way would be to make rates actually
based upon mileage, but it is impossible to do so, because one road, a
short line, may be one hundred miles shorter than another road also
going to the same point. Accordingly, it has been the rule in railroad¬
ing from Chicago to treat each of these towns on the basis I have
described.
So far, gentlemen, as the long and short haul is concerned, it is a
new law. It is now the law of the land, and I think that a moment's
reflection will show you that as the State of Missouri is in the center
of the United States, that, practically, that law must ensue, with rail¬
roads at least like ours. It is true that a rate can be made, taking the
State of Missouri now, from St. Louis to Kansas City—perhaps I am
not sufficiently posted in your laws—but a higher rate might be made
by a road, with simply a State law, to Jeflerson City; but that cannot
be done without interfering with the provisions of the interstate law,
because a shipment might originate at Cincinnati, and if it originated
at Cincinnati, charging the rate up to St. Louis, theif from St. Louis to
Jefferson City, it would be an interstate shipment. Consequently, if
the rate was higher from St. Louis to Jefferson City, that added to the
rate, which should be the same in both cases, the commissioners from
Washington would interfere. We have decided to carry out entirely
the provisions of the long and short haul. It is the law of the coun¬
try. It is an experiment and we have all decided to carry it out. So
that the gentlemen who have made complaints here to the effect that
cities on this side of Kansas City in Missouri, have been charged higher
rates, may consider that in the past. We don't think it can, under the
long and short haul, ever be repeated. As a matter of fact, we have
all endeavored to carry it out as well as we could, and I think on the
products of the soil it has never been violated, at least so far as the
road I preside over, so far as the freight department is concerned. Al¬
though I have heard freight agents state this fact, that if there were
no railroads the cities like Kansas City and Omaha, being situated on
the river, would naturally have lower rates than points in the interior
of the State. In other words, the route would be by river to Kansas
City and back, consequently that water gives those places a geographi¬
cal advantage which the interior parts of the State don't have. Again,
large quantities of business which come to these towns induce the rail¬
road companies to compete for it, and the question is whether the
small villages in the interior not having the wholei^ale and manufac¬
turing resources of the large cities, whether it requires such rates.
362
Tbat was the argument,of the past, gentlemen. The rule now is that
we charge the same rate to everybody. Publish the rates in the sta¬
tions, and that we make no discrimination ; that we don't charge a
higher rate for a shorter haul than a longer haul. Now, Missouri be¬
ing in the center of all these States can't do otherwise, the railroads
can't do otherwise than observe that principle. Every point we
ship to observes that principle, and the other points are exactly in
the same position. Suppose there were two roads in this city from St.
Louis, and strictly within this State. At first sight it might appear
they could pool their earnings ; but again, a shipment coming from Cin¬
cinnati, independently, to St. Louis, would be an interstate shipment,
and the commissioners would at once come down on the railroads for
breaking the law in pooling. Pooling, therefore, as the gentleman
representing the 'Frisco stated yesterday, is absolutely past. We would
like the provisions placed in your statute book, if they are not there,
because we feel the more we can get the State laws to assimilate to the
United States laws the better for us. I will illustrate it in a case: The
Rock Island road passes through Trenton, Missouri, and we supply that
town from the markets of Chicago, Davenport, Muscatine and Keokuk.
Clearly, shipments from the points I have named, to Trenton, Missouri,
are interstate. Our competitor there is the Quiucy, Missouri & Pacific
railroad, orginating in Quincy, Missouri, terminating at Trenton. Now,
the interstate law compels me to make the same rates to everybody and
publish them. The Quincy, Missouri & Pacific is not subject to the
interstate law, and she, if you have no law on the statute book, can do
what she pleases. She could give rebates, make lower rates and keep
them secret, which I, from my distributing points, can't do. For these
reasons we are in favor of the long and short haul as long as it is tho
law of the United States. Whether in the practice and experience of
the United States it will be ultimately the law remains to be seen. We
are houestly maintaining the law, we wish to experiment. We have
found in our experience that it does injure the manufacturing interest in
the far west States in this respect. It has been the policy, I will state,
of the Rock Island, to develop manufactures at every city on the road
they could. We found it increased the population there, and we find
the secret of the New York Central's success is not alone that it receives
from the west the immense tonnage of which they get but a small pro¬
portion of the rate, but the fact that every city along its line is popu¬
lous. It is full of manufacturing and mercantile interests. The passen¬
ger traffic and freight traffic between each city is immense. It has
been the policy of the Rock Island road for the twenty-five years I have
been connected with it, to endeavor to develop manufactories. We
find the long and short haul so far, unless we can get relief, is injurious
363
to manufacturers far away from (Jhicago. We have three hundred and
three miles from Chicago, a point in Iowa, a very large manufactory of
agricultural implements. The manufacturer sells in several States, in
South America and in Australia. Up to the passage of the law we gave
him on his material exceedingly low rates as we received a profit on
the transportation of the manufactured article. But now, if we give
him these very low rales, they will not only be maximum rates for
three hundred and three miles to everybody that might ship those
articles, but they will aifect the rates on parallel lines north and south
of us from Kansas City to St. Paul, however anxious we are to keep
that manufacturer doing his business in Iowa, and we are, for he has
increased the population of the town fifteen thousand inhabitants. It
would cause an overturning of the rates from Chicago that distance in
Iowa and reach as far as Saint Paul and as far as Kansas City. Ob¬
viously, we cannot afford to do that. The question, therefore, to be
decided, and it will be soon, is, is it unjust discrimination to give that
manufacturer on the material, the iron, wagon wood, the lumber, the
varnish, and even cotton that he uses, to give him lower rates on those
articles than the general public. If it is decided in Washington that
it is, I see nothing for that gentleman to do but to remove his manu-
» t
facturing industry farther east. Now, sir, this goes to show that while
the long and short haul is a good principle, and it is a principle we
wish carried out in this State, there are exceptional cases where it oper¬
ates as a hardship on manufacturing interests far west ; but it is a mat¬
ter which the Washington commissioners will at last decide on, and
we are willing to leave it in that condition. I will state this : The Iowa
commissioners are warmly engaged in the interests of the manufacturer
there to get relief for material hauled to manufacturers of this kind.
I would say further that, so far as discrimination is concerned, I think
if the long and short haul is applied and the rates are public, that there
will be very little difläculty in punishing roads. The difficulty has
been, it has been done secretly ; and I don't think that any undue
measures of favoritism should be charged to the railroads. One rail¬
road simply did it because it believed from evidence that other roads
were doing it. The penalties in the way are so high that, so far, I be¬
lieve, no road hgs attempted it. On the subject of pools, which has been
spoken of in the last two days here, I will state I have been connected
with roads that have pooled since they began, about twelve years
ago. The object of the pool was to maintain rates at the points
where there was more than one road, and not have them lower there
than the local points where there was but one road. It was found
when a new road came into town it had no business, and it con-
364
sequenlîy advertised itself by carrying under cost. It was, therefore,
decided that each road should be allowed a percentage of the pool. I
am bound to tell you, gentlemen, that while the intention of the pools
was good, they never practically succeeded; and if the laws of this
country will protect each road by making it a penal offense to cut
rates and discriminate in favor of one against another, or shall be at¬
tempted, if the law is imposed and the penalty is imposed afterwards we
will need no pools. So far as the Rock Island is concerned, it wants
all the business it can carry for the stockholders ; but under the pool,
if there was a weak road we had to carry it and keep quiet; we had to
give roads a part of our earnings. We didn't like it, but we did it to
prevent absolute bankruptcy for every road applying for the business.
But the law now says the rates shall be public, that there shall be no
discrimination, and there is no need, therefore, for a pool. So far as
we are concerned, we are glad they are a thing of the past and glad
that the new law prevents the necessity for them if it is thoroughly
carried out.
I have but little to say, gentlemen, seeing so much has been said
previously ; but I have been connected with the road so long that I
know some of the history of the law connected with the States of
Illinois and Wisconsin. It was what was known as the Granger law
which occurred in 1872, 1873 and 1874, and was, the result, probably, of
unjust discrimination on the part of railroads, and the people feeling
aggrieved, passed very stringent laws. They named the rates. Those
rates were believed by the railroads at the time to be too low. They
were a great deal higher than what the railroads charge now, but they
were believed to be too low. Capitalists got frightened, and the de¬
velopment of railroads in Wisconsin, Illinois and Iowa stopped. Ac¬
cordingly, Wisconsin and Iowa withdrew those laws which actually
named the rates and left it to the railroads in consultation with the
commissioners to name just and equitable rates. When the law was
repealed, I was one of the freight agents that went to Des Moines to
meet the commissioners, of which Mr. Dye is still a member; and we
talked over the rates and placed them in what they considered a rea¬
sonable position to the public. Since then there have been many com¬
plaints of the different railroads, all of which are annually printed in a
report ; and I can state, that while the commission is of an advisory
character in no case have they made a decision in ten years that they
found any resistente to ; in no case has it not been carried out by the
lailroads. There are many cases that were taken up which they de¬
cided were no cases at all, and decided in favor of the railroads, but the
greater number have been in favor of the people, and in no case has
365
the road appealed from their decision and gone to the courts on the
subject. It has had the effect of greatly improving Iowa, a great
many roads have been built there. So far as the Rock Island road is
concerned, gf^ntlemen, in the twenty years just past, we have not
increased our mileage one mile. We have, to be sure, built a double
track across the State; but that is not needed from the business of
Illinois, but we require a highway to lead to the great States of Iowa,
Missouri, Kansas, Nebraska and the Pacific coast, consequently have
doubled our track on the main line, not because the business of Illinois
rrquired it, but because the population has gone westward, and while
in 1871 Nebraska was considered a desert, and subsequently to that
Kansas was peopled, but became so dry and full of grasshoppers
that the people were starving, we started anew, crossing Missouri to
Kansas, and carried but little freight at first. The grasshoppers came,
and I think m six months we carried more tonnage—carried the freight
of those people, which was contributed irom the east; the freight and
tonnage was greater than it was on the paid freight for the year pre¬
vious. That is all changed now, gentlemen; Kansas is one of the best
States. The Rock Island to day is expending ten millions in the State
of Kansas in extending her system. She has built sixty miles in Mis¬
souri in the past year ; about sixty miles, about that, I think, for the
purpose of having a highway from Trenton to St. Joe, for the purpose
of carrying freight on their extension in Kansas. Now, the reason the
railroads go to Kansas and States like it is, in addition to what Mr.
O'Day stated, the fact it is a rich prairie and agricultural country.
The farmers from the east, from the New England States and the
Middle States come west, and after ploughing up the sod they get crops.
Your State, although I am not very much acquainted with it, has no
railroads in a certain portion of it. It is a wooded country, a hilly
country. There are vast resources there in timber and mines, coal and
stone, but these have to be developed. But you can see the capitalist
that goes to Kansas gets the farmer to go and develop it for him, but
as our friend who preceded me—the gentleman who spoke here last
night, shows that on his little road he has not only to find capital to
complete his road, but he has to find capital to develop the timber and
the stone and the product that he makes from his clay. The conse¬
quence is, while the roads cost a great deal more here, they don't so
soon bring a return. Mr. O'Day shows his road, while it is in a pros¬
perous condition to-day, has gone through very great troubles; that
his system to-day is founded on the bankruptcy of other roads; but he
is doing as every other road does, he is stretching farther, going into
Kansas, and it will be a prosperous road, because the business he gets
from the far west adds to its volume, and for that reason the roads, gentle-
366
men, that are to be developed in your State, require a great deal of en¬
couragement. The prairie State of Illinois has had many small roads-
and not one of them paid. I think I can almost say south of the Illi¬
nois river none but the Chicago & Alton and the Illinois Central are in
a prosperous condition. Some years ago there was a great fever to
build railroads, and there was a number built. The T. P. & W.and the
Illinois Midland were built in the center of the State, and they have
been in a bankrupt condition. I have seen no roads in Illinois, with
all its advantages, prosper unless ic was connected by a system with
other States. I am only giving you my opinion as an old experienced
man in the business. I am not accustomed to speaking, I am only ac¬
customed to attending to my road, and I think you will do well to make
your maximum rates so high that these small roads can be protected;
and I further think you need not be afraid that the maximum rates will
be observed by the railroads to stop business. Railroads, in their com¬
petition, must develop their local points, aad if they keep the com¬
modities on their road higher than the other roads will, then these
roads will languish and die. The wholesale merchant doesn't make his
riches by large profits but by small profits on a large amount of sales.
We have the same experience on the railroads 5 we want a small profit
on a large amount of business, and when we get that we get rich.
Now, small roads can't get that, consequently they wish your assistance
and protection ; and I am quite certain that the intelligence of this
Senate will see that, with the difficulties connected with your country
south of the Missouri river, you must encourage railroads all yon can.
I am speaking now for the good of your State, for we are not in that
territory ourselves at all; but I show you our capitalists went to Kan¬
sas and didn't go down to the southern part of your State because it
would have'cost us a great deal more money and taken a longer time
to get a return.
So far, gentlemen, as naming the rates by the commissioners is
concerned, I confess I feel the same as the gentlemen who have already
spoken to you. I have devoted the whole of my life to railroading; I
have grown up with the Rock Island road, and if I were sent down to
Georgia to regulate the rates as a commissioner I confess it would take
me a year or two years to understand the situation. In addition to
that, my experience in Illinois has been that where the commissioners
name the rates, and I want to say they also name the classification—I
wish to explain to you that my experience in that matter tends to show
that it is injurious to the State; and you are all aware when the law
was first passed that the railroads contested it; with the rates was at¬
tached a classification which was picked up from some very old tariff
of a railroad. It was unfitted for the purpose and was never used by
36T
the railroads. They used their classification which is adapted to the
modern exigencies of the trade. Consequently, after the Supreme
Court decided that it was a constitutional law, the commission—not the
present commission, but the former commission—made a classification.
They didn't consult us, gentlemen; I am afraid they consulted some of
their political supporters. One thing they did was to put whisky as
low as brick. (Laughter.) That was in the State of Illinois, several
years ago. (Laughter.) I wish to state further, that one member—I
don't know but he did the best he could for his constituents—but he
happened to live in apart where there was not much grain; the grain
had been a failure there, but there was timber there, and he made an
exceedingly low rate on timber to please his constituents. Now those
gentlemen went out and another commission came in, and they thought
that the classification was not what it should be. They saw, moreover,
that every State, from Chicago to Colorado and Utah, had the same
classification, and they thought it would be a fair thing, if not to actu¬
ally adopt the western classification, to get their classification in line
with it; and they invited the general freight agents of the State of
Illinois to meet them to go over the classification and advise with them
for ten days; and we did advise with them for ten days, and I assure
you we objected to the whisky item. It was a manufactured article,
bore a good price and should go into a higher classification. Well,
they admitted all that we said, and rather intimated that in the course
of a month the classification would come out almost identical with
this classification which is used—practically used in Missouri, Kan¬
sas and Iowa. But I regret to state, the fact of their having a
meeting with the railroad men got wind, and, sir, the man
who had the particular article went to them, and when their
classification did come out it had more inconsistences than ever. But
I think that in their hearts these commissioners believed it would be
for the interest of the State if they could have through bills of lading
from other States based upon the same principle. Now, take the Rock
Island road. Across the river is the City of Davenport. If the rate is
higher at Rock Island in the State classification than at Davenport, I
have got to take it as low as it is at Davenport. If it is lower in Rock
Island, in justice to Davenport I have to make it the same. For that
reason I wish to State the classification is something very different
from what the report of our friends, the commissioners, make it. I
think their idea—I may be mistaken—from the report is, that valuable
articles are classed higher because the insurance would be higher.
Now, gentlemen, that is not our idea of classification. Asithasbeeu
shown you here, if every article was classed in one class, the articles
of grain, lime stone, cement, etc., could not be carried. The conse-
B68
quence is we carry these articles very low, and we have so much to
earn. We put up hansom cabs, dry goods and other things to the first
class; they are a great deal higher, bul the reason we do it is this: that
it is discovered by statistics, not by statistics, excuse me, it is discov¬
ered by examination that the cost of transportation on these articles
can hardly be figured. If a pound of coffee, for instance, is brought to
this city from St. Louis, and the retailer charges twenty-five per cent,
profit, the cost of the railroad, based upon the freight here, is some¬
thing so far in the decimals, I don't think your minds would compre¬
hend it if I had the figures before me. I will state that there is a
schedule in the last report of the commissioners of this State. I could
go on with a great many things of the kind, gentlemen, to explain to
you, but I have heard a great deal, I think you are all weary and anx¬
ious to get through. I shall be exceedingly pleased to answer any
question which T can, and I assure you I will do it truthfully, and I
thank you very much for your attention.
Senator Proctor : Mr. Chairman, the only question I wish to ask
of the gent leman is to give us the political standing of these gentlemen
who made the rate on whisky lower than on bread?
Mr. Sage : Well, gentlemen, I will first tell you it is a very strange
thing to say that you see before you a man that never voted in his life,
who commenced early to devote himself to business. In my earl3^1ife
I commenced in a bank and drifted from that into the railroad busi¬
ness. I consequently never have had anything to do with politics.
Chicago is a metropolitan city. While I have had my preferences
sometimes, one way or the other, I have never been identified with pol¬
itics. I will say this: that so far as I know there was no politics con¬
nected with it. I know that the gentlemen who did put up the classi¬
fication and put it on as we wished, the last were republican gentle¬
men. But what the politics of the gentlemen was at the time that low
rate was put on the whisky I am not prepared to say. I really don't
remember. There is one of them dead now. I wouldn't say that was
a political affair. I think, however, in my observation that the gentle¬
men who deal in whisky are generally more active in politics than
others, and probably it was their infiuence that caused it.
Senator Allen : You believe in the long and short haul?
A. I consider it the law of the United States, sir, and wish it car¬
ried out; and in consequence if it being the principle east of the Mis¬
souri and west of Missouri and through Missouri to other States, I
would like to see it enacted in this State if it is not in the statute.
Q. Do you carry carry it out when you haul from Chicago to
Omaha as cheap as you do from Chicago to Kansas City ?
A. In this respect we do. You must approximate. Chicago to
360
Kansas City, and Chicago to Omaha by the short line, or of each road,
that is, by the short haul, are, I understand, within five miles of each
other. 1 will state this. When the law took effect we went to make
our tariffs. The first thing we did was to meet and agree on the rates
as it was the farthest distance on the roads, between Chicago and Kan¬
sas City and Chicago and Omaha. This we agreed on. Then we had
the junction points and shorter distances from Kansas City. Those
rates at those junction points are not higher than the Kansas City rate.
I will say the principle is to group it. For instance, I made the rates
from Chicago to—
Q. Eight there: in making the rate for the road didn't you follow
your road?
A. I will tell you, we first agreed on the far off points.
Q. Eight there: you followed the line of your road; you didn't
make the rates on an imaginary line, you made them on the line of your
road?
A. In our case we agreed first on the greatest distances which
were between the Missouri river and Chicago. Now, I will show you
we cannot follow the line of our road. I will take the point of Das Moines
which, you are all aware, is the capital of Iowa. The Eock Island
is the short haul to Des Moines. The distance is three hundred and
fifty-eight miles. Now, the Northwestern road is north of us, and she
passes Des Moines forty miles north of it, at a point called Ames. She
has a branch running due south from Ames to Des Moines. Obviously
then, to act equitably, if we were to follow the mileage, the Eock
Island road would make one rate, and the Northwestern would have a
higher rate, because she has greater mileage. So we draw a line north
und south through the State, and the short line makes the rates. Con¬
sequently when they send a commodity to Ames, they will make the
same rate that we do at Des Moines, and with all the stations between
Ames and Des Moines also the same rate, preserving an equilibrium be¬
tween the east and west. That is the way we practically make our
tariffs.
Q. In other words, you cut around the imaginary line whenever
it suits you, in order to stretch out and get some other territory ?
A. We are obliged to do it. The object is to preserve fair rates,
und not discriminate as to localities. If we made a very low rate to
Des Moines, the Northwestern couldn't stand a higher rate to Ames.
Q. Do you think you are following out the strict intention of the
law in doing this ?
A. I think so.
R M—24
370
Q. You said in your examination in chief, that Kansas City could
not compete with Omaha for her trade in the mileage, but she could
for territory northwest. I want you to explain that ?
A. Perhaps, I didn't make myself clear. What I want to say is-
this : that after Chicago and St. Louis, we all know that Kansas City in
population, resources and enterprise to-day, is the next city ; but in
the last three years Omaha has become a very great city. She is also
a jobbing point. It is not at all probable that Omaha, being as near Chi¬
cago as Kansas City is, would go down to Kansas City to purchase her
goods. The point I was making, was that Kansas City should not be
considered a distributing point to Omaha, because she is the same dis¬
tance from Chicago and New York, practically, as Kansas City, and
Omaha is entitled to the same treatment west. The roads east of the Mis¬
souri river make the same rates from Chicago and St. Louis to Omaha and
Kansas City, of course including St. Joe, Leavenworth and Atchison.
Now, the roads west of there endeavor to make the same rates out of
Omaha and out of Kansas City, to distribute in the west. If we don't
do this, each year is war, and that means destruction. Here is the
large, ambitious cily of Omaha. It is the same distance, practically^
from Chicago and New York as Kansas City. Now, we put her on the
same terms in distributing west, but we don't think Omaha can sell
goods to the Kansas retailers, nor the Kansas City retailer to the Omaha^
man. I don't think the merchants would for one moment expect it..
It is just the same way between the cities of Chicago and St. Louis.
There are manufactured articles in St. Louis that are purchased by the
Chicago merchant, and manufactured articles in Chicago purchased by
the St. Louis man ; but the wholesale merchant in St. Louis, Samuel
C. Davis, doesn't sell to the retailer to any extent in Chicago, unless
there is some article that should bo put up or manufactured there.
These cities don't expect to sell in that way, except manufactured, ar¬
ticles.
Q. You have no direct short line from Chicago to Omaha, have
you ?
A. Certainly, sir ; we have a line there. We are all about the
same distance. We call it for short, 50 miles.
Q. How far is it by the way of St. Louis ?
A. I have not the figures before me, but St. Louis is shorter to-
Omaha than Chicago by about, I should say, 80 miles. I am speaking
roughly now, and subject to correction.
Q. Well, suppose Kansas City should purchase all of its gooda
from Chicago, and haul them around by St. Louis, how could she do-
any trading west of her State line ?
A. I don't know that I get the meaning of your question.
37i
Q. Well, if the rates are the same from Chicago by the way of
St. Louis to Omaha as it is all the way from Chicago by the way of St.
Louis to Kansas City, and Kansas City did all her business in Chicago^
how could she compete with the western trade ?
A. I want to state to you. Senator, that the rate from Chicago to
St. Louis, and St. Louis to Kansas City, is greater than the rate from
Chicago to Kansas City ; that the difference between the rate between
Kansas City and the two cities is twenty cents, 1st class, and five cents
4th. Now, the rates between Chicago and St. Louis are very much
greater than that. They both compete in the west, and we agree on
what we call differentials. I don't see that there is any hardship in it.
If a merchant buys in New York, the rate is the same, whether it goes
through St. Louis or Chicago, and enables each route to make the same
rate.
By Senator Ball : I want to ask you two or three questions
for information. I understood you a moment ago to say that the long
and short haul, if strictly enforced, would be ruinous to the western
manufacturer ?
A. I won't say it would be ruinous; I say the question is not yet
decided. The law says, Under substantially similar circumstances
and conditions." Now, my rate on dry goods from Chicago to a point
in Iowa, 303 miles, is 70 cents on the 100, that is the rate; and it is the
same rate on the Northwestern to Marshalltown, a similar point; and
on the Burlington to Ottumwa. Now, this manufacturer requires in
the manufacture of his machine the article of cotton to make up that
machine. It has been customary to give him a lower rate than that,
because cotton was a part of the material with the other articles that
combined to make the machine. Now the question is, whether we are
to give to a manufacturer who increases the population and wealth of
that place—and there is the pride of the State in maintaining it there—
whether they will find it " under substantially similar circumstances
and conditions." That has not been decided.
Q. Now, let me ask you this question: If it is ruinous under the
long and short haul to a western manufacturer, why doesn't the same
rule apply to the eastern manufacturer?
A. It depends on what the article is that is manufactured. For
instance, say it is the manufacture of glucose, and it is shipped farther
west. If it was the product of the place, he would be just as well off
as the eastern man ; but the articles that the manufacturer of agricul¬
tural implements requires come from Pennsylvania, principally; and
the lumber he requires from Indiana, Arkansas, Wisconsin, etc.
Q. Now, another question : In your judgment, wouldn't the
372
enforcement of the long and short haul build up manufacturers on the
Mississippi river?
A. I think that the manufacturers on the Mississippi river will
not suffer very much, because the iron products are on the Ohio river,
and they can sail down and be made on the Mississippi river. The
rivers make the rates, and it is left for the railroads to take them or
leave them. I don't think the Mississippi river manufacturer will
suffer, sir.
Q. Missouri, being in the center of the States, why will not the
long and short haul have the effect of building up manufactories in
Missouri?
A. What kind of manufactories do you refer to?
Q. Any and all?
A. Well, there is a great deal of difference. If the material in
the article manufactured grows in Missouri it is all right ; but if the
material for it has to come from States farther east, what we call the
middle and the eastern States, they are at a disadvantage.
Q. How is it the raw material is shipped east, manufactured and
shipped back west, and they can compete with the western manu¬
facturer?
A. Now, if you would give me a special case, I might answer.
When you speak of raw material, what raw material do you refer to?
Q. I don't know that I can specify. Take, for instance, agricul¬
tural implements: why can't the manufacturer in Missouri of agricul¬
tural implements be sustained more effectually under the long and
short haul than it can in Indiana or farther east?
A. So far as the manufacturer is concerned, in shipping out his
manufactured article, if he is shipping it west, he has an advantage,
because he pays a less rate; but if the material he requires is farther
east from him than from the manufacturer in Ohio^ he is at a dis¬
advantage.
Q. Now, another question, and I am through: The long and short
haul, strictly enforced, will virtually force every community to live
within itself, will it not?
A. Not at all, sir.
Q. Well, why not?
A. Because I think you gentlemen think that the long and short
haul is a case of commencing with the short haul and working upwards.
Now, what we do is, we get the very longest haul. The longest haul
we have, as I have already stated, is to Omaha and Kansas City, and
we have in no case made a commodify higher than previous to the law.
In some cases we have made it lower. These are the maximum rates
on our road.
373
Q. Take, for instance, from New York to San Francisco : The law,
as T understand it, forces you to charge the same for a short haul as for
a long one ?
A. Yes, sir.
Q. Now, if you start from New York to San Francisco, won't your
rate be so high that you never can reach San Francisco with any article
and have anthing left after paying rates?
A. For that reason the Senators in Washington state in section
four that the commissioners may suspend the law, after investigation
They have suspended the law," as far as San Francisco is concerned, for
seventy-five days,
Q. Suppose it is not suspended, doesn't it virtually shut San Fran
cisco out of the markets of New York?
A. No, sir; it doesen't; because San Francisco is a port on the
ocean. It may suspend a large business going across the continent of
America, but it won't even do that. In connection with the water route,
we will take what is called the Sunset Koute," which goes by water
from New York to New Orleans, and then runs from New Orleans to
San Francisco. That route is not like the route over the New York
Central, Lake Shore, Chicago & Kock Island, Union Pacific & Central
Pacific. It doesn't go through a vast and populous country with a
great deal of business. In fact, it goes through partially a desert, and
that road must do the business, because the short haul will not apply;
there will be no business on this side, and it will simply go on and do
the business. It will give an advantags to the southern route across
the desert; it will also give an advantage to the Canadian Pacific,
which is outside the United States. For that reason the commission,
while they are investigating it, have suspended section four, so far as
San Francisco business is concerned, or California 1)usiness is con¬
cerned.
Q. By Senator Castleman : I wish you would explain what you
mean bv differential ?
A. Differential, of course, means at different rates.
Q. I mean as applied to railroads ?
A. For instance, the short route from Chicago to Kansas City is
not through St. Louis ; but St. Louis competes with the business, so
does Chicago. Now, if we were to charge the local rate, Chicago to St.
Louis, and St. Louis to Kansas City, it would be impossible for Chicago
to do it ; but she won't do it, because she has a shorter line, avoiding
St. Louis. St. Louis is as 300 is to 500 in the distance. The consequence
is we agree with the St. Louis roads on what should be an equitable dif¬
ferential to Kansas City. Those are, as I understand it, 20 cents on the
first two classes, then on the third, five; on the fourth and the fifth.
374
seven and a half, on what we call the class for agricultural imple¬
ments; and five on the others.
Q. By differential you mean the difference between your rates on
different classes of freight, is that it ?
A. The difference on what we charge from certain centers to a
common point.
Q. That is, the difference between the charges on separate roads ?
A. Yes, sir. I will give you a case in hand. The rates is 90 cents
on 1st class and 30 cents on 5th class, Chicago to Kansas City; St.
Louis is 70 cents on 1st class, and 25 cents on 5th class to Kansas City.
This we had in effect by agreement between the two cities for very
near nine years, I think. That is what is called a differential.
Q. Then you don't apply the term differential at all to rates be¬
tween different points on your own road ?
A. I don't know, Senator, that I catch what you are after. There
is a difference in this way again. For instance, the rate is 90 cents to
Omaha from Chicago, on the Rock Island road; the rate to De Moines
is 75 cents ; and we would say the differential between Chicago and
Omaha and Chicago and Des Moines is 15 cents.
Q. But as a special term in your railroad parlance, you mean the
difference in the rate applied to different roads ?
A. No, sir ; it is the difference in the rate from two jobbing cen
ters to one point beyond, that is it.
Q. Now,-Mr. Sage, you spoke of certain short roads being unable
to live in Illinois ?
A. The difficulty in their living.
Q. Do you know anything about the rates charged on those
roads ?
A. Well, oï course, I know this, that the maximum rates charged
are the commissioners' rates.
Q. Do you know whether their rates are up to the rates fixed by
the commissioners of the State of Illinois?
A. I have no actual knowledge of them, any more than I know if
1 was in their condition, and I couldn't get freight, I would take it at
anything, because the Illinois rates are at the maximum.
Q. I am asking you about the facts. As a matter of fact, do you
know whether the rates that they charge are up to the rates fixed by
the commissioners?
A. In some eases they are, and in some cases of course they can¬
not be, because if they wish to develop trade for a poor road they must
develop it by offering inducements.
Q. The difficulties with those roads were in the difficulty of their
situation, is that it?
875
A. This gentleman who spoke here yesterday, who owns this lit¬
tle road down here, he showed in his case that he has to charge very
high rates. Now, my idea is, no little road can live unless it is allowed
to charge big rates, but you take three roads, A, B, and 0 roads, and if
the C road is alongside of the A road, she can't get any more than the
other.
Q. The point I want you to answer is this, and it is the only point
I wish to throw any light on this subject we have in hand : are those
roads charging less than the rates fixed by the commissioners ? Did
they charge less when they got into diificulty ?
A. They charge in some cases, I think, on the merchandise rates ;
on the short hauls, they charge the commissioners' rates ; but if they
ihave a stone quarry or a brick quarry to develop, they certainly do
not. I noticed our friend yesterday only cut 1st, 2d, 3d, 4th and 5th ;
he didn't go any further down.
Q. Now, Mr. Sage, have those roads suffered any from lack of
business ?
A. I fear that the local business on a short road in an agricul¬
tural country is not sufficient to maintain it, unless there are extraor¬
dinary circumstances.
Q You think the difficulties those roads have fallen into are diffi¬
culties growing out of their natural position as much as anything else ?
A. Yes, sir; at the same time their natural position is better than
that in this State, in the localities where you have not railroads, and
where you wish to build them, because they have a prairie country.
Q. But the prime difficulty they have labored under is, that they
have not had the tonnage to support their roads ?
A. Yes, sir ; that is the principal thing; and the reason that the
Rock Island and the Burlington roads are good roads is because of
their great volume of business.
Q. Now, you are familiar with falure of the Wabash?
A. Yes, sir.
Q. How much of that line in proportion to its entire length runs
through the State of Illinois ?
A. Well, I couldn't tell without turning to the reports ; I don't
recollect the statistics.
Q. Is it large or small ?
A. At present I know they are separated, and the Wabash east of
the Mississippi river is a large part, quite as large as the corporation
west of the Mississippi river—larger, I think.
Q. What, in your opinion, produced the difficulty with the Wabash
system ?
A. Well, outside of the fact—the financial part of it—I wish,
376
gentlemen, not to criticise; it is beyond me; but there are a great
many reasons from a freight standpoint why the Wabash didn't suc¬
ceed. It was established as a bridge over the " bloody chasm." The
Kock Island runs to Chicago and connects with the Lake Shore, Michi¬
gan Centra], Pennsylvania, and other roads, and we give these roads
business from Kansas City to New York, and they give us business
from New York to Kansas City; but thé Wabash started, as we do,
from Kansas City, but ran to Toledo, and in going to Toledo it com¬
peted with the Pennsylvania system, Michigan Central system. Lake
Shore system. Grand Trunk system, and the consequence Vas that, as
it was an eastern as well as a western road, we didn't affiliate with iU
We had the advantage of all the trunk lines in New York working to
us, and we were working to them.
Q. In other words, you starved the Wabash to death; is that it?
A. Virtually, the Wabash hadn't the influence over her territory;,
she hadn't the influence. Then there was another thing : the principal
business, which ought to be the backbone, was the immense crops of
cereals on the road. Now, unfortunately, Chicago has a lake, and from
Toledo to a point south of Chicago the road virtually had to haul for
nothing. Thej^ couldn't really get earnings on about four hundred
miles of their system from Kansas City, on account of the lake being
at Chicago, and the lake rates from Chicago to Buffalo.
Q. That is to say, it was the compaercial system surrounding the^
Wabash road ?
A. Yes, sir.
Q. It wasn't the Illinois law ?
A. No, sir ; it was not.
Q. Now tell me whether or not the Illinois law, in your opinion^,
affected the Wabash system more than it aflected the other roads in it
which fell into difficulty ?
A. I think it did, sir, because it had a greater number of miles
in it.
Q. Do you say the Illinois law operated more seriously upon the
small roads than the Wabash, or less ?
A. I think that the Illinois law didn't in any way injure the
Wabash road, and I think, further, it became so from its geographical
position. No railroad man could state it was the Illinois law that
ruined it.
Q. Please come to my question. Do you think that the Illinois^
law affected these small roads which got into difficulty more than it
affected the Wabash?
A. Yes, sir; I think it did.
Q. Why?
377
A. Because, like other small enterprises, unless they take high^
rates on their small tonnage, they can't live.
Q. The commercial condition, that is to say, competition, affected
those short roads in many cases, just as it did the longer ones, didn't it?'
A. I think so. I think the cause of the longer roads becoming
bankrupt had nothing to do with the State law. They were such large
roads that the State law didn't affect them, or only affected them very
little. I don't think, the fates the commissioners of Illinois made upon
grain ever hurt the Wabash much.
Q. I ask you if the commercial condition and surroundings of
these small roads didn't in many cases affect them?
A. Where there was competition.
«
Q. Was there competition in many of these cases?
A. It depends entirely where the road was. Some foolish people
built roads where there was no need for them, and they had to die. In
the case where a road is made to develop a new country, it might be
desirable to let that road have a very much higher rate to work on.
Q. Now, Mr. Sage, you say that many of those roads starved to
death, because they were bu.ilt where they had no business to be ?
A. No business ; they had no business, and the rates were not re¬
munerative for the length of their roads ; they had no outside business
to help them.
Q. If they were built where there was no business, of course the
rates didn't very much effect them, did they ?
A. No, sir ; but you know the intention of the road is always to
develop its business. For the twenty years I have been on the Hock
Island I have tried to have manufacturing done in every little place
between Rock Island and Chicago ; I have introduced it there, and
done all I could to develop business.
I want you to give us your opinion why they got into difficulties,.
the short roads in Illinois ?
A. Of course, the great cause was they were built under the en¬
couragement and inducement of the counties t^hey went through, with
a hope that they would pay. They were short roads- There was com¬
petition, and perhaps roads five miles or ten miles on each side of
them.
Q. The small roads, what they could get, with the low rates and
with the competition, wouldn't sustain them ; that is to say, it was the
commercial situation, by which they were surrounded, as much as
anything else ?
A. Yes, sir.
Q. Can you give any of those instances ?
A. There is the largest road, I think it is the Indianapolis,.
378
Bloomington & Western, that failed two or three times, and the T.,
P. & W.
Q. What were they competing with?
A. Well, that is difficult for me to explain to you.
Q. There was competition?
A. Yes, sir. St. Louis beins: a great commercial city takes 116
^per cent, of the Chicago rate from New York. That is to say, if their
rate on grain from Chicago to New York is twenty-five cents, St. Louis
is sixteen per cent, more, about twenty-uine cents. Now, as that is the
rate at St. Louis, it naturally is the rate at Quincy, naturally is the
rate at Burlington. Now, these roads run to Peoria. Peoria is not on
the Mississippi river, but the highest th^t could be got would be some¬
thing less than the rate from the Mississippi river. The local business
in the State of Illinois had nothing to do with it. The grain was going
east to the seaboard. Peoria got ten per cent, higher than Chicago to
New York. We will take, for instance, a small road like the T., P. &
W. They had about a ninety miles haul on the thousand miles from
Peoria to New York. Now, the whole rate was 27^ cents, and all they
^ould get out of it was as ninety miles is to 1,000. The business was
not as the business is to Chicago, based upon the commissioners'rates to
Chicago, it was carried straight east. If the Pennsylvania railroad were
to go from Peoria to New York it would pay it ; but unfortunately the
T., P. & W., with ninety miles, would only have a share of it, and she
died on it.
Q. She died from competition, from the fact of her commercial po¬
sition or condition ?
A. You can see what would pay a long road of a thousand miles
would ruin a short road of ninety miles.
Q. Now, what would you say was the cause of the failure of this
particular road you have mentioned ?
A. The great volume of business there was grain, and it was a
small proportion of tariff they got. Peoria was ambitious. Chicago
had the lake. Instead of charging twenty-seven cents to New York,
they felt, rather than let it go to Chicago, and let the lake take it, they
would make it twenty, and this short road out there took its share of
the twenty cents.
Q. That is to say, it was competition?
A. Yes, sir.
Q, The rule was, it was competition that worked its destruction?
A. It was competition in that part of the State. The short route
to New York is south of Chicago. It didn't all go to Chicago.
Q. Now, taking what you have said about the condition of these
379
matters as true, the fate of these roads would have been the same, law
or no law, wouldn't it?
A. Oh, so far as those small roads built, there are concerned,
where there were plenty of other roads, I suppose it would.
Q. Ey the chairman, Senator Johnson, of Montgomery: They
were in the condition sometimes called 'Hhe big fish eating up the lit¬
tle fish?"
A. Well, a large road eating up a small road is. I presume you
mean as repards competition of the road ?
Q. No, sir; I mean as regards the stockholders. Don't the large
ones sometimes eat up the little stockholders, and bring about a failure
in order to squeeze out the little stockholders?
A. Well, I have always been accustomed in my life to a road
where the stockholders have got very handsome dividends. I am not
prepared to say what those railroads do. I am glad to say our road
iias never been in that condition. I have heard of these things just as
you have in the papers.
Q. By Senator Proctor : I would like to ask Mr. Sage just two
questions : Do you think the enforcement of the long and short haul
would be beneficial or detrimental to the steamboat interests of the
country?
A. I think that so far the steamboats have been the gainers. I
think the boats on the Mississippi river this year are in a more
prosperous condition than they were last year. I will say, however,
m
that there are attempts to suspend the workings of the long and short
haul where water transportation is a competitor, and that has not yet
been definitely decided in Washington.
Q. Well, if you will pardon me, your answer will necessitate an¬
other question on that point: Do you think the enforcement of the
long and short haul will be beneficial or injurious to the points having
water transportation?
A. I don't think it will be injurious to points having water trans¬
portation, sir, except in rare cases. If a road had a very populous bus¬
iness, it might be for the interest of the road to go out of competition
there and leave it all to the boats rather than to make that a maximum
rate on all local stations.
Q. Now, did I understand you correctly when I understood you
to say or intimate that you didn't believe it best for the commissioners
to have absolute power to'make rates, but let the railroads make their
rates and the commissioners be an advisory body thereto?
A. As I understand, your Constitution provides that the rates
«hall be named.
Q. Yes, sir?
380
A. That the rates must be named in this State; consequently that
matter is settled.
Q. That is, the maximum rates ?
«
A. Yes, sir. Now, I think there is no question but that must be
done. Now, if that is done by the State, or by the honorable House
here that settles it as the maximum rates. You need be under no
alarm that the roads will lose business by sticking to those rates. It is
the small profit on the large business that makes us rich, not the large
profit on the small. I have the greatest respect for this commission^
and I think they have acted equitably to all interests. I think this::
That in the matter of State rates, and especially Classification; that they
are not competent. I would say in the classification it is the average
by which we make our revenue.
Q. I wasn't asking so particularly as to maximum rates as to the
absolute power of the commissioners to control rates and lower rates
and raise them at will ?
A. Well, commissioners are but men, gentlemen, and from my
experience in Illinois, and I have been on very intiniate terms in a.
social way with them, that they would like to do what is right; but
their political friends are what affect them. I don't say that of these
gentlemen here, for I know very little of the politics of your State. I
will say, however, men are but human. If their constituents have, as
we call it, axes to grind, so many of them, they are apt to have a dan¬
gerous influence. If the commissioners will advise with us and give
us a chance of showing what is equity, these gentlemen are such
worthy, upright gentlemen, I am perfectly willing to stand and consult
with them ; but if they are under the influence of the people who elect
them they don't take on the merits. I think this is so difficult a sub¬
ject that I would like a conference of the railroads on it. I will state
\vhat a classification committee is, to show you the difiiculties con¬
nected with it. The classification committee meets three or four times
a year, and every manufacturer and merchant that wishes any change,^
or has any new article, comes before them. Sometimes they appoint
committees, if the articles are too large^ to go and inspect them. The
object is to adapt it to the exigencies of the times. Our classification
is not a fixed thing. It is changeable—subject to changes—and every
man wishes to change, naturally, his classification, and make it too low.
If it is left to the commissioners, they are not present ; they don't hear
the arguments. If I were asked at such a meeting to vote yes or no on
a particular article of the fourth or fifth class, my decision might not
be the same as a discussion by the railroads would bring up, where we
would hear the pros and cons. I think then that if you gentlemen
were to make it subject to the western classification, and when any
381
changes came that they shouldn't be introduced until the consent of the
commissioners was given, I think that the ¡State of Missouri would
•gain by it
Q. By Senator Kerwin : Will the provisions of the law prohibit¬
ing greater charges for a short haul than a long haul be benficial to the
general public ?
A. That, Senator, is a mixed question. It will be benefical to the
.general public where discrimination was formerly the rule. I don't
say where that is; but an iron-clad law might, in certain cases, be as
injurious. I will give a case, an imaginary one; I will apply it to this
city ; I will say, suppose a very valuable quarry develops in this town,
or I will say— no, I will say one hundred miles from St. Louis, on this
road, and.the rate is a dollar a ton ; very large buildings are to be built
in St. Louis, but it requires thirty cars a day of this stone. Now, over
in Illinois, or in some other State, there may be, outside of your State,
a place where they will make fifty cents a ton. Now, while a dollar a
ton is a proper rate for a few cars for this hundred miles to St. Louis, a
train of thirty cars a day would be a good thing for a railroad at fifty
cents a ton. Now, if the railroad could develop the quarry by bring¬
ing the stone to the metropolis—your city of St. Louis—there being no
iron-clad law, that would be an advantage that could be got over in
this way : the commissioners could state it was their opinion it wasn't
substantially under similar circumstances and conditions as the small
shipment, and that might be got over; but the general principle of a
long and short haul for the people is, I think, an advantage. It gives
this, gentlemen: if there is a rate between St. Louis and Kansas City,
to any point on any road between St. Louis and Kansas City, it can't
be higher. Another thing is this : it prevents wars at competing points.
The railroads between St Louis and Kansas City will not get into a
fight on shipments from Kansas City to St. Louis, and that means every
city this side is prevented from getting into like fights and injuring
other points.
Q. By Senator Hazell : Did I understand you to say you are not
willing to trust the commissioners to regulate rates, because they are
elected by the people?
A. No, sir; I didn't say so at all. I say this: that they are not
experts, and they have influences which we are in no way liable to. I
have a great deal of influence brought on me to lower a rate. I get a
letter from a gentleman that rates are injurious, and I reply. I gen¬
erally ask him to come in. I talk it over, show him what I ought or
eught not to do, and if he has a good case I agree, or partially agree to
it. That is the principal reason, sir. The commissioners, to be in a
proper position to name the rates and classification, should be thor-
382
oughly up on every road, and take up every case on every road On it^
merits, whereas, as I understand you, you simply want them to make
rates in this State irrespective of the roads or on the commodity.
Q. Now, then, Mr. Sage, don't you think that the commissioner»
who are elected for a term of years, and make the railway question a
study, are more competent to fix reasonable rates than this legislature,,
which is elected every two or four years for a short period of time ?
A. Well, if you will ask me who I think is the most competent, it
is the men who have given their lifetime to it, I wouldn't like to reflect
upon the wisdom of this body.
Q. That may be, but I am asking you on business principles, not
on the dignity of the gentlemen who compose this body?
A, Well, it would be a case of my comparing myself with your
commissioners. I have already stated my highest respect here for
them, but it would be absurd in me to say that I thought their judg¬
ment superior to the traffic managers of all the railroads in the State ;
I don't.
Q. If they had studied the question as long, for instance, as Mr.
Newman, who has for two or three years been elected for a period of
six, wouldn't they be just as competent as he is?
A. I won't say in reference to Mr. Newman. Mr. Newman's ex¬
perience until quite recently has been in Texas. There is a thoroughly
organized body of experts on the Missouri Pacific ; they are under him,
and he has the vast interests of all the roads in different States, and is
comparatively a stranger up here, and has not yet got into the details.
There are other gentlemen on the road, however, that are in with the
details.
Q. That don't answer my question. I ask you if those commis¬
sioners wouldn't be just as competent to fix the rates as he is?
By Senator Castleman : I submit it is not quite proper to put Mr.
Sage in this record as instituting a comparison between Mr. Newman
and Mr. Ripley or anybody else.
The Chairman : I suggest he might hypothecate a case and put to
him.
Q. By Senator Hazell : What I want to know is, whether men
elected by the people as commissioners for this purpose, to look after
railway matters, if they make a studv of these matters, look them up
thoroughly and constantly, why can't they learn just as much about
them as these tratfic managers, and know just as much about fixing
rates, reducing rates and making reasonable rates ?
A. Well, I will reply to that and state that their experience is
based on theory, and the experience of the railroad men is based upon
practical results. There is another thing I wish to state, that necessarily
383
if they are elected every six years they will not be as good men the^
first year as the last year, they cannot be.
Q. Well, you know there are two of them holding over
A. Yes, sir; then I want to say this, that I have been twenty-five
years in the freight business, and our road is becoming a very large one..
It may be they may decide I am a little old, fogy and stupid, and they
need a better man as the road is getting bigger. I will say this, because
a man has been five or six years a commissioner, it doesn't prove that
he is a good man, or the right man in the right place
Q. You don't believe the people are competent to select these
men ?
A. I think this : they are plenty, if the people will select ordinary
business men, and leave them to run their business, but during the time
they are learning their business, whether it is one, two, three or four
years, they are not equal to the experts on the railroads.
Q. By Senator Kerwin: I have not understood the answer to this
question yet : will the provision of law prohibiting a greater charge for
a shorter than a longer haul be beneficial to the general public ?
A. So far as prohibiting unjust discrimination and making rates
public, I think the general public will receive an advantage from it.
Recess until 2 p. m.
afternoon session.
E. H. Allen was called before the committee, and made the follow¬
ing statement :
Mr. Chairman and Gentlemen oe the Committee : I can easily
assume, gentlemen, that with your experience in the investigation of
the question which comes before you in regard to the proposed legis¬
lation touching the railroads, that you have already reached the con¬
clusion that the question submitted for your consideration is one involv¬
ing manifold complicated interests, and that any proposal which is
submitted as a part of the legislation on that question will have a
manifold effect, and needs exceedingly great care to make sure its
result and effects are not somewhat different from those which might
appeal at first instance to be its legitimate results. And yet this prob-
384
iem, with allits involutions or complications and difficulties, we believe
to be a problem lying at the door ôf this legislative body at this time,
and which must be crossed by the attainment of some successful solu-
tion. The situation of the State of Missouri, now that the interstate
commerce bill has been passed by the National legislature, is one
of somewhat peculiar character. We are all of us both producers,
assumedly, and consumers, and the welfare of every individual in
every part of the State is afíected by any question which increases the
cost of transportation to and from the State, and the cost of transpor¬
tation from one point within the State to another point within the State.
All these charges necessarily diminish the value of our products and
increase the cost'of our articles of consumption. The question is one
of plain, practical, domestic economy, in its final effect upon the great
State of Missouri, and we feel, those of us whose relations to it lie
pretty broad, in the broad possibility of its cities, that we ought to se¬
cure to the State of Missouri, in our relations to each other, and in our
relations of the State to the surrounding country—we ought to secure
advantages, certainly, that are secured to the country at large from the
operation of the interstate commerce bill. 1 say these questions are
very complicated. I received, a day or two before the final vote on
the interstate commerce bill, a very long, elaborate letter from a very
noted railroad manager in the city of New York, in which he took
great pains to explain, in detail and at length, that the passage of that
bill, as it did pass, would be absolutely destructive of the value of rail¬
road property throughout the whole extent of this country. And yet
that law has not yet been in operation sixty days, and its most earnest
advocates, its staunchest supporters, its boldest defenders, are the very
men who, two or three days before its passage, thought it was going to
be absolute destruction to all their property interests. So it is not in
the power of even our smartest men always to foresèe what the effect
of certain provisions may prove to be when they are brought to bear
upon the practical relations of life ; and for you the State problem is,
of course, a narrow one, more limited in its sphere of operation, but
still it involves deep questions of vital and practical moment. For this
reason, those of us who come broadly connected with the question of
the transportation of passengers and products are disposed to ask from
the legislature of the State the simplest and least legislation that will
<3orrect existing evils, in a firm conviction that as time passes and the
operation of the simple measures become clear to us, a wider sphere
of legislation may upon that experience be safely opened before us.
With that view of the case, myself and my colleagues desire to-day to
call your attention to a few facts in regard to the present operation of
the transportation problem in the State of Missouri, that seem to us
385^
possible of correction, and the correction of which we believe will lead
to still broader and better results than are at first apparent. In the
first instance, we feel it to be exceedingly desirable for you that you
provide, in the legislation which you may adopt at this session of the
legislature, a provision that within the limits of the State of Missouri
all pooling by railroads, no matter under what theory or upon what
basis, shall be absolutely impossible under the law. We are not
ignorant of the benefits that resulted from pools. We are also quite
alive to the injuries that have resulted from pools, and we are quite
alive also to the fact, disclosed by Mr. Sage's talk with you this morn¬
ing, of the unsatisfactoriness to the railroads themselves. That has
been a matter patent for the last half dozen years. While they have
been adhearing to it, they simply adhered to it because they saw
nothing for the immediate better, not because they were satisfied. The
only good result for the roads, in its legitimate condition, or for the
people of the country, was the fact that under the pooling system we
secured what was called steadier rates for transportation than without^
and a more settled rate upon transportation than existed without them.
Now, we submit, and, if I didn't misunderstand Mr. Sage this morning,^
he himself claims the same, that the provisions in the State law shall
provide that all rates for transportation shall be published, open to»
every one alike. Then there shall be no rebate, no discrimination, and
that a rate once lowered cannot be raised again, except upon due no¬
tice and time given. We believe both the railroads and the country
have gathered out of the pooling system everything that there was
good in it, and by the adoption of this provision the legislature for the
State of Missouri will get rid of all the larger body of evil which at¬
tached to the pooling operation as affecting the traffic and trade and
public interests in the State of Missouri- I need not, probably, en¬
large upon that. I think it is very plain to all of you that in that man¬
ner the whole trade and traffic inside of the State, from one part of it
to another; of all branches of industry, all forms of labor, all interests
of the consumer, are put upon a perfectly safe, equitable and just
basis. And I most heartily concur in urging upon your serious con¬
sideration the importance to the people of Missouri of such a provision
in the State law of this State relating to railroads. In the second place,
we equally and earnestly commend to your consideration the question
of not interfering with what is called the wholesale question in deter¬
mining rates on traffic on railways. I believe you have no legislation
in this State touching on that question, and we feel it would
be wise in you not to inject any into it. I know there is some¬
times a feeling that .if a certain rate of freight is charged upon
K M—25
386
a large volume of transportable product, that that same rate
pro tanto should rest down upon the smallest minute fraction
of it ; but that is neither for the interest of the railway, nor is it the inter¬
est of the consumer and producer of the State. The welfare and the
interest of the railway, and the interest of the consumer and the pro¬
ducer, is that a discrimination should be able to be made between car
load and less than a car load, and a discrimination should be able to be
made between a single car load and an accumulation of cars, such as
make up a freight train. It is to the interest of the railway, inures to
the interest of the consumer of products raised without the State, or
created without the State, and brought here for consumption. A pro¬
ducer can go to a railroad and say : ''What is the size of your train?''
"The size of my train is 25 cars." "What is your rate per car? "So
much, sir." "If I make you a train te-morrow morning of 25 cars,
what rate will you give me ?" It is in the interest of all parties
who are to consume that product that that man should be able to se¬
cure a lower rate for making up the entire train than a man would se¬
cure who furnished a single car, in conjunction with twenty-four other
men t o make up that train. The railroad could handle it easier ; it all runs
from one point to one point ; it all runs from one shipper to one shipper,
and it is a legitimate recognition of a discrimination in business that
exists in every department of it, and which it is impossible to eradicate
from it ; a discrimination which has led to the reduction of the cost of
products everywhere throughout the country to the consumer; and,
therefore, it is largely in the interest of the people in this State that no
prohibition of it be inserted into your law. I will remark in passing on
the discussion which occurred here this morning on the question of the
long and short haul, that, if I understood, and if I am incorrect, you
can correct me in your own minds, some remarks made by Mr. Sage
here this morning to this effect, that the long and short haul, the en¬
forcement of that in the interstate traffic bill, was a provision that in¬
ured to the benefit of the manufacturers in those localities where the
natural condition for manufactures was most available at the least ex¬
pense; that it antagonized no manufacture except where that manu¬
facture attempted artificially to place itself in a locality where it didn't
belong. It may be perfectly, it may be in the line of the interests of
a railway to fill up its line of travel, its towns to which it brings and
from which it carries the products, not only with the natural manufac¬
tures, but to establish artificial manufactures there out of their time
and place also, it may be to the interest of a line of railroad to do
that ; but the question, gentlemen, whether in the broad sweep of that
sort of thing it is to the interest of the public to have it done. In the
State oí Missouri, I take it, that the highest interest of the State is that
387
there should be no railroad intervention to prevent her from realizing
all the advantages that intire to her own resources, and you should take
care that there is no provision in your railroad law which enables the
railroad to vitiate the advantage you derive from the availability of
those products. It is for your interest to get the articles of consump¬
tion irom the place in the country where those articles can be produced
at the least cost, and get them to you at the least expense. There is
always a waste of money to somebody in the effort to transplant man¬
ufacturing from its natural localities into localities where the natural
advantages for its sustenance do not exist. I take it for granted that
Missouri is entirely able to take care of herself. She can if she is leit
to her own natural resources, do it. I merely make that remark in
passing. But I wish most emphatically to call your attention to an¬
other remark that occurred in Mr. Sage's interview with you this morn¬
ing. You will remember when I remind you of it, that he was asked
to define what he meant by "differential." He stated facts to which I
wish again to invite your attention. It was this : that under the oper-
eration of the railroads, and for the purpose of establishing an artificial
differential, the rate of transportation from Chicago to Kansas City, a
distance of five hundred miles, on first class freight, was ninety cents,
and the freight rate of transportation on first-class freight from St.
Louis to Kansas City and points within the State of Missouri, a dis¬
tance of three hundred miles, was seventy cents. If a railroad can
afford to carry traffic, first-class traffic, mind you, and which, they say,
they make their largest margin of profit on, five hundred miles from
Chicago to Kansas City at ninety cents, why can't she carry it from St.
Louis to Kansas City for fifty-four cents? Can any gentleman answer
that problem on the absolute merits of the question. It can't be.
There is no question about it. Now, why is it that the railroads con¬
spire on that stale of facts, to preserve between St. Louis and Kansas
City and points within the State of Missouri, that differential addition
of sixteen cents on first-class freight, a provision that you can all see
is plainly inimical to the welfare and happiness of the State of Mis¬
souri, a provision made, not for the benefit of this State or its
people, but a provision made to enable the city of Chicago to
control a trade on the western line of the State of Missouri
in competition with St. Louis, when she canT do it without that
artificial sustenance and support. That brings to our attention the
•
proposition which I shall urge upon your consideration, and that is
this : That any legislation on the part of the legislature of the State of
Missouri on the railroad question should contain provisions that insure
that whatever rates of traffic are established from a point without the
JState to a point within the State, under the interstate traffic law, or
388
from a point within the State to a point without the State should de¬
termine a maximum rate of charge from one point within the State to
another point within the State. I trust I make myself clear. We can¬
not by your legislation determine what the roads shall charge on the
interstate traffice ; that is, a trafläc from a point within the State to a
point without the State, or a point without the State to a point
within the State ; but you can accept the result of that law as
adopted by the railroads of the country and say that when they
have adopted a rate under the provisions of that law for inter¬
state traffic, they shall not adopt a rate for traffic within the State
that shall not be in harmony and equitably relate to it. That is
a very vital question. My colleagues who will follow me in this
discussion can enlarge upon the practical operation now going on
within your State in violation of what such a provision would permit.
It was fortunate for me that Mr. Sage cited in his remarks an identical
case in which the railroads, by the establishment of an artificial dis¬
crimination, are maintaining Chicago's ability to compete with St. Louis
in the State of Missouri, when, under a natural state of affairs, St.
Louis is entitled to an advantage which, under that artificial state of
affairs, she does not get, and the citizens of the State are entitled to a
corresponding advantage in dealing with St. Louis, an advantage which
St. Louis would have under the natural condition of things, and which
they are deprived of, because the power of the railway putting a sev¬
enty cent charge on a first class freight that they claim is the best
paying freight they carry, and they carry it^ three hundred miles, if
that three hundred miles happens to begin and end in the State of Mis¬
souri, when they only charge ninety cents for it for a distance of five
hundred miles, if the distance happens to begin outside the State and
ends within it, or begins within it and ends outside of it. And the same
state of facts existing with regard to Chicago and St. Louis in that con¬
nection are in operation along all the sides of your State. The same
state of facts exists along your western border. They charge from
Kansas City to St. Louis a much larger local charge than a proportion¬
ate rate from Topeka to St. Louis, or Atchison to St. Louis. They
charge from East. St. Louis to Kansas City a smaller rate proportion¬
ately than they charge from St. Louis to Kansas City. It is that dis¬
crimination which, it seems to me, any legislation upon your part on
this subject, as the proper custodians of the interest of the people of
this State require should be made clear, emphatic and unmistakable.
I am aware—touching it once more before I sit down—that Mr. Sage
endeavored to leave the impression upon your minds that the enforce¬
ment of the long and short haul throughout the State of Missouri
389
would be inimical to the construction of railroads ; in fact, that any
legislation touching the railroad question that at all presses upon the
railroads or restricts their freedom of action in any respect is of neces¬
sity a sort of interference with the building of railways, and the build¬
ing of railways is the all important question. Now, I am not able to
speak in response to that in regard to the State of Illinois, but if I am
not mistaken, when Mr. Sage cited instances in the State of Missouri
where the cessation of railroad construction had been most marked, he
happened to pick the years when the panic was in operation all over
the country and railroad building ev^ery where was crippled, not by thé
law of the State, but by the financial condition of the country at large ;
and if I didn't mistake, in the cross-questioning to which he was sub¬
jected by some of you Senators in the committee here, after he had
concluded his remarks, he admitted, substantially, that the defect in
the building of railways was not because of the law, but because of the
lack of demand for them and their services. Now, I will call vour
7
attention to a State not far enough away to be out of sight—the State
of Kansas. The State of Kansas has, I believe, as good a railroad law
in operation there as any State in the Union, which it enforces right
up to the letter without the least delay. I know of nowhere where the
violation of the provisions of the railroad law are brought home to the
railroads more intelligently, more rapidly, than they are in the State of
Kansas, and yet I think there is no State in the Union, since the laws
have been in operation in Kansas, in which there has been a larger con
struction of railroads than in the State of Kansas; yet Mr. Sage would
make us believe that the reason for that was that the State of Kansas was
larger, had more fertile lands, and lands that responded more rapidly
and easily to agriculture than the land of Missouri. Of course, there are
parts of Kansas which are better than parts of Missouri, but there are
parts of Missouri that are better than parts of Kansas. There are no
such lands for responsive fertility to agriculture as lie along the Mis¬
souri river between Jefierson City and Kansas City. There are no
lands in Kansas which can equal those in their capability to respond to
human labor and human efforts in the way of productiveness. There
are no better lands in Kansas better than the lands in the northwest¬
ern portion of the State of Missouri. I am not conversant with the
balance of the State and cannot speak for it;.but I take it for granted
that the real reason why the railroads have been pushing into Kansas
is simply because emigration drifted there; had emigration settled in
Missouri as actively as in Kansas, the roads would have come into
Missouri the same as in Kansas, if Missouri had had the same law in
the way of it, even that Kansas has there; but the real explanation is
the roads went where they knew the people were going, and there was
3yo
«ort of a boom on Kansas which took emigration there. There has been
sort of a boom of late years on Nebraska. Perhaps it has been created
by the roads, partly, I don't know now, but for some reason or other
there have been great inducements held out to emigrants in that coun¬
try. They have got roads there ; they have foreseen that emigration was
going there; consequently it has accelerated railroad building in those
localities. Let the same-state of facts occur in Missouri, and you will
find a corresponding interest on the part of the raads, even if you have
a railroad law as firm in its grip as the law of Kansas, and a law as
firmly enforced as the law of Kansas. So I take it, gentlemen, that
there is really nothing in that proposition. The three provisions which
we are exceedingly earnest in pressing upon your attention are with
reference to pools; that that be supplemented by a provision for the
open publication ot rates without the possibility of discrimination,
without rebates, and when lowered, not to be raised again without a
reasonable notice. I believe the interstate law requires twenty days.
I believe the Kansas State law requires sixty days. That is a mere
matter of detail. Secondly, that there be no provision in your legisla¬
tion that shall interfere with the natural operation of what is called
the wholesale principle in business; and, third, that there be such a
provision in your railroad legislation as shall make it absolutely oblig¬
atory upon railways transporting products from one point to another
9 ■
in Missouri ; that those roads shall make th-e charges for transportation
between those points an equitable proportion of the rates which they
charge for corresponding freight from points without the State to
points within it or from points within the State to points without it. I
thank you, gentlemen.
Q. By Mr. Duffy: As I understand you, you wish to press upon
the mind of the legislature as a very important fact that what you term
the wholesale rate sfiould not be interfered with. Now, I want to
know where you would commence in defining a wholesale rate and
where you would end? In other words, to illustrate what I want you
to explain to me: suppose you and I lived in Kansas City; that we
were engaged in shipping from Kansas, and you were enabled by hav¬
ing a little more means than I to ship twenty-five car loads of wheat—
my means being limited—a little shorter than yours, I could only ship
fifteen car loads of wheat. Now, the question is, and did I understand
you to mean that you should have a rebate—a larger rebate—that you
should ship per car your twenty-five cars less per car than I my fifteen,
or where would you stop? Where would you commence and where
would you end on what you call the wholesale rate? That is a^^question
I want to call your attention to ?
A.. As between a car load rate and less than a car load rate, that
391
is a very natural point of discrimination. As to the discrimination on
the shipment of a number of car loads, it would depend on the interest
or convenience of the railway in making the transportation. You will
understand, gentlemen, throughout, there is, under my suggestion to
this committee, no such question as a rebate to an individual. That
we' desire expressly to be made impossible in the law of the State of
Missouri. But the rate that is open to me, under the illustration given
by Mr. Duffy for twenty five cars, is open to any other individual
for twenty-five cars. The supposition is that the railroad will be able
to carry the twenty-five cars in a single train every day for me at a less
cost than they would carry Mr. Duffy's fifteen cars. I will answer
squarely and promptly, and 1 will add that if that is all the difficulty
there is in the question, in Mr. Duffy's mind, it wouldn't take a very
long time until he would find some friend with ten car loads who would
join with him in making a train load of twenty-five car loads, and they
would get the same rate on it; and if you didn't have two men, then
five or ten—say five men with five apiece; and the result of the reduced
rate to me in that open rate of the market wouldn't be^a pecuniary
advantage to me in my pocket. He would find that the result of the
competition, the effort upon my part to acquire possession of the
product of twenty-five car loads and the ability upon my part to deal
with the market at the other end, having that amount of product to
sell, would end in that reduction of the cost in transportation being
divided either on the one hand with the producer from whom I got the
product that is shipped, or with the consumer, where it is shipped. If
you will examine the statistics of the country on the question, you will
find wherever those reductions have resulted, shipments have been made
openly—open to everybody that can compete with the terms of them—
that the advantages of that reduction of rate have always inured on
the one hand either to the producer from whom the product is secured,
or to the consumer to which it is shipped. In both capacities the people
of Missouri stand. Now, that is not the case where a rebate is made
perpetual to a single individual, and the public doesn't know it. You
recognize at once the broad distinction between the two.
Q. Perhaps I did use the word rebate; I didn't intend to do it.
What I want to get at is this: You propose to ask that the General
Assembly of the State of Missouri pass a law; that law must be made
plain and applicable to all traffic. Now, would you say that more than
a car load would be considered a wholesale shipment ?
A. Perhaps one, two or three car loads.
Q, Well, let me place the matter before you in a different way
and I will give you a chance to answer it. As an illustration, from
Kansas City to St. Louis for five cars a man gets them at one price, for
392
ten cars he gels them at another price ; still lower for twenty cars, still
lower for thirty cars, still lower for fifty cars, still lower on up to one
hundred and fifty, if you please. Now, the question is, if you give a
proper rebate to the larger shippers won't you make it oppressive upon
the man who only ships ten cars or five cars per week?
A. No, sir.
Q. Where would you advise the rate to commence? What diflfer-
ence would you propose to make between five cars and fifty cars ?
A. In the first place, I would remark this in answering that ques¬
tion : I don't contemplate that the law would say anything on the
subject. The matter could stand in this shape: That the rates of the
roads shall be open and public without discrimination between indi¬
viduals; that every man shall have the same privilege, the same rates
under like circumstances and conditions. You don't need to define
just where a line of reduction shall be made, because the railroad may
choose to make no such reduction. But if a man shall accumulate a
larger product in that way by buying up the product at a higher price
than he would otherwise be able to pay for it, I think the people ot the
S^ate are entitled to that increased price for their grain and their pro¬
ducts. I should not inject into the laws any statement as to how
many cars should constitute the discrimination. Whatever the dis¬
crimination is it is open to all men on the same terms. The road can't
give it to one man and withhold it from another ; it can't give it to one
place and withhold it from another. The consequence would be the
people would get the benefit of it. If you don't do that you don't get
the benefit, because the railroad will adhere to the car rate no matter
what number of cars are shipped, and the railroad will be the sole
beneficiary and the people not benefited by it at all. The legislature
should simply require that every man shall stand on a like footing,
whatever rate is given to one shall be given to all under like circnm-
stancee.
By Senator Johnson, of Madison :
Q. I understood you to say, Mr. Allen, that you opposed pooling ?
A. Yes, sir.
Q. If it is wrong for the railroads to pool in order to raise your
freights, why isn't it wrong for you to pool your shipments with other
shippers in order to reduce your rates ? What is the difference in the
principle ?
A. The difiTerence is this. When the railroads pool together they
fix an arbitrary rate of shipment, and the benefits of competition are
not secured to you. The railroads are not in the same attitude as a
man transacting private business is. The railroad is not purely a pri¬
vate corporation. It has come before the people and holds, necessarily,
393
a monopoly in the transportation over certain territory by virtue of
its having been granted the right of eminent domain. No private
trader ever comes before the public in that attitude. If the railroad
simply owned the track and allowed any man to run cars over it then
you would have something more nearly representing it.
Q. You are willing to permit the shipper or business man to pool
their business to take advantage of the railroad rates, but not willing
to let the railroads pool and take advantage of you?
A. Yes, sir; that is it, for that very reason the railroad is using
the power of eminent domain in the State. I am not cut out of com¬
petition when you make a pool, you don't prevent others, but the .rail¬
road does.
Q. Please inform me, if you can, how many points in the State
are so situated, commercially, that they could ship twenty-five cars or
more at one time.
A. I can't answer that question.
Q. Can you approximate to it, in your opinion? Give us your
judgment?
A. No, sir, I cannot ; I know in Kansas there are a large number
of such points.
Q. I am speaking about Missouri?
A. I don't know about Missouri.
Q. Isn't it a fact in Missouri we have but few large business cen¬
ters—Kansas City, St. Joe ?
A. Yes, sir.
Q. St. Louis and a few large points ?
A. Yes, sir ; the size of the town don't prevent it. It is the pro¬
ductiveness around the town that makes the freight.
Q. Don't you know that nine-tenths of all the shipments of Mis¬
souri are made from small points where they could not possibly, except
by combining, by taking time, make upa train load at one time ?
A. I am not posted on that point, sir.
Q. Do you suppose there are half a dozen points in this State out¬
side of the cities of twenty thousand inhabitants or over, that ship
train loads of freight at a time once in a year ?
A. I presume that is possible ; I don't know the fact ; it would
not occur to me as improbable at all.
Q. It is not impossible ?
A. But this is the point in that matter : Suppose they don't, is
there any injury by this ? I don't raise the price on what is shipped
from them that you make it possible by the rate for the other locality
when they do collect the matter to get a less rate.
Q. Taking your view in regard to manufacturing establishments,
394
and carrying it out, would it not carry all the manufacturing establish¬
ments of the State into the large cities and absolutely denude the
country of manufacturing establishments?
A. No, sir y I think the tendency is now to take them out of the
cities.
Q. You made some strictures on Mr. Sage's argument, with refer¬
ence to the establishment of manufacturing establishments along the
line of the road ?
A. Yes, sir.
Q. You seemed to make some structures upon that proposition of
his ?
A. Yes, sir.
Q. Wouldn'^t your logic carry all these manufacturing establish¬
ments into the cities and out of the towns?
A. No, sir; it would carry every manufacturing establishment te
the point where the raw material for it could be had at the lowest rate,
and where the other conveniences for manufacturing were least ex¬
pensive.
Q. What reason except the mere reason of the predominance of
capital over smaller capital can you give why a dozen cars should be
shipped for less than one car ?
A. Simply for the reason it is easear for the railroad to do it, they
make more money.
Q. Suppose one of the ablest railroad managers in the country
should state that they can ship one car at as precisely a low rate as
twenty-five cars, per car, would your opinion or his be the best?
A. His opinion ought to be far better than mine, because he is an
expert, but I should want to ask him some questions about it.
By Mr. Miller : I want to ask Mr. Allen, if the interstate commerce
law does not leave it open for lower rates for quantities in excess of
car loads to be made as it now exists ?
A. That is my understanding of the law.
Q. I want to ask you if you know of any such law in any of the
States around us which limits the rate to the car load ?
A. I do not. No, sir ; I don't know of any State that limits the
operation of the wholesale dealer in that way.
Q. If the State of Missouri was to enact a law which made a car
load the unit, admit no lower rate for anything exceeding a car load,
what would be the effect, in your judgment, upon Missouri towns ?
A. I think all the States around us would secure prices for their
products that would be impossible to be secured in Missouri in con¬
sideration of that fact.
395
Q. It would have a tendency to distributefour products to other
States, and build up the towns of other States? '
A. Yes, sir.
By Senator Ball : Do you think it is fair to have the same rate from
St. Louis to Omaha as it is from St. Louis to Kansas City ?
A. It does not seem to me a just rate, sir; the distance is
greater.
Q. Do you think, then, it would be fair for the rate from Omaha
to St. Louis to be about the same as that from Omaha to Kansas City?
A. I don't know the relative distance ; I should not, because
Omaha is farther from St. Louis than it is from Kansas City, if I am not
mistaken.
Q You live in Kansas City ?
A. Yes, sir.
Q. You are opposed to pooling?
A. Yes, sir.
Q. Your are opposed to pooling because pooling means that you
are to pay a reasonable, round price for what is shipped from a compet¬
ing point?
A. No, sir ; it is not on that ground.
Q, What is your ground ?
A. My opposition to pooling is on the ground that it uses the fran¬
chises secured from the public in contravention of the purposes for
which they were secured without accomplishing any satisfactory re¬
sult or public benefit in so doing. It has various effects. Mr. Sage de¬
clared them to you this morning. The effect of the pooling system has
been in the first place, to fix artificial rates. It has had the effect to
give a proportionate part of the earnings to those roads that never
earned them ; it has had the effect to increase the number of persons
who become members of the pool, induced them to build a road not
called for by the needs of the country, but by pooling they can force a
contribution out of the pool ; it has produced from the first to last an
artificial state of case inimical to the public welfare.
Q. State now, Mr. Allen, if the wholesale merchants have not or¬
ganized themselves into a sort of confederation, agreeing to charge a
certain price for groceries ?
A. That may be, sir ; I don't know anything about it. I know
there are such combinations with a great many manfacturers in the line
of their manufacture.
Q. Hasn't that been done for the purpose of maintaining prices?
»
A. It is done for the purpose of increasing the profits on their
business, I take it, I don't know the fact.
Q. Don't railroads pool for the same purpose ?
A. But the status of the parties is not the same.
396
Q. I understand the difference in the status. Does it make a
particle of difference, Mr. Allen, to the community as to who gets the
better of them, the wholesale merchant by combining or the railroads
by combining ?
A. So far as the effect of the combination in dollars and cents is
concerned it is the same ; it wouldn't make any difference in dollars
and cents ; but it is different from the other point of the question, and
there are more damages from the pooling from the point I have indi¬
cated than from this. I am not a Standard Oil Trust Company,
though.
Q. No, I know you are not ; you are opposed to pooling, you think
it is wrong to charge as much from St. Louis to Kansas City as from St.
Louis to Omaha, and vice versa, and you believe in maintaining car
load rates ?
A. Yes, sir.
Q. All of that, Mr. Allen, is largely due to the fact that you are a
merchant of Kansas City, isn't it ?
A. I am not conscious it is, sir. It is nut easy for any man to say
how far his birth or circumstances or situation may control him or the
results of his thinking, but I am not conscious of the fact from my loca¬
tion at Kansas City. I believe what I have said is good for the State
everywhere.
Q. Yes, sir; I concede it very frankly. I will ask you this, Mr.
Allen: do you you think it would be right that the wholesale mer¬
chant in the city of Kansas City or St. Louis, or any other wholesale
house in any city in the State, should have a better rate on his stuff
that he ships simply because he ships more than the farmer on one of
these roads?
. A. Well, the two are not in competition, but I do think the ad¬
vantage of that principle, as I have endeavored to explain, comes back
to the consumer and the producer. A man can pay half a cent a
bushel more for corn at one point than another. Why ? Because by
so doing he accumulates the product in that locality, consequently
ships it out on the reduced rate, and he gives to the man of whom he
buys the benefit of that rate in order to increase the volume of his busi¬
ness.
Q. Doesn't the small farmer and the small shipper lose on the
small shipment because he can't get as good rates as you do, notwith¬
standing he may get something back at the consummation of it?
A. The result of the operation of it every where would be that the
small farmer wouldn't ship directly, he would sell for the advanced
price to the man who was shipping in the accumulated volume.
397
Q. In other words, jou propose to force the small farmer to sell it
to him ?
A. No, sir ; I expect he will sell it because he gets more money.
Q. Because he can't help himself?
A. How ?
Q. You propose to say that he shall do that simply because he
can't help himself?
A. No, sir; he needn't do it, but he will make more money by
doing it.
Q. Then, Mr. Allen, it simply means this, take me for instance :
Suppose 1 was wealthy, which I am not, and able to go out and buy
stock and ship it along on this road, you would say to these small
farmers and shippers, you must sell to Ball because he can get a bet¬
ter rate than you can," wouldn't that be it ?
A. No, sir ; I would say to him, sell to him if he will give you
more than you ca^n otherwise get for it." The result would be you
would give them more to get the grain.
Q. Wouldn't the result be that I could give them more because I
could get better rates ?
A. Yes, sir ; there is where the farmer would be benefited.
Q. Now, knock that car load rate and come down to the small
shipper; he could not ship as cheap as I could?
A. No, sir; the railroad can never give the same rate for the
small shipment.
Q. Don't you believe in the doctrine of buying where you can
buy the cheapest ?
m
A. Yes, sir.
Q. Upon what sort of theory would you say because you had a
car load of stuJff to ship therefore you can ship it into the market for
less money than myself when I have got only a few pounds ?
* A. The roads will never charge the same low rate on these small
shipments that they will on a car load, and you will find that so. It is
not a question of my control or your control ; it is the nature oí the
transaction that brings that about whether you like it or not.
Q. Suppose we pass a law providing penalties, and say such shall
not be the case ?
A. Oh, you can make them do it inside the State of Missouri but
not outside ; at the same time they won't do it outside.
Q. Don't your theory simply tell you it is a system to build up
and make the rich richer and the poor poorer ?
A. No, sir, I think not; there is where I think you are in error,
as a matter of fact ; and my proposition is that it results in an in¬
creased price to the producer and diminishes the cost to the consumer.
398
Q. The Kansas State law would be perfectly satisfactory to you ?
A. So far as I understand it, yes, sir. There are some differences,
of course, between Missouri and Kansas, and that might need atten¬
tion, but the general spirit and effect of the Kansas law is very satisfac¬
tory as I understand it.
Q. Mr. Allen, this question of railroad legislation has been largely
discussed in your locality?
A- Yes, sir ; more or less so.
Q. Now, 1 will ask you if a bill containing substantially the pro¬
visions! will mention would be satisfactory to your people, because we
want to satisfy them as well as the balance of the State. If we will pass a
law containing a clause preventing discrimination between persons and
places, put in your long and short haul clause, giving the railroad com¬
missioners authority to enforce these provisions and fix maximum rates
in the bill, will that sort of a bill suit your people ?
A. The question of maximum rates we take no interest in ; I don't
see any benefit in that one way or the other; I am not opposing it or
favoring it, but there is one point, so far as I understand you, it
wouldn't contain, that I consider as important as any others, and that
is a provision that any shipment from one point in the State to another
point in the State, or from a point without to a point within, that there
shall be an equitable rate. I don't understand you to name anything
of that kind ; that I consider to be an exceedingly important thing in
the State of Missouri.
Q. By Senator Parcher: Suppose a shipment comes from the
western boundary of Illinois into Missouri, landed twenty miles on
this side ; crossing a portion of Illinois that is almost a dead level coun¬
try, coming here another shipment is made running down through the
mountains, takes the 'Frisco road, would you take that as the basis of
making your charge the same distance on the 'Frisco ?
A. I would make it pro tanto equitable charge.
Q. Suppose the distances are just the same, landing on this side
and running down the same distance over the 'Frisco road in this State
that it has already traveled in Illinois?
A. If the cost of transportation on the 'Frisco road per mile was
greater than the transportation on the Illinois road per mile that would
be a question for modifying the matter; but that is not the present
state of case. It is not on that ground that the roads insist upon St.
Louis paying seventy cents to Kansas City when Chicago only pays
ninety—it is not on that ground.
Q. You say there is no State bordering on Missouri that has the
car load principle?
A. I donT know it.
399
Q. I understood you to answer Mr. Miller positively?
A. I don't know of any.
.Q. You don't know that is the case in Iowa?
A. No, sir; I don't.
Q. If you were assured it has been the case and came with the
railway, remains such to-day, would you regard it as pretty good evi¬
dence it satisfied the people and the railroad ?
A. Yes, sir, if it was a voluntary matter on their part.
Q. It does no injury or injustice to the business man?
A. It would be a question of experience, probably, that would
outweigh any question of theory.
Q. Do you know what the law of Colorado is in that regard?
A. No, sir.
Q. You don't know that they have a unit there and it is fixed at
five cars instead of one ?
A. No, sir.
Q. You don't know that?
A. No, sir; I had the impression they didn't have any unit less
than a car rate.
Q. If that is the case and has worked »well for years and given sat¬
isfaction to the business men and people, it would go far towards fixing
the question; it would do no violence to business or business princi¬
ples ?
A. That would depend on how that question was related to the
condition of afl'airs in Colorado and how it was related to the condition
of affairs in the State of Missouri. The towns in Colorado may be
fewer in number and consequently may be necessary to gather the
the products at fewer points than would necessairily be the case in Mis
eouri, so the five car unit in Colorado would be just the same to Colo¬
rado that a one car unit would be in Missouri.
Q. Now, then, I understand you to say that either the producer
or the consumer gets the benefit of the lower rate on grain to the larger
shipper ?
A. I think he does ; I think the history of the thing has pretty
well demonstrated that in all instances where the rate was an open
public rate. There have been cases where the rate was only secured
by private rebate. I know of a case under my own observation where
a gentleman had a rebate on a certain class of shipment from Missouri
roads. He told me that rebate privilege paid him thirty thousand dol¬
lars a year profit, but he wouldn't have had that advantage if it has
been a rate open to anybody. Nobody knew it, nobody else could
get it.
Q. Suppose I am a shipper from the north-western part of Mis-
400
souri; I am shipping live stock; I am there buying one hog or steer as I
find them ; I am in the market; the price of cattle and hogs was fixed
in Chicago; my shipments there don't perceptibly change the market
one way or the other; then if your theory is correct when there is a
larger portion of stock in my county, for instance, some shipper—a
large shipper comes in there, sweeps around over the country and buys
up ; he is able to ship twenty or thirty car loads or buy enough to load
two or three trains in that country; he runs them to Chicago, and
there is ten dollars difference between his rate and mine ; he sells
them in the market for the same price I do ?
A. Presumably ; it may be possible, as a heavier operator, he
may have an advantage
Q. Do you say presumably he comes back and distributes that
ten dollars a car around ?
A. That has been the history in the past.
Q. That he comes back and pays out what he has saved over and
above the rate to (he smaller dealer ?
A. He pays it to you in the first instance to get your freight.
Q. Don't you know there is instance after instance when we
raise a large crop in these agricultural districts, and they are feeding
a good deal of stock, that is the only time these large shippers with
plenty of money come into the country at all ; don't you know that is
a fact?
A. Well, I am not as conversant with it as you are, probably.
Q. They sweep around the country, that freight rate difference
they get enables them to buy forty head of cattle to my one ; they
don't figure the number of pounds on them as carefully as I have to ;
that gives them an advantage over me?
A. It gives them an advantage over you, as the buyer of cattle,
but not the men from whom you and he are both buying cattle ; they
are the men who raise the cattle, that is what I am looking after; they
are getting their money for it.
Q. No, sir; I deny that the men who sell the cattle to him and
me get a single dollar more ; he comes there and buys at the same
price I do; I sell in the same market at the same price; they are given
a rebate or differential, or whatever you call it, of five or ten dollar»
a car, and that is the last you see of him in the country that year ; he
goes away with it, and neither the consumer nor producer gets a nickle
A. You speak from observation, perhaps ; that may be the expe¬
rience in your locality ; I can't say as to that, but the experience of
Kansas City has been precisely the reverse. It has been a benefit to
ship large volumes of freight from that city. We have made that city
a competing market for the purchase of hogs and cattle as against
401
Chicago to-]ay. We can send hogs from Nebraska down into Kansas
City, from Iowa down into Kansas City, at a better price than parties
ean get shipping to Chicago, because of the operation of that provision.
It has been the very thing that has built up the live stock trade of our
locality.
Q. It may all be possible, sir ; it don't affect us that way ?
A. Yes, sir; it does, because you are getting more money for it,
and you don't go with your stock to Kansas City unless you get more.
Q. You said if this carload rate is established in Missouri as a
Missouri law, it would tend to destroy the towns in Missouri and drive
out trade ?
A. I don't know that I get the question exactly. Won't you be
kind enough to repeat it ?
Q. It is the very point we are on—the establishment by this legis¬
lature of a car load unit and forbidding the railroads to grant better
rates to the man who can ship twenty-fíve cars than to the man who
«hips one. I understood the question to you to be directly on that
point and your answer to be an affirmative one; it would tend to de¬
stroy Missouri towns and Missouri business?
A. I don't know.
Q. That wouldn't necessarily follow?
A. I don't know as to that; I think the concession made by the
aailroad company would inure to the benefit of producers of that com¬
modity wherever they were. Competition between men in business
always tends to force them to use every advantage for the purpose of
increasing the volume of their business.
Q. Yon spoke of the railroads using the franchise granted by the
State?
A. Yes, sir.
Q. You would turn around after granting that franchise exercis¬
ing the power of eminent domain in favor of a corporation that is ne¬
cessarily in and of itself a monopoly; you would give that monopoly a
chance under the law to create a monopoly out of you as compared
with me, you being able to ship twenty-five cars—
A. I say this—
Q. You would turn around, I say, and by the power of the State
through its legislature, you would legalize the building of little monop¬
olies of that kind in favor of the strong as against the weak ?
A. I wouldn't do it. Senator Parcher, if I wasn't thoroughly con¬
versant with the fact that money don't stop in the pockets of the capi¬
talist, as you call them, but it passes from him to the producer and
consumer.
K M—26
402
Q. Now, I am a young man and you are past middle life; we
will say you have aggregated one hundred thousand dollars capital?
A. I say this: There is a difference of opinion between you and
me all along here, and whereas whatever the large shipper of twenty*
five cars ships, it isn't mere wind, and if it was I will admit that you
might have a superiority over the weaker lunged man. But the com*
modity shipped is purchased bushel by bushel, piece by piece, all
through the community. The large shipper, in order to make up his
twenty-five car loads, has got to get it from the rñan who produces it;
he don't raise a single pound of it; he don't build up a single brute
himself; he buys them from other people, and the fact is—a fact which
you don't seem to admit, which my experience has taught me ta be
true—he utilizes this advantage by shipping over twenty-five car
loads to enable him to gather in these things at a better price, for he
offers better prices to get them. That advantage thus dissipates itself
through the pocket of the entire community.
Q. You assume some things I wouldn't be willing to admit. I
don't assume he gives any better price, I assume he buys as low as
he possibly can.
A. He buys as low as he possibly can, but he is buying in compe¬
tition with others, he has got to give a price that would bring the stuff
to him from somebody else. If you are offering 14 cents for corn and
others are offering the same price, one is as liable to get it as the
other ; but if you are offering 14 cents tor corn and I am offering Hi, I
will get the corn and you won't.
Q. Well, suppose you and I are living in the same town, you
have f 100,000; we are stock Shippers there; I have got but $2,000; I
am twenty years old, trying to start in life ; you have got yours, the
accumulation of half a lifetime. Now, then, you are buying just as
low as you can, I am buying just as low as I can; it would be true
that I would have to compete with you in that market?
A. Yes, sir.
Q. Suppose you being able to deal more largely than I, go about
the county saying that you could pay $5 or $10 dollars more than I
could on a car on account of the larger shipments, what chance would
there be for me to get on in the world in that line of business ?
A. I don't think there would be any difficulty about your get¬
ting on. You can make your shipments just the same as if the dis¬
crimination wasn't made; but the other man may buy at places
you can't buy, or you may be able to buy at places his advanced
buyers wouldn't reach. You can buy at 14 cents around your
immediate neighborhood and ship when he might not be able to
buy at 14:^, because he can't ship at the same point you do, probably.
403
There are a thousand questions to come in ; and the competition, $5
or $10 on a car is a small one, it makes a small per centage when it is
divided upon the original stock or article.
Q. Do you know of any writer, save one or two, who became
sufficiently noted to appear at all in public, any writer upon the sub¬
ject who has justified the position you take here to-dav in favor of the
large shipper as against the small one?
A. I must admit I can't read, my sight is defective, I am not
very conversant with literature; on that subject my entire knowledge
has been from observation.
Q. Do you call to mind a single court where the principle you
enunciate here to-3ay has been admitted for a moment as good law,
sound doctrine as between citizens of a common State, a common
country ?
A. I presume it has been; I am not conversant with the cases; I
know it is a part of the ordinary transactions of business everywhere
I can bûy a dozen steel pens cheaper than I can buy one; a man will
sell a dozen cheaper than he will Jone; I can buy a pint of peanuts
cheaper than a glass.
Q. You are enunciating self-evident truths known to us all?
A. I suppose so.
Q. Then you believe that the sale of transportation from the
monopolies, these corporations shall be placed upon the same ground
with the sale of steel pens and peanuts?
A. Providing the same facts surround it.
Q. Has that principle ever been admitted in a court of justice?
A. I don't know, 1 never knew it had been litigated. .
Q. Don't you know that every decision of the courts on the sub¬
ject running clear back to the earliest litigation upon the subject that
very doctrine enunciated here has been pronounced wholly inadmis¬
sible, that these rates must be equitable rates, and that the decisions
laid down by judge after judge that it couldn't be permitted?
A. I suppose the question was raised because they were antago¬
nistic to these secret rebates.
Q. You will admit to act upon your principle, not prohibit it, and
permit railroads to practice this discrimination as between individuals,
that it would take but a very short time to run me out of the country,
and drive me to other fields, and give you the sole control of that
market as a buyer?
A. Well, I don't know that it would be so, sir; if I am in a situa¬
tion to be able to deal better by the persons of the country by paying
better prices than you are, is there any reason why they shouldn't have
404
that benefit? Why should you be maintained when you can't furnish
the same advantage that some other person can?
Q. I am precisely; I am buyingon that market at what the market
will bear; you argued a moment ago you would perhaps be able to give
a quarter of a cent .more than I on the bushel. Now, suppose you
carry it right up to three-fourths of a cent, until you give to the pur¬
chaser all there is in your better rate?
A. Yes, sir; that has been done.
Q. How will I keep up with you and maintain myself in that
market as a shipper?
A. You have got to gather other operators together so as to ship
the same quantity of freight direct.
Q. Suppose we two are the only ones that are there in that
county ?
A. How long do you suppose that state of fact would last? If
you couldn't compete with me how long before a fellow would come
there that could. It wouldn't take a month in this country for one of
these fellows who knows what is going on everywhere, to come there
and probably swamp me twice over.
Q. Now, there is a limit to this thing?
A. Of course there is.
Q. These counties in Missouri support about one local or resident
stock buyer, perhaps two ?
A. I don't know, that may be.
Q. Suppose there are two j you have got an aggregation of capital,
I am just commencing in life ; you by giving the producer the advant¬
age of all that better rate in the purchase of his stock, you admit I
can't keep up with you?
A. Yes, sir.
Q. You will admit I can't live there with another man who has
got two hundred thousand dollars and get along there under such cir¬
cumstances ?
A. Somebody will come there and compete with me.
Q. You admit it has that effect?
A. I admit you can't do business in any community unless you
can furnish corresponding advantages with other men who do business;
maybe one is a smarter man or a healthier man or younger man and
can get around more than the other fellow and gets the business.
Q. Take some of the fellows up in Clay county, they could get
the same rate a man that feeds a couple of car loads of stock, get the
same rate any other man could to St. Louis, if that was the market ?
A. Yes, sir.
Q. If your principle be correct, because you aggregate large quan-
405
tities of stock there, running out a train load a day, getting a ten-dol¬
lar rate we will say, wouldn't it campel the people of Johnson and Clay
counties to send all their stock in there to you and let you handle it?
A. No, sir.
Q. Well, they could make money by doing it?
A. Yes, sir; people are very apt to do what they can make money
by doing.
Q. I understood you to say in answer to somebody here that the
railroad never would make a car load rate the same as to a man that
shipped twenty-five cars ?
A. I don't think they would voluntarily ; I have heard them say
so over and over again ; I hear Mr. Sage say so.
Q. Why ?
A. They can't afford to do it.
Q. You have not been here for three or four days ?
A. No, sir.
Q. Now, railroad men have stood here and testified that the dif¬
ference between one car load and a lot, about as much as twenty cars,
was so small that they took no note of it as business men ?
A. Very well, I am satisfied with that so far as they are con¬
cerned.
Q. Did you state from your observation in answer to the question
put to you by Senator Johnson that it hadn't had the effect, giving
these larger manufacturers better rates on the incoming freights and
outgoing freights over the small manufacturer in the country, that it
hadn't had the effect of driving these small manufacturers into the city
or go out of business ?
A. No, sir, I don't think I answered the question that way. I
said this : that the question as to whether these manufacturers should
go into the small towns or large cities should be determined by the
cost of the thing they are manufacturing. The history of the past few
years is, it would show a tendency on the part of the manufacturers
to come out of the large cities into the small towns on the ground they
could control their enterprise more advantageously and with greater
economy in the small towns than in the large cities, and the only
reason I have ever known for their being a larger city was it was where
there were large bodies of workmen, so if they wanted to increase
their men at any time they could do it, which they couldn't do in a
small town; though I presume under the shipments Mr. Sage spoke of,
I presume corresponding facts to that have existed by a concession of
rates by the railroads intended for that purpose.
Q. You have not read the statistics as I have. I understand it has
beén the other way ?
406
A. I have not read the statisticts at all, I have only observed from
the facts that have come under my observation.
Q. The statistics show that the men with ten thousand dollar
plants in the interior towns are rapidly disappearing, the whole ten¬
dency being the aggregating of large manufacturing establishments in
the larger cities ?
A. If that is the case hasn't it been the case prior to the adoption
of the interstate trafic law by virtue of the rebates, one man could get
it, another could notj The moment that state of fact was stopped
hasn't that state'of facts reversed itself? Can you name any large
manufacturing establishment that on that account has left its place ?
Q. So far as that is concerned, the secret obtaining of rebates, I
am not conversant?
m
A. I think that has been the cause of it.
Q. Suppose a man is buying grain
A. I have a grain man here that will answer your grain questions
to the point.
Q. Suppose one man is shipping twenty-five cars a day and gets
a very cheap rate upon that, another man is shipping cattle. The bus¬
iness won't admit of his shipping more than one car at at time. There
f
will be no chance for him to pool with the other ; consequently, on about
the same class of freight here recognized by the classification and
schedules, I believe, you buying one kind of freight and he another,
then he couldn't take advantage of the remedy that you suggest
here of pooling with somebody else to make up so many cars, there
would be no remedy ?
A. No, sir.
Q. You do believe in legalizing discrimination between citizens of
Missouri ?
A. If you construe my words to that effect, I will answer affirma¬
tively ; I can't help it.
Q. By Senator Castleman : Mr. Allen, what is a rebate?
A. A rebate, as we understand it, is where an individual makes a
private contract with a road that he will ship a certain product throng h
on the o^rdinary charge, but at the end of a month or two months, three
months or six months,-or on a year's business as the case may be, he
shall receive privately back from the railroad a certain percentage of
the money which he paid for the original shipments.
Q. You object to it ?
A. I do.
Q. Why?
A. Because it is not open to any one but one person; it is a pri¬
vate contract made between the officers of the road and a single indi-
407
^idual which they don't open to the public, and which the public gets
no opportunity to share, and is not known to the public.
Q. You say it is given to one person. Do you know a railroad
that confines its rebates to one single person?
A. I have known several such cases admitted to be so; I can't
vouch for it myself, because it is a private transaction. I know of a
gentleman who shipped from the west to the east told me that he had
a private contract with the road who took the shipments by which he
realized a profit to himself of thirty thousand dollars a year, a rebate
nobody else got ; I know there are cases in our own city to-day where
there are merchants who think they are receiving, or did think before
the interstate traffic bill went into operation, that they were receiving
rebates on shipments of goods not enjoyed by anybody else; I don't
know the truth of it, you know. I only know the facts so far as they
happen to come to my knowledge, not being myself a shipper, I only
know it as hearsay.
Q. Now, I want to ask you if the offensiveness of that practice
grew out of the fact that the rebate was simply confined to one person ?
A. It grows out of the fact it is not open to the general public, all
shippers alike ; it is a secret rate.
Q. Then it is not from the fact simply that there is only one per
son that shares in it ?
A. That don't make any difference to my mind if the matter is a
public matter that the public know about so that they can measure the
effects of it themselves and understand it; so that the officers of the
road cannot enter into a collusion or have the benefits out of it ; so it
IS open to every man on the same terms, open to one man or two men,
not a select crowd of men that the officers of the road may choose to
give it to and the rest of the public know nothing about it whatever
and cannot, then I think it is a very bad thing.
Q. Is the offensiveness of it because the officers of the road may
get some benefit of it ?
A. That is only—
Q. Is it offensive because the officers of the road may get some
benefit of it, or is it offensive because the individual who gets the re¬
bate gets the advantage of his fellow traders ?
A. It is objectionable for both of those reasons, and others be¬
sides; as to its secret character it is offensive.
Q. It doesn't make any difference then that the money went back
to the man and he gets the benefit of it and thereby gets an advantage
over his fellow trader, but the bad part of it is simply in the secrecy
of it?
408
A. The bad partis in its secrecy and other defects growing out of
that, but that is the cap-root of the evil.
Q. Is it that it enables him to pay more for his goods and reap a
higher profit ?
A. That is one of the evils of it, but he has that evil exclusively
to himself by viitue of the becrecy.
Q. Which is the evil, is it the secrecy or the illegitimate benefit
he derives ?
A. I think the other evils grow out of the secrecy. The fact one
man shipping freight under certain conditions at one rate when na
other man can secure quite so low a rate, that is not so objectionable
if it is an open fact ; when it becomes a secret contract you see it
broods evil of all sorts.
Q. You believe that competition is the life of trade, don't you ?
A. Yes, sir.
Q. How should competition exist, between the sellers alone, or
should it exist between the buyers as well ?
A. Between the buyers as well.
Q. The more you promote competition between buyers the
healthier you think trade becomes?
A. Yes, sir; you are apt to do business on a smaller margin.
Q. By competition do you mean the number of men who are en-^
gaged in a particular business ?
A. No, sir ; not necessarily.
Q, What do you mean by it ?
A. I mean the ability of men to furnish to the community better
and better advantages and articles they sell to them than others.
Competition is a strife between men in the same line of business to get
more from those from whom they buy and self cheaper to those to
whom they sell.
Q. Do you think the gradual exclusion of the individual from
trade and the concentration of buying in the hands of one is beneficial
to competition ?
A. I don't, sir ; nor do I concede this is the same. There is whera
I think you and Senator Parcher are in error.
Q. There is where we think you are jn error ?
A. That can't be very well helped, I suppose.
Q. If you, by reason of your larger capital can pay a higher price
than your neighbors can, the eflfect of it is to concentrate the purchases
into your hands, isn't it?
A. It is very apt to do so, sir.
Q, Then where do your neighbors who are favored with less
capital than you are, where is the benefit to them ? Now we will leave-
409
out of sight for a moment the consumer and producer ; but the effect
of it is to wipe out your competitors in trade, isn't it ?
A. The effect is to reduce the competitors ; that is to reduce the
number of competitors by just so many as fail to come up to that line
of competition. But do you want to legislate to maintain men in a
particular ñx, or do you want to legislate so as to produce the largest
benefit to the whole body of the public ?
Q. I want to legislate for the benefit of the largest number, and I
don't think that I accomplish much benefit to the largest number by
enabling the big fish to swallow all the little ones. Suppose now, there
is a certain man who gets the benefit of these reduced rates who doesn't
pay the larger prices for the product of the country, then where does
the benefit come ?
A. He would increase his capital.
Q. That is to say he would get the very benefit that your thirty^
thousand dollar friend got ?
A. Yes, sir.
Q. He would put it in his pocket ?
A. Yes, sir.
Q. Do you remember whether that thirty thousand dollar friend
of yours paid any higher prices, or that the consumer got any special
advantage from his thirty thousand dollar rebate ?
A. No, sir; not as I know of; he had no competition.
Q. Now, then, do you think that the tendency of getting an ad¬
vantage over your neighbors makes you more generous, or do you look
for your own benefit?
A. I look for it for my own benefit; I am speaking of business
men generally. If competition necessarily arose, there is no such
thing as one man getting it all where the matter is open and public.
Q. You believe that the city prospers or that the country prospers
only in proportion as its trade is concentrated in a few hands, is that it ?
A. Not necessarily; I am a large believer in a better condition
of affairs in the country when the trade is divided among many small
owners.
Q. Isn't it also true it is beneficial to the country where the trade
is divided among many small traders ?
A. I think the general effect in such a community, speaking
theoretically about it, I think that makes the best community, all other
things being equal.
Q. But would you so frame your laws so as to destroy this theory
which you approve ?
A. Well, I don't think it would have the effect to destroy it in any
sense.
410
Q. Now, Mr. Allen, the effect of this matter would be to put the
«advantage all the time in the hands of the large capitalist, wouldn't it?
A. Not necessarily.
Q. Why not ?
A. Of two men who were operating, one having larger capital
than the other, it would give the advantage to the man who had the
largest capital, provided he had the other necessary qualifications.,
Q. But as a rule, as a commercial fact, the rule is the larger trade
goes to the larger capital?
A. When all other things are equal.
Q. Then as a rule the tendency of your theory would be the con¬
centration of trade into single hands?
A. Yes, sir; in some respects.
Q. And that, you think, would be a benefit to the city of Kansas
City, to crush out its small traders and build up its large ones?
A. No, sir; I don't think that. I think if the whole of the com¬
munity were benefited by it there might be a compensation against
any damage that might result from a reduction of the number of com¬
petitors in one line of business. When you ask me that question, I
may be one man out of a thousand who don't think that the larger
'dealers are more benefited than the smaller ones. My opinion don't
settle that question.
Q. You are giving this matter only as your own individual opinion ?
A. Yes, sir.
Q. What you have stated as here testifying is not in a represen¬
tative capacity ?
A. Only so far as to represent the facts of our trading community
—commercial community at Kansas City—so far as I know. These
questions you have been catechising me on since here, of course are
upon individual matters, that is the question of the wholesaler and
retailer. Well, I don't know, I guess there is a body of them that
think about it as I do. As to whether it is best or not for the city to
have half a dozen larger operators or twenty-four small operators I
don't know their opinion about that.
Q. You understand these roads are treated under these laws only
upon the theory they are public highways ?
A. Yes, sir.
Q. I believe the theory of the highway is, it is a road upon which
all have equal rights ?
A. Yes, sir; or something of that sort.
Q. You are still under the impression that the prince, who is the
king's subject, should have a very much greater right on the highways
in this country than the humble peasant, is that it?
411
A. Yes, sir; if by the prince you mean the whole body of the
people. I mean that the prince, which is the whole body of the people
who conferred these franchises, that their interests should be secured,
^ven if in some instances particular individuals are not benefited.
Q. Their interests, you think, should be for the benefit of the one
individual?
A, Only so far as the benefit of the one individual is in line with
the benefit of the whole.
Q. Our theory in this country is that the people are the king?
A. Yes, sir.
It '
Q. Though I think you are a little illogical about the king and
the prince being the same, one is the subject and the other is not.
Now, then, on your theory you would give the prince one right upon
the king's highway and you would give the peasant another right upon
that highway ?
A. I understood you in using the word prince to use it equivalent
to the word king?
Q. No, sir.
A. I answer no, sir.
Q. You think the prince and peasant ought to share equally the
benefits of the king's highway ?
A. So far as that can be without trespassing upon the benefits of
the whole body of the people. I don't think either of them should be
built up or torn down at the expense of the public..
Q. I understand you represent a large commercial city. I would
like to get some light on your views in regard to fixing the rate. I
would like your opinion as to what you would like to have the legis¬
lature do in regard to fixing the rate?
A. That is entirely within the scope of the legislature. So far as
I am able to see, I don't think that question has much practical bearing
on the vital questions at issue. Of course, if you have a maximum
rate you want to fix it as wisely as you can. You want those parties
to do it that can get at the wisest result; that is all I would ordinarily
say about that. I don't believe there is any practical benefit to the
State out of the question of the maximum rate ; but if you have got to
fix one, do the best you can; that is all I can say.
Q. You have no advice to give on the question of fixing the rate?
A. No, sir.
Q. That is one of the most important questions?
A. It doesn't seem so to me, so I don't say anything about it.
412
H. M. Kikkpatrick made the following statement before ttie com¬
mittee :
Mr. Chairman and Gentlemen of the Committee: The transpor¬
tation association at Kansas City, through their executive committee,^,
two days previous to the meeting of your called session, met and dis¬
cussed the character of laws we would like to see passed and have
their representative advocate; and I have, while it is not put in any
definite form, I have undertaken, as their representative, to put down
and write briefly the matters that they would like to present to your
body for consideration, not in any particular form, but rather in the
nature of a declaration or suggestion. I have assumed only in a very
slight degree to suggest any arguments to the conclusions or the
action of the committee ; but I have endeavored in this way to present
to you briefly as I can the ideas we have agreed on. I think no one
can more fulJy appreciate the fact that whatever action you may take
here in this special session, whatever laws you. may enact, or shall fail
to enact, must very materially affect the great commercial interests of
our State and my city. That the passage of an unfair or mischievous
law would be greatly deplored, yet the interest of our commerce de¬
mands the enactment of a wise, clearly defined law for the proper con¬
trol of the railroads within the State. In doing so, we must not lose
sight of the fact that the railroads are the great promoters of trade, the
vehicle upon which is carried the development of every county in the
State, and that a material injury to these would react upon the com¬
merce of the State. Yet I believe on the other hand to place them
under control of regulating laws will increase their power for good,,
and serve the ends of commerce without injury to them. It is not our
purpose to presume to formulate a law for your advocacy, but would
submit that the law that you may pass, should embrace the features
that we beg hereinafter to suggest.
Kansas Citv and the whole State have suffered for the last ten
%j
years from three effects: High rates, deflection of trade from its nat¬
ural channels, and discriminations as between merchants and places—
high rates as compared with the rates to the territory northwest and
southwest of us, with the merchants of which our merchants compete,,
and high rates to and from the territory directly tributary to us and
within our State. The deflection of trade from its natural channels,
making it hazardous for merchants to invest money in merchandise or
property improvements, based upon the only known rules of calcula¬
tion, "natural advantages," and breaking down, financially, those par¬
ties who build upon those rules. We call your attention to these effects
in a general way in order to charge them directly to the pooling sys¬
tem as the cause, believing as we do that the effects enumerated can
413
in no other way be successfully maintained. We are not surprised that
railroad company employes, whose duty it may be to represent them,
should seek to maintain and justiiy pooling; but our surprise is that
any merchant or business man not so interested can favor the principle
of pooling, and yet we do not forget that human slavery had its ad¬
vocates and their motives, gain. We believe that pooling is an evil
within itself, that it does not practically secure what its advocates
claim for it, a stability of rates. That it overcomes and destroys
healthful competition, diverts commerce from its natural channels,
obstructs merchandising, based upon natural laws of trade, and alone
makes it possible for railroads to maintain arbitrary rules and exorbi¬
tant rates. That is contrary to the spirit and the letter of the con¬
stitution of the State, and especially is it contrary to the purpose and
intent of the people who voted the bonds, donated the public lands and
the rights of way and granted the charters. We undertake to say the
principal objects in the minds of the people granting these franchises
were, first, facilities of transportation, and, second, competition, the
latter in order to avoid the former, at a reasonable price. If this is
true, and I take it as self-evident, how can you justify that which de¬
stroys the very object sought. It will not do to say that there is free
competition where pooling exists, because it is unnatural and is sub¬
stantially untrue. Now, a word as to the defiection of trade. When
speaking of this I have in mind the results of the S. W. P. Association,
that, up to within a recent date, has so long controlled the commercial
afi'airs oí the State, and in a milder form exists to-day, the eJïect of
which was to reduce rates to and from points within our natural terri¬
tory of trade—to reduce them to a point materially below the aggre¬
gate of the local rates, giving Chicago and the seaboard cities great ad-
vantage over the cities within our own State. Thes reduced rates
were given by the association, paying to roads outside of the associa¬
tion their arbitrary or local rates, while merchants within this State
were compelled to pay the aggregate of the locals. Now, what could
be done by these interstate roads on a large scale, may be done by the
roads within the States if on a smaller scale, probably not the less
hurtful, and should be prohibited. Then, again, what has been accom¬
plished by combinations may be done by individual roads under cer¬
tain circumstances. Mr. Allen referred to this point and mentioned
the matter of eastern rates between Chicago, St. Louis and Kansas City
and other points. I would like to call your attention to the other side
of the State particularly, where a similar state of affairs exists, and in
order to present it to you in the most forcible way, I have a copy of the
rates here, now in existence on the C., B. & Q. I would like to leave that
with the committee; I wish you to examine it forthat purpose; I want
to emphasize the point Mr. Allen makes and I wish to make for myself:
COPY OF RATES.
Stations on B. á¡ M. R. R. in Nebraska.
Litchfield.
Bertrand.
Oxford...
Korten ...
Kearney..,,
H old red ge.
Republican
Grand Island
Hastings
Blue Hill....
Red Cloud...,
Central City
Aurora
Edgar
Superior
Columbus.
David City.
Seward
Crete
De V\'itt.,..,..
• •••• ««v««
Distance to Kansas
City
Chicago rate on corn
and oats .
St. Louis rates
Kate on corn and
oats to Kansas City
355
35
30
29
406,
35
30
30
364
35
30
29
378
35
30
29
375
35
30
29
390
35
30
29
339
35
30
26
308
34
29
27
336
34
29
28
O ^
öoa
34
29
28
299
34
29
27
332
34
29
28
289
33
28
26
272
32
27
26
275
32
27
26
309
29
29
24
24
27
26
290
241
26
21
26
259
26
21
26
214
m
21
25
Tbe same on parallel stations on
the Union Pacific.
Plum Creek
J
Kearney
Grand Island
J
Central City
Columbus
David City.
I Lincoln
^.0
::i' 00
^ P
a
o
o
w
p
p
QD
P
m
O W
p »
CO ^
OD
o
P
p O
p O
p H
ao P
O
9>má* ^5
C+- ^
169
428
505 21J
m
m
400 21i
366 19
294 19
Tbe same on parallel stations
on Missouri Pacific.
251. 15 Lincoln
Be at ri líe
W y more
Walioo .
^Lincoln
Dunbar.
Auburn
202
27
22
25 r
192
27
22
25
234
25
20
25
239
26
21
26
169
22
17
22
159
22
17
22
VVahoo.
Lincoln
211
14
290
17^
251
15
Lincoln
Dunbar
Auburn
12
10
IQ
*At all points east of Lincoln to the river, and southeast to Falls City, we are charged from 23 to 26.
Union Pacific the rate should be 15 and 14, or with Missouri Pacific 12 cents.
When compared with rates on
416
Mr. Kirkpatrick (continuing): It will show you,if you will exam¬
ine these rates, it will show you the rates they make from points in
Nebraska to Chicago are, in every case, less than those they make to
Kansas City and other points in your State. To bring it home in a
practical way, we might refer to the workings of it in the past few
months in our own State. We are in the western part of the State,
and not the central. There was, as you know, a very short crop of corn
in certain localities last season, and it was necessary to feed the stock
and provide the necessary feed, for farmers to buy largely of the pro¬
ducts of the western country that had a surplus. The country that had
the cheapest and greatest surplus was the State of Nebraska. I repre¬
sent a grain house and I speak from data. We have shipped within
the last six months into the State of Missouri over thirteen hundred
cars of corn, a large portion of this corn coming from Nebrask; and
the rates we have had to pay under the southwestern system of rates
has largely increased the cost of the product. Now I don't wish you
to understand I make any complaint against the 0 , B. & Q. system. I
understand that they ha^e agreed and are going to change these rates
and that it is to take place some time this month, but I present a table
to show you or to point out to you more clearly the iniquity of a sys¬
tem that will maintain rates of that character. To this, then, I will
call your carefukattention, that you should require by law all railroads
chartered by the State to make their rates within the State upon the
same basis that they make from points outside the State to points
within the State. That is, you understand, the proposition is simply,
whatever system of rates they may adopt on the roads running into
this territory in which the State is interested and the merchants of the
State, whatever basis they may make, it shouldn't exceed the rate of
charge that they make within tha Stata of Missouri.
In regard to maximum rates, we deem it impractical for the legis¬
lature to fix maximum rates of freight that would be just or serve the
interest of commerce throughout all the changing conditions that would
arise during the two years that elapse between the sessions of that
body. Such rates must of necessity be so high as not to work injury
to railroads under minimum conditions, and therefore such rates if
infiexible would be of doubtful protection to the people. That while
raising no serious objections to the establishment of maximum rates, I
would recommend that, if established, some provision should be made
for a fiexible standard changeable with variations in trade conditions,
and would suggest the right of appeal to the commissioners.of the
•State with mandatory provisions upon them to hear and act upon proof
of error. And right here I would like to protest against the commis-
•ers'schedule of maximum rates that they have prepared at the in-
417
stance of the Senate. The serious objection we raise to them is in the
excessive high rates on the short haul, which we think is unfair to all
interior points as well as Kansas City. Take the item of stock as an
illustration. Kansas City, with her large and steadily increasing ca¬
pacity for slaughtering and packing, affords to western Missouri a good
market for her hogs and cattle. The commissioners' rates largely in¬
crease the cost of reaching the Kansas City market on this class of
freight, greatly to the disadvantage of the producers in the western
half of the State. What is true of c^-ttle and hogs is true of grain,
and, while I have not examined all classes, I think from the general
plan of the rates the whole line is in a greater or less degree objection¬
able.
In regard to the wholesale principle, we have some reasons to be¬
lieve that the honorable body you represent, is agreed upon the main¬
tenance of the wholesale principle in transportation. Yet, we would
like to emphasize the importance of continuing to recognize that prin¬
ciple as we deem it unwise to abridge, or by law overthrow, the long
established wholesale principle in matters of transportation. The laws
of trade throughout the whole world are in harmony with that prin¬
ciple. It runs through all the various branches of commercial exchange
in all degrees, and we believe that this law is just as potent and appli¬
cable to transportation. We regard the interest of yie city and coun¬
try as identical. That the city does not depend upon the destruction
of the town for its prosperity; that whatever tends towards the
prosperity of the whole State is of the greatest interest to the
cities in proportion to their size. We believe that any ship¬
ping center can only thrive through the prosperity of the
country which it feeds and which is tributary to it, and that
anything which tends to foster the business and improve the
general condition of such tributary country is of far greater advantage
to the commercial centers than any special discrimination could be,
and while we advocate the maintenance of the wholesale principle
it is with the regard to the foregoing declarations. It struck me when
the gentlemen were arguing the question of the wholesale rate, no
reference was made to any advantage to points in the interior of the
State where it would be advantageous, I think, on two, at least, of the
staple products of the State, that the interior points would reap as
great benefit, possibly more, in proportion to its magnitude, as it is dis¬
tributed over the State, than the commercial centers of the State.
The question was raised here as to whether there is a point in the State
that would be apt in any way on any product to ship as largely as five
or ten or^twenty-five cars at a time. On those products jmu certainly,
R M—27
418
by recognizing the wholesale principle, would tend to reap benefits on
those products quite largely. I think, besides that, from the inquiries
made here by some of the Senators, that you magnify, not only the
benefits to be derived by that, but they magnify the evils that might
grow out of it. It is a negative proposition, so far as we are concerned.
We are simply going on the presumption that such legislation as this
might be proposed. We think it advisable to allow the wholesale
principle, as in everything else, to maintain in this case ; that is, tó
allow it to remain not legislated upon. In that case, of course, it will
stand as it is^ tc-day. As I said, I think that probably we magnify
the importance on both sides ; that the great bulk of the tonnage
must go on the unit or car rate; the great bulk of the tonnage of the
Slate will go on that unit, because it is the system. I think it would be
a rare case for any great benefit to be derived on the large wholesale
principle. A shipment of fifty, one hundred or one hundred and fiity
cars, would be a very exceptional thing, and I fully concur in what Mr.
Allen has so fairly stated, that whatever advantage may accrue from
it that it is io the competition of trade and in the nature of things
bound to result to the benefit of the general consumer and producer of
the products that afford the heavy tonnage of this State.
Now, having taken care of these grain matters suggested, if you
will provide protection against discrimination as between persons
and places, supplementing thereby the wise provisions of the
interstate law, you will have, in my judgment, covered the material
intents of the State as regards railroad legislation. And if, in >our
judgment, you believe it wise to put much power into the hands of the
commissioners of the State, we would ask that their duties may be
clearly defined, and mandatory, and that you provide for the speedy
hearing of all cases of grievances and a summary redress of proven
errrors or violations of law on the part of the railroad companies.
As to this question of the long and short haul, it was not discussed
at our meeting, and I know, as a matter of fact, that our merchants are
not probably evenly divided on that question, but there is some differ¬
ence of opinion. My convictions are, so far as representing Kansas
City is coQcerned, that it is not a question with us, and I doubt if it is
to us, and I doubt if it is to the State. I don't at least, call to mind
any rates in the State—there may be in the interior of the State, I am
not familiar with that—I don't call to mind any rates that would be
affected by any clause that you might pass here, but we would raise
no objection to it.
Now, you will see by these suggestions I have made in comformity
with what I believe to be the opinions of these people, that the reme¬
dies that 1 have asked can be covered by very simple laws.
410
By Mr. Hazell : You say you are in favor of the legislature enact¬
ing a law preventing discrimination between persons and places, and
in the same breath say you are in favor of twenty-five car lots. Can't
you see that is a discrimination ?
A. No, sir ; I can't see wherein that is a discrimination between
individuals.
L. E« Erwin made the following statement:
Mr. Chairman and Gentlemen : 1 am a merchant, and that is all
I am, not a public speaker. In coming before you, it is with a great
deal of timidity, not being used to address the Senate ; but I have con¬
fidence in what I will say, for I am going to state facts. I will state in
the first place that I think the great trouble we have had with the
railroads for the last seven or eight years, and which exists to-day, as
far as that is concerned, has been attributable to the southwestern
pool. It has flourished, thrived and grown, nntil it has become such a
monster with such power to crippleand crush the material interests of
this State, that it has become unbearable, and I think has been a
factor influencing to a larger extent than any other in this whole
country, the passage of the interstate commerce bill. In other
words, it is just such extortions and just such grievances that the
merchants and business men, farmers and everybody else in this
country have labored under that have made imperative the passage of
a law such as the interstate commerce bill is, and if it does not do any
other good, if it is found to be impracticable in certain sections, of
course that can be remedied. It has at any rate set the precedent
that there is a higher law and a higher authority and a greater man in
this country than a railroad manager; and that is something that we
as merchants of Missouri and citizens of this State have never found
or been able to understand ; and it has set a precedent which is a ben¬
efit that should outweigh many deficiencies that the railroad people
have picked out in the law. It has set the precedent that the govern¬
ment can and will and has the right to control railroads in the interest
oí the people. Now, gentlemen, I as a merchant would deprecate the
passage of any law by this honorable body that would cripple this
great industry in this State or in this country. We know what rail¬
roads have done for us. The railroads have developed the west; they
have done more, possibly, for the States west of us than for our own
State. Of course, railroads have received benefits from us. Some of
them to-day are free from taxation in this State, as the result of a dis¬
position upon the part of the legislature of Missouri to encourage and
foster railroad enterprises and develop the industries of the State.
420
There is no city in the country that can attribute its position and
standing tc-day, possibly, to its railroads more than the city that I
come from—^^Kansas Oity. At the same time, there is not a city in the
country who has grievances for wrongs inflicted by the railroads
greater than hers has been for the last seven years, and, as far as that
is concerned, are to-day. Now, gentlemen, we don't want the railroads
crippled. I think I can recite to you certain facts that will indicate to
you what railroads have done and what they may do if not controlled
by you. All we ask in this instance is to draw the fangs—break
out the teeth of the monster so it cannot inflict again these injuries
upon us. We want to call your attention to the hurtful influences that
railroads can exert in their great monopolies and in the aggregation of
enormous power that they have introduced and made possible by the
aggregation of enormous wealth. Up to a year ago the rate from
Chicago to St. Paul and Minneapolis, a longer distance than from
Chicago to Kansas City, was fifty cents a hundred, first class; it has
been for seven years ninety cents to Kansas City ; I believe it is now
eighty cents from Chicago to Minneapolis and St. Paul. About a year
ago the board of transportation was organized in connection with our
board of trade in Kansas City ; and the avowed purpose of that organ¬
ization was to try to influence in a legitimate way, as business men,
«
and as we had a right to do, to appear before the southwestern pool
magnate, Mr. Midgley, and ask him to give us an equitable rate. We
never asked the obolition of the pool, but we simply asked for a fair
and equitable rate as furnished by other railroads to other points, and
presumably at which rates they were making money Tor their stock¬
holders and with which they were satisfied. At any rate, that was a
rate that had been existing between Chicago and St. Paul, ours being
nearly one hundred per cent, greater than that. We addressed a
respectful letter to Mr. Midgley, a statistical letter, stating the whole
facts in the case as Kansas City was affected by the extortion of the
southwestern pool. There is not a railroad representative in Kansas
City that has not said to me, there is not a railroad agent in Kansas
City or a railroad representative that has not expressed himself
privately, largely, it is true, but there is not one that does not believe,
and has not believed for years, that the rate extorted from Kansas City
and the people in the western part of this ¡State by the southwestern
pool was an extortion, unreasonable and iniquitous. All we asked in
this matter was justice, and all we ask at the hands of this legislature is
that these railroads be placed upon the.same basis as other business in
this country. I presume you all know that railroad managers take the
ground that there is no comparison whatever ; that there is no analogy
whatever ; that they stand on a higher plane ; they have a law of their
421
own; they are only responsible to each other; and in that spirit these
southwestern pools met, and because they had the ability they were
maintained and are maintained to-day. We presented our case to Mr.
Midgley, and to this day not one word or one sign have we got from
him. Not one word did he deign to give the great State- of Kansas in
which all five of his roads run and all of which had the same rate ; and
the whole of the southwestern pool gave to us, practically, one rail¬
road between Chicago and Kansas City, no competition, destroying
the merchant and the people that it has come from, and the beneficent
advantages that competition in all lines of business gives. We have
got no answer ; and although the interstate commerce bill is in force
in this country, and although Mr. Midgley's authority, as Othello's,
is gone, he is there yet as manager, through what infiuence I can't
say as a merchant: but I say the authority of the southwestern pool
is just as strong to-day in the State of Missouri as it was before the
interstate commerce bill passed. Now, gentlemen, these are facts, and
as a business man I want to talk to you as business men and as mer¬
chants, and as I said before, what is to the interest of the merchant is
to the farmers and everybody else in this country, because they all,
whatever they may be, are affected just as we are, because as our
freights are affected so is the price of our goods. The iniquities and
wrongs indicted by this system of pooling is greater still. As has been
mentioned by the gentleman preceding me, they have the power to
make their own rates ; they have the power to enforce their own rates ;
and by that power, just as was stated, as you all, no doubt, saw in the
argument given for the interstate bill, the case of the Standard Oil
Company, a great devil-fish that, with its tentacles, is seen in every¬
thing, for it came from small concerns, so they are enabled by this
southwestern pool, they are enabling the larger dealers to cripple
the small. It is claimed that the advantages the people are to
derive from the southwestern pool or from pooling is stability
of rates. Of course, that is very desirable. There is nothing that
influences traflBc and trade so much as the constant changing of
rates. But how have you done that in Kansas City? They have
done it ostensibly. I have had to pay the tariff rate, hundreds
of other business men Inhere have had to, but there are numbers of
others that didn't do it; they paid in the first instance, but afterwards
got their rebates. There is a great influence brought to bear by these
men by which to encourage large enterprises and cripple and crush
out the smaller ones. The question has been asked here how the sys¬
tem of rebates hurt, how it acted ? I tell you it is just practically the
same thing as the southwestern pool entering into a partnership with
a great grocery concern for the purpose of getting its influence as a
422
kind of hush-money to keep it from kicking ; and by that means this
thing has been saddled onto the whole community of Kansas City—by
the use of these great rebates that the trade in general knew nothing
about. There are houses in Kansas City that have been getting re¬
bates yielding a very big profit, which smaller concerns didn't get,
and the result has been in our connection with the southwestern pool,
these men stayed in their oflîces, they wouldn't come about us, they
were afraid because of their being a party to the contract; they
wouldn't use their influence and eflbrts in trying to abolish, or do what
they could to abolish this great evil under which we were laboring.
There is the iniquity of it. I ship glassware from Pittsburg to Kan¬
sas City by car loads, sometimes less than car loads ; I ship it from
Trenton, New Jersey, from Liverpool and Wheeling, in car loads. The
rate on glassware from Pittsburg to Kansas City has been 23 cents a
hundred ; the rate from Pittsburg to East St. Louis and St. Louis has
been 23 cents a hundred; the rate from St. Louis to Kmsas City is 55
cents a hundred. Now, see whether there is any extortion there. The
rate from New York to Kansas City is $1.59 a hundred; the rate from
Chicago to Kansas City is 90 cents a hundred. See whether there is
any extortion there. But no matter what rate they choose, or what
classification they choose to put upon any goods handled by the mer¬
chants and consumers, being responsible to nobody, the whole object
and aim being to serve their employers, recognizing no higher author¬
ity than an intimation from some such source, they make their rates,
and being without law to control them, they are able to collect it and
are doing as I have said up to this time. As Mr. Allen said, he got a
letter just a few days before the interstate commerce bill was passed,
or came up for final passage, from this gentleman in New York ; and
I have no doubt the burden of that letter was the long and short haul.
I know there was a meeting called at Kansas City to telegraph our
representative to vote against it. Every advocate of the railroad that
was there incidentally mentioned the long and short haul, and then
got off onto the beneficial effects of pooling, showing what they feared
was the anti-pooling clause; and that is really the cause of the oppo¬
sition of the railroads in this country to the passage of the interstate
commerce bill ; it prevents them from combining. I will say com¬
binations and pools in everything is iniquitous or is wrong; but in the
instance of railroads who have got their franchise, and over whom the
laws of the State and the United States can be exercised by constitu¬
tional right, it is iniquitous and criminal in them to do it, wrong to
nermit them to do it. Even for manufacturers or for merchants to
combine it is wrong. The object of combination is to keep up the
price, and to defeat competition ; and about the only people that in
423
this country outside of railroads that combine are manufacturers.
Manufacturers of lamp-burners, for instance, they get together and
make a combination, and the people all over the country pay twice
what they ought to pay for the burners, because when there is
no combination they come down to what is about a fair profit,
25 cents a dozen. So combination in eyery instance is wrong
and I believe a conspiracy is against the public and should be handled
by the law. I suppose the law has been firmly established, we have
the right to prevent extortion and pooling by the railroad companies,
and it has come to the hour when we should use that right—that privi¬
lege—in this State as they are doing in other places ; and I come before
you to-day to ask you to take such wise legislation, not to hurt any in¬
terest, but to pass such a law that will make the railroad companies
subject to competition, the competition existing between others,
just as I am in my business controlled and govërned by competition
with other merchants in my line of business in Kansas City, Leaven¬
worth, St. Joe, Atchison, St. Louis, Chicago and every other place.
There never was a time in the history of the world when the profits on
merchandise have been reduced to the minimum as they are to-day
here. It has come to a point when the profit in business, in the whole¬
sale business especially, depends more upon the quantity of goods sold
than the price obtained for the goods. Who are the beneficiaries of
this ? The people who consume these goods. Why shouldn't the rail¬
roads be made to compete for business as we compete for business, and
every other interest in this country competes for business ? They will
come before you and they tell you about their system of mileage and
give you their opinion of the long and short haul, and want to do this
and that in order to protect this railroad down at Cape Girardeau and
all this kind of business, and if they are interfered with in any way,
why, ruination will ensue, and go on and show you they made three
per cent, dividend last year. I tell you, gentlemen, I think every rail¬
road ought to be compelled and forced to-day to take an inventory of
the cost of construction of their railroads per mile upon the basis of the
price of the iron and ties to-day, and let them show you an account of
the per cent, they make upon the actual cost and value of the railroad
to-day. The Missouri Pacific was built after the war, and the price was
about twice what it could be built for to-day, or rather three times ;
and they come in here with fifty or sixty millions dollars, I don't re¬
member just what the figures are, it is a big capital stock, and because
they only make three or four per cent, upon their fictitious valuation
they ask you not to interfere with their business, if you do you will re¬
duce it to a plane or basis on which there is no profit. I tell you, I be¬
lieve to-day that the cause of the social unrest in this country is largely
424
attributable to the policy and the system of financiering, and the con¬
sequent extortions that have been brought upon the country by the
watering and manipulating of railroad stocks by Gould and everybody
else like him. I think it is time that the protection which the law has
furnished these corporations should be withdrawn from the fact they
are no longer infant industries. Here about four or five months ago
there was a war between St. Louis and Wichita between the Missouri
Hacific railroad and the San Francisco railroad. They hauled freight
from St Louis to Wichita at the same price that they hauled it from St.
Louis to Kansas City, about half the distance. There was the effect of
competition. The fact has been for seven years we have had only one
railroad running frona St. Louis to Kansas City, and one from Chicago
to Kansas City, because of the combination these managers were able
to make between themselves, that virtually destroying all competition,
and a rate upon the people of the western part of this State from which
they were utterly unable to extricate themselves. I want to say I am
in favor of the car load rate. I am in favor of the wholesale rate as it
is termed here. I think every gentleman here in this house will under¬
stand that a man is entitled to buy a bolt of jeans cheaper than if he
is going to buy three yards for a pair of pants. I think that is just
about an epitome of the whole thing. I think if a man buys a car load
of glass ware in Pittsburg and brings it to Kansas City to sell, proba¬
bly in Missouri and Kansas he is entitled to buy that at a less rate than
if he bought less than a car load, and for that reason he is able to sell
it for less. I think it is a play on words to try to show that a car load
rate discrimination is not a benefit to the people at large as much as it
is to the merchant. If a man ships five car loads of cattle from here to
Chicago, or from any part of North Missouri to Chicago, the better
rate he gets than another shipping only one or less than one, he is able
to give to the people of whom he buys his stock. If he don't it will
not be long before another man from abroad brings in a hundred thou¬
sand dollars with him and tries to gobble up all the stock. He has got
to pay a better price for it than the local dealer or he is not going to get
it. I know that is the result in North Missouri, and if there are any here
that are acquainted with the business they will bear me out in it that
stock shippers are, as a rule, breaking.up. And why? From the fact
they pay the farmers more for their stock than they can afford, and the
least little fluctuation will knock the profit out of the whole business.
That has been the result in my section, North Missouri; too much has
been paid for stock ; they are the very men who, I have heard here to¬
day, were liable to make so much profit out of the shipping of stock.
But I don't care for any specific case. Of course we cannot have any
special legislation, I don't know as it is necessary. The thing to do is
425
to do that which will affect the most people and be a benefít to the
most people. That is all I ask in the case. I believe in the car load
rale, five, ten or fifteen car load rate. The more goods a man buys and
ships the cheaper price he is entitled to. That has been an established
rule. We have lived upon it ever since we were born, and I believe
we will live upon it for a thousand years to come, because it seems to
me it is common sense.
Now, gentlemen, with regard to the commissioner business, I
don't know whether my opinion on that would be worth anything or
not : That is, whether the legislature should make a maximum rate or
whether it should leave it in the hands of the commissioner?. As far
as I am concerned, I am free to say I think the commissioners ought to
have the power to fix the rates. I believe that men can be selected
who are not venal, who can learn just as well, who are honest and who
are intelligent—who can learn and do learn justas well all that is
practically necessary about railroads as the railroad managers can î
and I repudiate the position taken by these ^gentlemen that come in
with twenty years' experience that they know it all. I believe rail¬
roads should be run and ought to be run just as all other business is
run, and the injuries that they have inflicted upon the country to-day
are solely in consequence of the fact that they have not been subject
to competition and the rules governing other kinds of business. I
deny that the railroads should have more rights than I have or you
have, gentlemen. I think they should be controlled by competition ;
and, gentlemen, I believe that is all I have to*say on the subjec^t. All
that I know has been said before; and I just want to say in conclusion
that all the business men of Kansas (Jity were disappointed when
the legislature adjourned in its regular session because no railroad
legislation was enacted; that is, healthful legislation. There is no
controversy, there ought not to be, between the people of this State
and the railroads. The railroads are not an outside party threatening
to knife us or anything of that kind; they are among us, and we want
them here ; but we do not want them to assume they have done it all,
and that they are entitled to privileges nobody else in the community
has. We want them made subject to the same laws as other business
is in the country. We want them subject to the law of competition.
We want some such law enacted as will compel them to be,*a law to
some extent controlling in all cases the power that they have been in
the habit of placing in the hands of a few men. Just think of a rail¬
road rnanager, a man himself irresponsible except to his employers,
controlling 150,000,000 or $60,000,000. Is it to be wondered that the
people have grievances ? They, to a certain extent, occupy the rela¬
tionship of enemies to the people in business here. If I want to sell
426
you something it is to my interest to get as much as I can, and to your
«
interest to get it as cheap as you can. That is the position thej^ are in.
But I ought not to have the power to say to any gentleman, by cir¬
cumstances under my control, be able to say you must pay me a
certain amount for my stuflf. I want what is right and just as between
the purchaser and seller. Let him be placed upon an equal basis, and
let him buy of whom he pleases, and let the merchant sell for what
he pleases, which, of course, is all controlled and governed by compe¬
tition. If the roads place themselves in such an àttitude that they
have got to be legislated upon, legislate and make them feel the
power of the law. There is nobody wants to legislate. They are the
only interest in the country that are to be legislated upon, and they
are responsible for it, because they have usurped powers and con¬
trolled powers inimical to the State, and in that respect I ask that
their powers be curtailed in the interest of the whole.
Q. By Senator Davieson : You say you are in favor of confer¬
ring the power on the railroad commissioners to fix the rater. You
think that would be wise?
A. I think it would be better than the other, yes, sir; it is for
the legislature to fix the maximum rate or to ¡leave the matter in the
hands of the commissioners for them to determine, according to each
case as it presents itself, what the rate ought to be. I think there is a
precedent set, and very wisely so, in the interstate commerce bill. It
wasn't supposed a law could be enacted by Congress under such con-
fiicting^interests, but what it would injure some one; and they very
wisely put it in the hands of five men to suspend the action of the law
where it did work such injury. I think it would be a wise thing for
the legislature to entrust something of the kind, some such power as
that, in the hands of the commissioners.
Q. I would like to ask you if you think it would be wise for the
legislature to confer the power on the commissioners to fix rates, do
you think it would be wise to confer the further power on them to
examine into the cost of running the roads, and how would you have
them get at the rate—how would you have the commissioners fix
the rate—go to work and ascertain the real cost of transportation?
A. I think in view of the fact that they are legally empowered
by the législature to fix the rate they ought to have the power to
bring before them all data and statistics, all information of every kind
and character, and these men be made to bring before them such
information as would bear upon the question.
Q. You think it would be wise for the legislature to confer upon
the commissioners the power to go into the cost?
A. Yes, sir.
427
Q. All cost connected with transportation?
A. Yes, sir ; I think the legislature ought to compel the commis¬
sioners to take action promptly in ckses, to investigate every grievance
at once, to take prompt action in redressing them to the extent of their
power and ability to do so. I think the great trouble heretofore has
been the commissioners didn't have the power to enforce the rate. I
think of course that power ought to be delegated to them ; and then
again they ought to be made accessible so a small shipper in a little
town as well as a large shipper in a big town, could be heard and should
be redressed; I think they should have that power.
Q. Do you think it would be wise in the legislature to confer the
power on the commissioners to inquire into the rates of wages paid,
money paid for services and clerk hire?
A. You mean on the railroads ?
Q. Yes, sir—railroad president and so on?
A. I don't know that I would say that they ought to inquire into
their privaté affairs any further than would enable them to get that
data and information that would enable them to act justly between
the parties.
Q. Do you think it would be necessary for the railroad commis¬
sioners to do that ?
A. I don't know; I think if they gave them a sworn statement of
the.expenses of running the railroad, the aggregate amount, it seems
to me that would be all thev would want.
Q. Suppose the question came up in court to settle what a fair
rate would be from St. Louis to Kansas City, the railroad came in and
showed they paid so much wages, paid a dollar a day for men to work
on the track, paid twenty-five thousand dollars a year for a president,
and so forth and so on ; do you think this question would enter into
the cost of the transportation ?
A. Why of course it would enter into the cost of transportation.
Q. Do you think it would be wise to give the commissioners power
to fix the salaries ?
A. No, sir ; I don't think it would, not unless they believed that
the salaries were made at so high a figure as to make its running ex¬
penses large in order to influence their dividends.
Q. Suppose you were the shipper, would you go into court and
show they did pay high salaries on purpose to put up the rate on you
unfairly and unjustly ?
A. I don't know whether that would be proper. If they did I
couldn't say whether that could be controlled by the legislature or not;
I think it would be a species of conspiracy that ought to be taken cog¬
nizance of.
428
Q. Do you think that the legislature would have the power to
• confer any such power as that on the commissioners?
A. I don't know.
Q. You think the legislature has the power to confer the power
on the commissioners to fix rates?
A. I judge so from the fact it has been done.
Q. In what State has it ever been done ?
A. I think they have the power to fix it in this State, but I don't
think they have the power to enforce it, that is my understanding of it.
Q. By Senator Hazell : I understand you complain of the dis¬
crimination twenty-three cents a hundred on glassware to St. Louis»
and one dollar and thirteen cents to Kansas Oity?
A. No, sir ; I didn't say that.
Q. You said the rate from St. Louis to Kansas Oity was ninety
cents ?
A. The first class rate from Chicago to Kansas City is ninety
cents.
Q. From St. Louis to Kansas City is seventy cents ?
A. Yes, sir; from Pittsburg to St. Louis is twenty-three cents ;
from St. Louis to Kansas City fifty-five cents, less than car loads ; I
think it is an absolute proof of extortion.
Q. Isn't it reasonable to assume more glassware is shipped to St.
Louis than to Kansas City.
A. I think so.
Q. Well, on your theory that twenty-five—fifteen or twenty-five—
cars should be shipped at a less rate than one, isn't it right that dis¬
crimination should be made in favor of St. Louis ?
A. Not to that extent ; no, sir ; not by any means.
Q. By Senator Parcher : You believe railroads ought to be run
on business principles ?
A. I think so ; yes, sir.
Q. You believe in the disposition of transportation that the same
principle prevails that prevail in buying a yard or two yards of jeans ?
A. They have got their transportation for sale just as much as I
have got my cups and saucers.
Q. You would let them run on business princles until it hurt you
and then you would have the legislature come in and stop it, and stop
it right short \^henever the shoe pinched you ?
A. I answered the question awhile ago. I say all pools and all
combinations are iniquitous and injurious upon the people; and I
would be in favor of a law, if it were constitutional, and it could be
enforced, to abolish all monopolies off the face of the earth.
429
Q. You say that you wish the railroads to be run on business
principles?
A. I say there should be competition between railroads as in all
other business.
Q. When it hurts you or your business, then, you say they shall
not be run upon business principles, but that the State should step in
with its power and regulate them ?
A. No, sir; if it only affected Kansas City I wouldn't have the
presumption to come here and ask that a law should be enacted for the
special benefit of Kansas City.
Q. Does the Government in the sale of postage stamps sell cheaper
to one man that buys one hundred than to one that buys one ?
A. It ought to.
Q. You can't do it ?
A. No, sir.
Q. The Government is magnanimous and it treats all citizens
alike, that is the reason ?
A. Yes, sir ; it is the greatest good to the greatest number.
Q. It is because the Government proposes to treat all her citizens
alike, isn't it?
A. I suppose it is because it can afford to do it.
Q. You admit and argue here that it is the bounden duty of this
State to go to work and regulate these railroads ?
A. That is what I contend for. I say that the government or the
legislature should regulate them, because they won't regulate them¬
selves. It is the only power they recognize ; it is the only power that
can be brought to bear to reach the autocratic managers in dealing with
the public; it is the only authority they recognize, and it is the bounden
duty of the legislature to exercise that wholesome authority.
Q. As it is a power that the State has authorized, has fixed and
built up in our midst, it has given us a system of transportation ; and
I am at their mercy, I can't help myself ; the old system or means of
transportation has disappeared ; I have got to utilize the railroads.
Now, then, alter the State of Missouri has forced, so to speak, fostered
the building or railroads, put that as you will, this system of transpor¬
tation as it is, now then, don'c you think that the State of Missouri owes
it to me as a citizen to come in just as the government does in the case
of the postage stamp and give my one car transportation just the same
as the general government gives me my one postage stamp at the same
price it would a thousand postage stamps ?
A. Well, that would be all right if the government controlled the
railroads; I don't think it is an analogous case at all.
Committee adjourned until June 3d.
430
MORNING SESSION—June 3,1887.
W. M. Sage was called before the committee and stated as fob
lows :
Q. By Senator Ball : Mr. Sage, I want to ask you if in your
opinion the railroads of Illinois were confined to the local trade of Illi¬
nois under the rates fixed by the railroad commissioners of that State,
could the roads make a living?
A. I will reply to that by saying that in my opinion they could
not. So far as the Rock Island road is concerned, we use Illinois as a
highway to Iowa, and we certainly couldn't live unless we materially
altered our present way of doing business. We have, as you are aware,
one of the oldest roads in the State, but if we were to live on the local
business it would be so small—you must remember that we run paralell
with the Illinois canal and the river, so that we have to divide the
business with water transportation; and if we were to live entirely on
the rates prescribed by the commission we couldn't pay the running
expenses.
Q. You are acquainted with the geographical position of Illinois
and Missouri?
A, I am not very much acquainted with Missouri south of the
Missouri river.
Q. You are also acquainted with the amount of traflSc that passes
over the lines in Illinois to the lines in Missouri, to some extent, are
you ?
A. Yes, sir.
Q. In your opinion can the roads of Missouri prosper under the
rates fixed in Illinois ?
A. 1 don't think they could, sir; I don't think they could unless
they were at least twenty or twenty-five per cent, higher ; I don't think
there would be much chance for the roads; you must remember that
the roads don't prosper in Illinois on these rates, in a prairie country ;
that south of the Illinois river, with the exception of the Chicago &
Alton and the Illinois Central, which are through roads, no road south
of the Illinois river to-day is solvent—no road.
Q. Do you know of any section of country that is prosperous,
that is, has a large population, that is not supplied with railroad facil¬
ities?,
A. I understand some of the towns in your State are not. Oh,
you mean Illinois ?
Q. Any State ?
431
A. Oh, yes sir ; I think there are a great many States have not
yet got all the railroad facilities necessary.
Q. You don't understand my question ?
A. No, probably I don't.
Q. What I want to ask you is this : Do you know any counties
in any of the States of the Union that are prosperous and have a large
population, that have not railroad facilities ?
A. Well, Senator, in reply to that I will state that I have heard in
this house of certain counties in this State that have hardly any rail¬
road facilities.
Q. Well, are those counties prosperous and largely populated ?
A. I believe not, sir. Oh, I understand the point now. You
mean when they are largely populated ?
Q. Yes sir?
A. I didn't understand your point until now. I don't know of
any largely populated counties in any State but has more or less rail¬
road facilities.
Q. By Senator Allen : From your statement the Illinois roads
are in rather a bad condition?
A. South of the Illinois river, they are, sir.
Q. You would like to see Missouri pass a law to help them out, if
you could ?
A. Oh, I have no interest in it ; we are north of the Illinois river.
Q. You would like to get all the aid you can from Missouri to help
the Illinois roads ?
A. Well, I think we have got all we can get from Missouri
already.
Q. This testimony you have given is not from your own knowl¬
edge but simply from hearsay ?
A. 1 have an experience of 25 years in the State of Illiois, and I
have been through all the various vicissitudes of the reacts being pros¬
perous and poor; and I have been through all the experiences of a law
and without a law; I think I speak as much as any man in Illinois from
actual experience.
Q. By Senator Claycomb : If I understand you correctly you say
that if the roads in Illinois were confined to their local traffic that they
could not live under their rates in that State ; is that the position you
take ?
A. I am not interested in these roads. My knowledge is from the
reports as published and the fact of their being in the hands of receiv¬
ers time and again. I make the suggestion that Mr. Smith, the traffic
manager of the Wabash road, is down stairs. He was for fifteen years
general freight agent of the Alton road. Since then he has been in
432
connection with the Wabash road. I think that he being more in the
southern part of Illinois where these bankrupt roads are can speak from
his knowledge better than I can. I know he is an experienced railroad
man. If you want actual railroad knowledge, he will be very glad to
give it to you probably.
Q. Well I understand you to answer Senator Ball's question that
you think the roads in Illinois can't live if confined to a local trade?
A. That is my experience.
Q. I will ask you this question : Isn't that true of the roads of
most of the States of this Union, if confined to their local traflSc, un¬
less you take some of the extreme eastern States ; wouldn't the samé
be true of Kansas, confine their roads to their local traflSc, could they
live ?
A. Of course the Fort Scott is now extending south, but when it
was a local road in Kansas it did very well, indeed. Of course the ten¬
dency of a railroad is when it gets prosperous to branch out into other
States. The Santa Fe got strong in its local business and it had
credit—
Q. I don't ask you to take one road, take the roads generally, you
might find one road in Illinois that could live on its local trade?
A. I don't know.
Q. Take the State of Kansas generally with its railroads, or any
other State in the Union ; don't all the roads in building build with a
view of going beyond the limits of any one State ?
A. Yes, sir; to increase the volume of their business.
Q. As a rule none of them would make money if confined to the
limits of their own State ?
A. I would'nt be willing to make it as general as that ; but my
experience is, that local roads, as local roads, don't succeed for the sim¬
ple reason their tonnage is so light. They may get two and a half
cents per ton per mile. On the Rock Island, I think, last year's fig¬
ures were ninety-four hundredths per ton per mile. Now, if you run
over the Commissioner's report down stairs y^ou will see that the low¬
est per ton per mile is generally the most prosperous road, because it
is the volume of business that makes the monev.
Q. Then following out that idea, the volume of business in Illi¬
nois is a great deal more than it is in the 8tate of Kansas ?
A. Yes, sir.
Q. Shouldn't the roads in the State of Illinois make money on a
much less per cent, than in the State of Kansas?
A. Yes, sir; they should make more money.
Q. How would it be with the State of Iowa ?
A. The State of Iowa is, I think, one oí the best States in the
433
Union ; and while north and south roads in Iowa have gone into the
hands of receivers, I will say one north and south road, partially east
and west, is exceedingly prosperous ; it has no connections with Ohi-
-cago out of the State; it has a branch out west into Dakota, but the
country is so new it has not materially added to its revenue.
Q. , That one road that is prosperous in the State of Iowa is an ex-
•ception to the rule?
A. Yes, sir ; the Central Iowa has not been prosperous.
Q. The rates are much higher in Iowa than in Illinois ?
A. Yes.
Q. And higher in the State of Kansas than Illinois?
A. Yes, sir.
Q, Is it the low rates over in Illinois that is particularly injuring
those roads that have gone into the hands of the receivers?
A. If you wish to build and develop a road in your State, in a
new country, it can expect nothing else at first but local business
Now you must get the capital from investors who are generally either
in the large cities like St. Louis oc in the east. Unless he sees there is
money in it he will not invest in a local road. The hope is with the
liberal county aid given to build roads, taking that into consideration
with relative higher rates, that they will be able to pay.
Q. What is the more detrimental to the roads, a low rate of
freight that is not an unreasonably low rate, but a low rate of freight,
or a very great lack of traffic ?
A. Of course, like your retail merchant in St. Louis—
Q. Please answer the question ?
A. A road can only get a certain amount of business. Now, if it
has only a small amount of business and you have low rates it will go
down. If it has a small amount of business the rates must be rela¬
tively higher or they cannot pay their charges.
Q. The opposite of that is also true, isn't it, if the volume of busi¬
ness is great the rates will proportionately decrease?
A. Yes, sir ; because the road will reach out and have a larger
business.
Q. Well, I will go back to something like the original question I
asked you. The rule in Illinois as to the roads making any money on
their local traffic is not different from that oí the other States in this
Union. Isn't that the rule, that no roads in any State of the Union»
nnless you take some of the extreme Eastern States, could make
money on its local traffic, isn't that the rule?
A. It there are other larger roads within ten miles of it, I should
R M—^28
434
say that was the rule, because the strength of the larger road will cer¬
tainly kill it.
Q. Well, I want to call your attention to a statement you made
yesterday. If I understood you correctly these roads in Illinois that
have gone into the hands of receivers, the Wabash and other roads,
didn't necessarily go into the hands of Receivers irom the low rate of
freight charged in that Sfcate but from a lack of traffic, being brought
into competition with other roads, they didn't get a sufficient amount
of traffic to keep them up ?
A. It was a lack of traffic and a proper remuneration for the traf¬
fic. OoL O'Day showed what the expenses should bring. Unfor¬
tunately, however, for a road like the Wabash, it has a very high
bonded indebtedness, and the Rock Island has less. That won't ena¬
ble the Wabash to get higher rates. She must take the rates that are
going. It is correct as a first principle. The point I make is this:
Col. O'Day can't get actually what the capital invested wants. He
simply gets the current rate.
Q. I understood you to say yesterday that the Wabash went into
the hands of receivers, not on account of the low prices, but on ac¬
count of your road and other roads just naturally freezing it out?
A. No, sir; I didn't say that. You all know that the corporation
extended from Toledo to Kansas City with branches up to Omaha. It
was an aggregation of bankrupt roads. These roads were bonded to
their full value before, and the theory was by throwing them all to¬
gether and banding them as a whole in addition, that it would pay»
That was the opinion of some railroad men. It was an experiment
they were trying. But practical men like myself could never see that
the Wabash could pay, because if those separate roads, and there were
a great many of them, were all bankrupt before they were joined to¬
gether it didn't necessarily make them solvent as the old indebtedness
and new indebtedness had to be earned.
Q. They made one big bankrupt road instead of four or five?
A. Yes, sir.
Q. Then the other roads in the hands of receivers in Illinois, aro
not they in the hands of receivers by virtue of the fact that they were
thrown into competition and they couldn't get a sufficient volume or
amount of traffic to keep them up at any reasonable price?
A. Yes, sir.
Q. Now let me ask you this question : In order to maintain those
roads and keep them up wouldn't they have had to charge an unrea¬
sonable price on everything that was shipped, a price the people
wouldn't stand ?
A. Ii you give the Missouri Pacific to-day a maximum rate of one
435
dollar a hundred from here to St. Louis it couldn't charge it. They
have this great river along side of them and they would have to charge
the river rates or go out of the business. You think the railroad can
charge what it likes. It can't; it can charge only what competition
will allow. If the local rates are put down very low that aifects the
through rates, because the through rates cannot be more than what we
call the sum of the locals. If you make the locals very low between
the Missouri and Mississippi rivers that is a part of the through rate.
Q. My question, is this : Coder the circumstances surrounding
those roads in Illinois that are in the hands of receivers in order that
they could have lived and made any money, would they not have had
to charge an unreasonable amount on the traffic that they transported
in the State of Illinois ?
A. It depends altogether on what tonnage they could get.
Q. You know the conditions and circumstances surrounding the
Wabash railway at the time it went into the hands of the receivers'?
A. Yes, sir.
Q. You know the conditions that surrounded most of these other
roads at the time they went into the hands of receivers?
A. Yes, sir.
Q. As to the competition and volume of trade they were getting,
and the country through which they ran and upon which they were
dependent ; you know those facts ?
A. Yes, sir.
Q. Taking all those circumstances into consideration, wouldn't
those roads, in order to have lived and made any money, wouldn't
they have had to charge an unreasonable amount on the traffic which
they transported?
A. I will answer that that could only be applied absolutely on a
particular case with the statistics before us. I can't give you a general
idea as to all roads, on that principle, because it would depend upon
what the tonnage would be.
Q. But those roads in the hands of receivers, confine your atten¬
tion 10 those roads; I don't speak of all roads; direct your attention
to these roads in the hands of receivers. Under the circumstances I
have stated, they couldn't get along and charge a reasonable price,
could they—a reasonable freight rate ?
A. Take the L, B. & W., quite a long road, if it was permitted to
charge as reasonable a rate as we think would live and let live, it
»
might have succeeded. I am free to say, however, the short roads in
Illinois, where there are large roads crossing them and parallel with
them, can hardly be expected to live unless they fall in as a part of
the great system.
436
Q. Unless it charges unreasonable rates ?
A. It can't do that.
Q. Of course it can't, but in order to let it live it would have to
do that ?
A. Well, I don't know ; I think it could do that.
Q. You don't desire, JMr. Saga, that this committee shall under¬
stand that you intend to convey to them the idea these roads go into
the hands of receivers by virtue of the low rates of freight in Illinois
alone ?
A. No, sir; the facts, or a great many of them, died before there
was a law. The L, B. & W. was bankrupt several times before the
Illinois State law. It is like everything else—if a man doesn't transact
his business properly he will become bankrupt. It is the same with
the railroads.
Q. By Senator Simrall: Mr. Sage, does your road charge as high
as the maximum rates fixed by the railroad commissioners of Illinois,
on traffic ?
A. In some cases we do, sir.
Q. Take it as a whole?
A. In cases alongside the Illinois canal, which is just exactly as
near our road as this river is to the Missouri Pacific, we, of course, never
expect to get maximum rates.
Q. So your road doesn't charge as high as the rate fixed by the
commissioners of Illinois ?
A. Not where we have water competition.
Q. Taking it as a whole, do you charge as high rates ?
A. We charge from Chicago to Bock Island, which is the full
length of the road, the commissioners' rates on merchandise, but along
the Illinois canal and the Illinois river we don't, for the simple reason
the canal boats will take it if we did.
Q. I mean on an average ; you answer that question ?
A. Taking it as a whole we do ; where the water competition is we
don't.
Q. Well, now you say that the local traffic in Illinois don't pay
the operating expenses of your road, didn't any more than do it ?
A. I didn'c say that; I have not figured on that.
Q. You have a double track ?
A. Yes, sir.
Qr There has been a question asked you with regard to the coun¬
ties of this State. Those counties that have not railroads I understand
you to say have not prospered?
A. Wouldn't say that ; I àm not acquainted with the State ; they
have not been developed.
437
Q. Is the public ever worsted by the railroad going into the hands
of a receiver; is it injured?
A. Certainly; any commercial undertaking that fails is disastrous
to a community. If the I., B. & W. goes into the hands of a receiver it
is because it can't pay its debts, and the creditors suffer, the employes
suffer, the whole community suffers.
Q. Do you know whether they have suffered on the Wabash
road ?
A. I think those gentlemen who trusted them to the extent of
thousands of dollars and didn't get their money suffered.
Q. That pay be, but the public I am talking about. Mr. Sage,
don't you know, as a matter of fact, that the Wabash road running
from St. Louis to Kansas City is in 50 per cent, better condition to-day
than it was before it went into the the hands of a receiver?
A. I think it is; I think the receiver has spent the money on
betterments; he has done that at the expense of the original owners,
who get nothing.
Q. But the public along the line of that road has not been injured
a particle since it went into the hands of a receiver ?
A. Well, by the public, do you not mean every person ?
Q. I do ?
A. Well, the persons who lost their money, haven't they suf¬
fered ?
Q. I mean everybody that lives along the line of that road and
ships goods over it, travel over it, are they not better off by the road
going into the hands of a receiver ?
A. I should say not. I should say, perhaps, as there are less ex¬
penses, the receiver, simply looking to the betterment of the road, has
not had to do as I have to do to get a return for my stockholders. That
was a temporary expedient that no State will ultimately gain under,
because if large corporations are to repudiate their indebtedness it will
cripple and extend the injury to the whole cummunity.
Q. You can put a bankrupt farmer on a good farm, and he can't
succeed, he owes too much, but if the farm is sold and goes into the
hands of a man who is in good ffnacial condition, he can make money
on it ; it is just the same with this Wabash road, it is sold out to the
parties who are able, financially, to operate it and make it a good
road ? ♦
A. Yes, sir ; unless you give them a fair rate on their freight, they
will go like their predecessors, they will become bankrupt, too.
Q. Now, Mr. Sage, isn't it a fact that the roads in Illinois do not
on the average, charge the maximum rate fixed by the commissioners?
438
A. They do in every case, so far as I know, except where water
competition prevents them. So far as the Q" is concerned, it has a
thousand miles in Illinois, and I have time and again heard Mr. Ripley
say their rates are absolutely maintained with one exception, which I
shall explain,
Q. Where they have competition ?
A. No, sir ; it is the tendency of the roads in Illinois to invite
manufacturers to settle on the road ; and these manufacturers on the
material going to those stations get lower rates than the public, which
the commissioners of Illinois have decided is not an unjust discrimina¬
tion ; and there is no road in Illinois that I know of, that could get a
large manufacturer to settle on its road but what will give that manu¬
facturer, on the material brought in there, lower rates than it does to the
public ; and that is done publicly, everj^ merchant in the town wants
them to do if.
Q. Are there not more railrads in Illinois than the necessity of
the case requires ?
A. I think so, sir; but the builders didn't all think so.
Q. So the bankruptcy of those roads is owing to the multiplicity
of the roads and the competition, not the rates fixed by the commis¬
sioners ?
A, I want say, so far as the commissioners' rates are to-day con¬
cerned, that for the development of the country, I don't think they are
unduly high to-day.
Q. Unduly low, you mean ?
A. I mean we don't object to their being too high ; but you must
remember those rates were practically fixed ten years ago. There has
been an immense development to increase the tonnage since, so the
rates which were injurious ten years ago are not to-day ; they are prac
tically the same to-day as when the commission was started.
By Mr. Miller: If it be true, as Senator Simrall informs us, that
the statistics of Missouri show that those counties which have no rail¬
roads have prospered much more than those which have them, don't you
think the logic of events would show the true policy of Missouri is to
destroy all the railroads and have none ?
A. That would be a very radical conclusion, but is one horn of
the dilemma.
Q. You said something here yesterday concerning the operation
of the wholesale principle in transportation as between car loads and
what is less than a car load. That is a question that has been under
consideration and discussed here ; I understand it has been a question
between the railroads composing the southwestern and the northwest¬
ern—different associations; they have had considerable discussion over
439
it, and have adjusted it. I want you to tell us what the history of that
agitation has been, and the result and the reasons for arriving at the
•conclusions you arrived at in the matter?
A. Well, before the country west of Chicago developed the city
of Chicago, and of course, in a measure, St. Louis, I am not referring
to St. Louis now, the wholesale trade of Chicago virtually supplied the
west as far as the Missouri river, especially Omaha and all the points
between; butas the western fever gradually populated the country,
large cities grew up on the Mississippi and Missouri rivers, and also in
the interior of the State of Iowa; and we have found that wherever a
city gets about eight or ten thousand inhabitants, it naturally becomes
a jobbing center for a limited extent around it. The consequence
was, that as Kansas City and Omaha and Minneapolis developed
the retailers of that country, or those cities, became wholesalers,
and instead of purchasing as they did when they were retailers from
the great Chicago grocers, they bought exactly where the grocers did,
they bought from the manufacturer. For instance, they bought canned
goods direct from Baltimore, and they generally bought in the markets
where the wholesale merchant did in Chicago; and being nearer the
retail trade in their country they naturally took a good deal of the
business. Their business being so large they desired to ship in car
loads. The consequence was that the soap manufacturer in Chicago
loading five car loads shipped it to Kansas City, shipped it to the whole¬
sale grocer there and he unloaded it. That was an exceedingly profita¬
ble business to the railroads ; and I for one held that there was more
profit to the railroads in a five cents reduction on the car load than
there was in a car of mixed goods, for this reason : If ten boxes of soap,
€0 many bundles of brooms and a mixed car of first, second, third and
fourth class freight were put into the car, there is a great deal of ex¬
pense in doing so connected with the checking, classification and load¬
ing; and the aggregate weight in the car will never exceed twelve
thousand pounds ; but in a straight car load we get twenty-four thou¬
sand pounds. Now, clearly there was more profit to us in the ship¬
ment of twenty-four thousand pounds at thirty cents a. hundred than
twelve thousand pounds at thirty-five, forty-five, fifty-five and seventy
five. So that the cost to the railroad of the handling in car loads was
less and it enabled these jobbers on the wholesale principle purchasing
in large quantities to put it in that shape. The railroads consequently
treated these articles in car loads just as we do grain from the eleva¬
tors. It was discovered as Kansas City became a great jobbing center,
Chicago lost her trade west of Kansas City in Kansas. A grocer in
Chicago, who is a cultivated, educated gentleman, gave a case like
this : Soap in car loads, Chicago to Kansas City, thirty cents; Kansas
440
City to Topeka, in less than car loads, twenty cents ; total, fifty cent»»
Then the wholesale grocer sends direct to Topeka, and they buy a les»
quantity than the wholesaler in Kansas City ; thirty-five cents, add
twenty, fifty-five. He held, consequently, that that was an unjust dis-
crimination against him in Chicago in favor of the Kansas City man»
We railroad men replied,'^no, it is not discrimination; if you wish to
¥
ship a car load to Topeka you may do it ; you have the same privilege."'
But hé says, "we have not a customer in Topeka that can buy a car
load ; we want the jobbing trade oí Topeka on just the same terms a»
the Kansas City man." We said, " all we can do is, to give you tho
same privilege on the same class of goods ; if you wish to ship a car
load you have the same price as the Kansas City shipper, if you don't
you pay the retail price." This went on, I will state, for two years.
The classification committee was divided on it and the jobbers of all
the Mississippi and Missouri river towns, with those in the center of
Iowa, up as far as Minneapolis, they fought the question, and it went
from the freight agents to the presidents of the roads, and when the
vote was taken the presidents of the roads all voted for the car load
principle, but the blood had got so bad that a compromise was pro¬
posed by the late Mr. Hoxie, that the jobber should lower that differ¬
ential from five cents to three cents. Chicago accepted that and Kan¬
sas City accepted it, and it is in that position tc-day settled ; and 1
don't think there is any intention to change it, unless, as I understand^
it was spoken of the other day by the St. Louis delegation ; but that is
the way that St. Louis and Chicago, who are together in this, settled
this question.
Q. If the car load principle was abolished and everything was
ruled down to the hundred pounds, what would be the effect upon the
jobbing trade west of the Mississippi river? Is the profit of the jobbers
in the country west of the Mississippi rive river any more than the
concession made to them by the railroads on accounts of the car load
rates ?
A. Oh, I can't say what the jobbers' profit is, Senator ; but I will
a answer you in this way, looking at it from a railroad standpoint ; i
have spoken now from a jobber's standpoint ; looking at it from this '
point, we feel that the large quantity is the competitive business. If
a man wants but ten barrels of sugar in Kansas City, he doesn't want
water transportation, he wants it immediately. If he wants one box of
dry goods, on account of the expedition made by the railroad, he doesn't
think of water transportation for a minute ; and he is well satisfied to
pay the additional charges in the same way as if it was a small package
that he wanted in a still greater hurry, he wouldn't take the railroad,
but would use the express company. Now, the large articles, the pro-
441
portion of their cost to the proportion of the freight, is nearer than on^
the small articles. Consequently we feel that large quantities must
have lower rates than the small quantities, and in addition to that, as
I have already explained, the railroad can handle them cheaper than
small quantities.
Q. Do you know whether the jobbing trade of the country west
of the Mississippi river could exist or not if the car load rate was with¬
drawn ?
A. They are very enterprising men there; I think they would
find some way to continue their business.
Q. Have the jobbing trade of that country urged it on the rail¬
roads, in the condition it is carried on that it would be impossible for
them to maintain the jobbing trade in that territory ?
A. That has been their position.
Q. Now, I want to ask you another question: The concession
you make for larger quantities, from a railroad point of view, is based
largely upon the fact that it costs the railroad les^ to ship it in car
load quantities than less?
A. Yes, sir.
Q. If the car load rate was withdrawn and everything went by
the 100 pounds, it would be to the benefit of the railroad rather than
to the benefit of the people, wouldn't it?
A. Yes, sir; if we carried the business. If the rates are too high
we cannot get it. This country has immense rivers in it, and there
would be a longer time used, but I think the Kansas City man would
get there just the same. The resources of Kansas City are such that
they certainly wouldn't have to stop.
Q If the concession on account of the car load can be made
"because it costs less to ship it in car loads than to ship it in less than
car loads, can't the railroad make a concession in excess of car loads,
such as train loads, on the same principle ?
A. Up to this day the car load has been the unit; but I wish to
state that since the interstate law has come into effect it permits us
to classify our freight any name we choose so long as it is public to
everybody and no higher rate than a shorter haul. Now, I can
imagine that under the law such a thing in the future might occur..
It might be beneficial to the railroad and it might be beneficial to the
public ; and I think I referred to an instance yesterday which I will
refer to again: That if a stone quarry or a brick concern within
sevent-five or a hundred miles of St. Louis wished to do business they
would certainly, if they offered twenty-five or thirty cars a day on
account of one shipment, a whole train, they would be entitled to a
less rate than simply for an occasional car going along the road. Now,
442
up to this day, for the purpose of developing such interests, the rail¬
roads have made what they call special rates, though they are pre¬
cluded from that now. You can quite imagine a manager of a
railroad, wishing to develop his road or some local industry, might feel
it for the interest of the road to say I will make a car load rate at 75
cents a ton ; that any shippers that gave him a train load would have
it at 50 cents a ton. There would be no discrimination, but the effect
would be that any concern by offering thirty cars, which would be a
whole train, would have it; and any concern there or nearer to St.
Louis could have the same privilege. I think the time may come that
such apropusition may be favorably entertained by the railroads. The
car load has been the unit up to this day, with the explanation I make
that local industries have been developed, not because of the excess of
twenty-five or thirty cars a day, but we did it by giving special rates.
Q. Did you do that simply to develop the local industry?
A. We could afford it. I will say if the rate was 75 cents on a
single car, a ton, there would be a good deal of money in one train at
fifty cents, the volume of tonnage would be so great. It takes every¬
thing to make the road's earnings, so there is no railroad manager, I
think, th^t would refuse such a proposition.
Q. You think that the railroads have never made any concession
in this western country for quantities in excess of car loads?
A. They have given special rates. That was given on train
loads, the large jobber got it by the volume of his business; that was
the old principle.
Q. The railroads have no control of the matter whether the
profit made by the local dealer should be distributed amongst the
people around him, or whether he got it all himself?
A. No, sir.
Q. Under the new arrangement ^you ^are to adopt now, if you
adopt that practice as a rule, would that have a tendency to divide or
distribute that profit amongst the people?
A. I think it would, sir; because any man can have it; we would
have to make it public, post it up in the depot ; any person that con¬
sulted us could come there and have the same rate.
Q. That would bring competition amongst the people enjoying
that kind of rates ?
A. Yes, sir.
Q. Distributing it to the consumers and the producers in the
localitv ?
A. Yes, sir.
Q. By Senator Sears : Have you had any conference with the
railroad commissioners with regard to car rates ?
443
A. I will state, Senator, we met informally yesterday afternoon,
Just as I was called up here ; we hadn't got to business.
Q. Do you think you will likely agree ?
A. Well, we have not had a single word on the subject.
Q. By Senator Parcher: I will ask you if this controversy you
«peak of as having gone on between Chicago, Milwaukee and St. Louis
as against these interior jobbing points here, hasn't been a matter of
substantial indifference so far as the railroads are concerned ? In
other words, it was a quarrel between the great jobbers and the
interior jobbers that were growing up in this western territoty ?
A. I will say I was champion of the car loads, although I was a
Chicago man ; I think we had more bad blood in our meetings fighting
that subject than in anything I have known for twenty-five years in
my experience. We fought it furiously. I am glad to say it is a past
issue now so far as we are concerned ; there has been no trouble for
two years.
«/
Q. You railroad managers sat and heard the arguments as made
by the representatives of the St. Louis and Chicago jobbers, and the
arguments pro and con between these great central jobbers and the
interior jobbers ?
A. Yes, sir. You see a railroad is in this position : We have
patrons in Chicago and patrons in Kansas City; and I want to say
that the railroad man is by no means anxious to fight his patrons, but
to try to satisfy them. Here was the difficulty : If we were to antag¬
onize Chicago and St. Louis, the road that would do that would even¬
tually lose business; but on the other hand, those gentlemen in the
west had the routing of their freight. Now, it was a question on our
part, being desirous of settling it amicably, and we each had our
opinion. I told the Chicago jobber plainly I thought the car load prin-
oiple was the correct one ; and I will say this, it was not the city of
Chicago, it was certain jobbers in Chicago. The manufacturers in
Chicago, like this case of the soap I have spoken of, they were on the
side of the people.
Q. The car load has been recognized as the unit ?
A. Yes, sir.
Q. Your theory has been that there has been no discrimination ?
A. No, sir.
Q. Between shippers, although including the car load ?
A. No, sir.
Q. And whenever there was a discrimination as to the whole
salers or large shippers it has come in the way of the detestable evil
that you now denounce by way of rebates or drawbacks ?
A. Yes, sir; that was not on car loads, at the same time. For in-
444
stance,we will take the largest concern, one of the largest in Kansas City,.
Nave, McCord & Co. They couldn't give any railroad at a time thirty
cars of sugar, but in the aggregate, in three months, they would give a
very large quantity. Now, you can see that the railroads were com¬
peting for that large business, not on the principle I spoke of, not on a
certain number of cars in a train, it was on the volume of its business.
He had a large business. Every soliciting agent was anxious to get it.
One road was poor and had no business, and they would offer many in¬
ducements. Mr. Nave now can't get one cent better rate than his
neighbor. If the neighbor can't ship a car load Mr. Nave has that
advantage ; but if he wants to ship a car load he can have it. I don't
think this principle I was talking of, thirty cars, would apply to com¬
mercial articles ; it would be in developing certain local industries, like
brick, stone, timber, and so forth.
Q. By Mr. Castleman: One reason, as I understand it, that you
think a road ought to make a difference between a car load and a train
load of cars in favor of any special person arises from the benefit which
comes to the railroad, isn't it ?
A. Directly and indirectly. If, for instance, a place as at present
is inhabited, and an industry goes there and has from one to seven
hundred inhabitants in it, the railroad is benefited by that, but the
country is also benefited.
Q. That is because the road can afford to haul a train made up
more cheaply than it can pick up a car at this station and a car at that
station, and so on ?
A. Yes, sir; and also in that way gets a business that they
wouldn't otherwise have. I would not recommend this over the unit
on an ordinary commercial transaction, dry goods and groceries ; it
would be only industries to be developed in certain places.
Q. Now, then, you would pick out just special instances to give
the train privilege to, is that it ?
A. Not at all, sir. I mean this : Here is an industry not in ex¬
istence ; here is an undeveloped quarry, and a capitalist comes there
and says, want to compete with stone in Illinois. Now, your rate ia
seventy-five cents a ton into St. Louis, I will guarantee you thirty cara
a day -—"
Q. Now, the reputation of a grocery house is already established
and fixed in such a city as Kansas City, where the merchant would
come to you and say, 'H have a train load." You would not make a
distinction between his price and a person who shipped a car load ?
A. No, sir ; I think he couldn't do it.
Q. Well, if you will pardon me, I am putting a case to you ; if you
445
can answer it I will be very much obliged to you, if you can't I will
excuse you ?
A. Perhaps I didn't understand it.
Q When a business is established as, for instance, in the case of
Nave, McCord & Co., in Kansas City ; that is not one instance that you
would give a preference in rates to, providing they could ship a train
load ?
A. No, sir.
Q. Now, you would not make a distinction between places and
persons in a matter of that sort ?
A. No, sir. I said if we did it in this case we would publish that
rate.
Q. Just answer my question?
A. I couldn't; I would publish that rate, place it at the station,
and any man can have it.
Q. You would not do it at all where there was an established
'business ?
A. Well, I will say in the case of a quarry already established as
on the Missouri river
Q. I am not talking about that?
A. Not at all; 1 wouldn't want to exceed the car load unit in
Kansas City on any wholesale business there.
Q. You don't think*it ought to be done at all?
A. It couldn't be done.
Q. If it is practical, it ought not to be done ?
A. I couldn't in Chicago get thirty cars for any grocery in Kansas
Oity.
Q. Now, Mr. Sage, if you could afford to haul for an individual a
train load shipped from a particular point, the same reason that would
make you haul the train for an individual would force you to haul it
from a particular point or place, wouldn't it ?
A. Yes, sir.
Q. So that the logic of Mr. Miller would lead you to give Kansas
'City a preference because there large train loads are made up, over
such a place as Tipton, for instance, where train loads are not made
up?
A. I don't exactly catch the alternative of your question.
Q. You say you would make no greater distinction between
individuals than you would between places in a matter of that sort?
A. No, sir.
Q. Now, then, if you distinguish between persons, part of whom
could ship whole train loads and a part of whom could only ship car
446
loads, you would have to distinguish between places, by the logic of
the matter?
A. You mean if I took thirty cars to Kansas City and didn't do it
anywhere else, I would be discriminating in favor of Kansas City,
because another place couldn't carry it, that it was necessarily a dis¬
crimination ?
Q. Yes, sir; wouldn't that be logical?
A. That would be the logic of it; but I think if a railroad were
to publish that our tariíF is so much on a train load, good to all, that
they wouldn't be called upon to go into the logic of it; they would
make it open to everybody.
Q. The same reason which would call upon you to give a prefer¬
ence in rates to a man who could ship train loads over one who could
ship car loads only at the same place, would require you to give the
same preference to Kansas City which shipped train loads over Spring-
field, say, which could not ship train loads?
A. Yes, sir; but I don't think any merchant in Kansas City can
accomplish the matter of train loads in a commercial business; it
would that way give the advantage to the Kansas City men; but the
railroad wouldn't be doing it, because Springfield would have the same
privilege.
Q. It would give Kansas City over Springfield advantages by
reason of the superiority of Kansas City over Springfield?
A. It might, possibly; it would be because Springfield doesn't
have as large business as Kansas City, which of course we are not
responsible for. I will say this: Springfield does a car load business.
Q. You say you met last night the traffic managers, didn't you?
A. Yes, sir; talked the matter over,
Q. Alter that conversation, have you any reason or desire to
modify anything you said to this committee yesterday?
A. In reference to what, sir ?
Q. Anything, sir; any statement that you made to this committee?
A. Oh,no; I have not; there is one thing I would like to say, and
that is in regard to penalties,
Q. So far as any statements made by you yesterday in/answer to
questions put to you, you don't desire and don't intend to modify any¬
thing that you have said?
A. No, sir; I want to explain that it was through a misunder¬
standing that I was called up here to day. I understand from our
chairman that he understood that I expressed a wish to say something
more. I didn't express any wish, and it was by accident that I waa
called.
Q. By Mr. Miller: I want to ask you if it is the habit of cities
447
as cities, to ship the freight, or if it is shipped from cities by the
individual merchants? Mr. Castleman's logic would seem to imply
that Kansas City, by reason of being a larger city than Springfield,
would therefore enjoy some better rates than Springfield?
A. No, sir; I understood him to say, as there were larger mer¬
chants in Kansas City than Springfield, it would naturally be able to
offer a larger number of cars.
Q. I wanted to get at that point as to whether merchants in Kan¬
sas City could get any better rate than Springfield because Kansas City
is a larger city ?
A. No, sir; it will be a long time before the principle of train
rates is brought into use with merchandise; I don't think it could be
carried out.
Q. Mr. Castleman : You didn't understand me to intimate any
such thing?
A. No, sir; I want to say in justice-to Kansas City, all the cities,
as far as Sioux City, on the Missouri river, all the cities up to St. Paul'
and Minneapolis, and the interior shipping points in Iowa, joined her
in this warfare two years on the car load question ; Kansas City was
but one in it.
Q. By Mr. Sebree: I will ask you if all the business, except the
local business, were cut off from the roads in Illinois, if the roads could
live and make any money?
A. No, sir ; they couldn't.
Q. I will ask you if there were no commissioners, no rates made
in Illinois, and all the balance of the business of the Illinois roads
cut off, except the local business, if the roads could live and prosper
on it ?
A. That would be placing the State of Illinois, which you know
is a highway between the east and the west; it would so change the
character of the State that I really couldn't answer what the conse¬
quences would be.
Q. I say supposing there were no rates fixed by the commission¬
ers, the matter was left to the roads themselves and all the balance
of the business was cut ofi except the local business in that State, if
the roads could live and prosper on that ?
A. I think some of the roads could, and some of them couldn't.
Q. Those that could certainly have a very large business, with
the business that is added to them from the other States, have they
not ?
A. They wouldn't be as prosperous as they are tc-day. I think the
Chicago, Burlington & Quincy, with its thousand miles, could keep>
prosperous, get such rates that it could live.
448
Q. You have stated that the cause of these roads having been
thrown in the hands of receivers was not by any rates of the commis¬
sioners but by the competition of various railroads and of the water
routes?
A. By their being built too soon for the requirements of the
oountry, that was one. There was a fever to build roads in 1873; every
county wanted its railroad ; every farmer in the country wanted a rail¬
road at his back door, and they voted away immense sums of money
from these different counties to get the railroads. They got too many
of them. In time Illinois will develop, and probably in ten years
some of those roads will be good property ; but there were too many of
them tliere.
Q, You say your own road doesn't pay any attention to the local
freight?
A. I pay attention to it ; there is a very good revenue from it.
Q. You use it principally as à highway for the western States?
A. Yes, sir.
Q. If you were confined to your own local traffic on your road
you don't contend you could make a good paying business?
A. It would be the difference between a paying retail trade and a
large wholesale trade. I am afraid they wouldn't pay me the same
salary as they are doing. I would like to say this in regard to penal¬
ties : It very often happens in a small community that there is an over¬
charge on freight which creates a great deal of bad feeling when it
wouldn't for a moment be permitted if it came to the proper officer. I
will instance a case : We have a very cheap agent at a very small
town, and he makes a mistake. I will give a case like this: The rate
on a car load is twenty cents a hundred, a car load being twenty thou¬
sand pounds ; that would be forty dollars. The rate on less than a car
load would be twenty-five cents a hundred, eighteen thousand pounds.
Now, that would be about five dollars more on eighteen thousand and
less than a car load. The agent might make a mistake and charge
eighteen thousand at thirty-five cents per hundred, when he should—
a car load being the maximum—charge twenty cents on the twenty
thousand. Now, he might make that mistake. Under your laws he
would at once apply to the proper parties and have us fined for doing
it. Now, if the gentleman went to the general freight agent he would
at once order the correction, and whenever we find the mistake we re¬
fund the money. For a mistake of that kind we should not be put in
the position of being fined, because we have so many employes, and
•
some of them not very good agents. I mention this because it has been
stated that in Texas this law is in effect, and on pure mistakes they
449
have been fined. I don't think it is right to fine a road until it actu¬
ally and wilfully intends to transgress the law.
Q. Do you know whether the commissioners in Illinois are in
session now?
A. I understand that they are in session in Chicago to day.
Q. They are to have a meeting soon ?
A. Yes, sir.
Q. What is the object of that?
A. They wish to meet all the general freight agents in Illinois to
take up the subject of certain commodities.
^ Q. Well, isn't the object of that meeting for the purpose of ask¬
ing the roads to show cause why the rates on certain things shouldnt
be reduced ?
A. I only saw their circular ; I saw it the day I left. They sim¬
ply state that they are to take into consideration the freight rates on
certain commodities ; that was the call I saw; I think to-day is their
meeting.
Q. By Senator Hazell: Did I understand you to say on yes¬
terday that the local freight rates were not advanced since the inter¬
state commerce law went into effect ?
A. In no case have they been advanced.
Q. Do you know whether the local freight rates have been ad^
vanced on any other roads since that law went into effect?
A. I should judge they could not be ; I mean any road that is in
the neighborhood of our road.
Q. Say the Missouri Pacific, Iron Mountain, 'Frisco or Wabash?
A. Senator, these roads are so far south of us unless there was a
general war we would not feel it. Mr. Newman assured me there has
not been. When that subject came up he was willing to bet any
amount of money there could be no case shown where there was an
advance on the local business. Of course I have not read one of his
tariffs and I can't speak from my own knowledge.
Q. I have some receipts from the Wabash & St. Louis railroad
and Wabash, St. Louis & Pacific Railway ?
A. The traffic manager of the Wabash road was before you the
other evening and you adjourned ; and if you are going to take up any
charges of the Wabash, he is down stairs, and perhaps be had better be
called.
Q. The gentleman wants these receipts returned to him : "Mr.
Julius Kessler, Bridgetown, St. Louis County, Missouri. The first re¬
ceipt is dated March the 22,1887.
A. If it came through the proper parties I would own it up and
R M—29
450
say this is the mistake of my agent. I had a case in Iowa once of that
kind. We made the rate on car loads and the clerk applied it to less
than car loads to that point. It was claimed that it was discrimina¬
tion. I said "we are not discriminating, you have the same rate on the
shorter distance." We*found on examination that the clerk forgot to
put on the"C. L.," which means car loads. Of course I promptly set¬
tled with this man. In that case it was a mistake. I only claim, on
the immensity of the railroad business, having so many employes,
clerical errors shouldn't count as wilful attempts to defy the law, that
is al) I say. It could be done in this way : The power who does try
this should have the power, first, of laying the case before the head of
the freight department or the head of the passenger department,
whichever it is. I will say the commissioners of Iowa, for instance,
when they get complaint they at once send a copy of the letter. Now,
if it is an error it is promptly attended to, the money is sent to the
party ^complaining and the copy of the letter sent to the commis¬
sioners.
Q. Your idea is that these matters should be inquired into before
the commissioners before resorting to the courts ?
A. Whatever your authority is to impose the penalties, that au¬
thority should come to us and ask whether it is our intention to do this
or not to do it before asking us to settle a penalty for so doing. You
see if it was an act of an officer of the freight department, he knows
what he is doing ; but the small station agent, he is often a man of
very small education who takes the place; he takes the place for the
good of the town ; gets thirty dollars a month, perhaps, and is not ca
pable of understanding all the intricacies and classifications, and he
makes a mistake. We have machinery to prevent that. We have a
large auditing office with seventy clerks in it. We go over every bill,
but even those clerks may miss it sometimes. If our auditing clerk
sees it he says "refund to that man so much money," without the man
asking, but if he fails to discover it we think he should be asked
whether there is any mistake, or whether we are wilfully intending to
discriminate against this man.
Q. How many convictions do you suppose would ever be ob¬
tained against a road if they had to prove it was done wilfully ?
A. I think that the present interstate commerce law practically
makes a provision for that.
Q. That is before the commissioners ; I am speaking of our courts ?
A. You must remember that I am almost a stranger in the State;
I know Kansas City, St. Joe and St. Louis a little. I was but once in
my life in this part of the State before; I am almost a stranger in your
State.
451
Q. Don't you know it would be impossible to ever convict a road
if we had to prove they made these overcharges wilfully ?
A. It the road refuses to refund it, it is against the law ; that ends
it. Take the case of a grocery clerk. He makes out a bill, he puts in
all the items and he charges $15.60 and you pay it; after going home
you look at it; you come back and you say to the proprietor "You
made a mistake, this should have been fll.60." Why, he says, "I am
sorry for it." He goes to the clerk and tells him "if you do this again
I will discharge you, I don't want my customers to be robbed in this
way." That is all I ask for the railroads. He gives him his money.
James Smith was called before the committee and stated as follows :
Q. By Senator Hazell ; I understood you the other day to say
that the local rate hadn't been advanced on the Wabash line of
railroad since the first of April or the time when the interstate com¬
merce law went into effect ?
A. There may have been some cases—
Q. I ask you if you stated that the other day ?
A. I mean to be understood that our average rates are not higher
than they were before the first of April; that is my information. It
wasn't our intention to make them any higher. My information is,
without having made a" close comparison with our present tariff and the
old one, that our average rates are not any higher than they were be¬
fore the first of April. I know they are lower from some stations ; they
may be some higher from some others but I think they will average
lower than they did before the first of April.
Q. I ask if you remember whether you stated the other day that
the rates were lower than they were before the first of April ?
A. I may have stated so as I say now that I believe they average
lower than they did before the first of April.
Q. Now, Mr. Smith, I hold a receipt from the Wabash railway
signed by E. F. Heidon, agent, I presume at Bridgeton ; the consignee
is J. Kessler, for five thousand pounds of fiour and bran at eleven cents
per hundred, making the freight $5.50, which was paid on the 20th of
April, 1887 ; I also have another receipt dated March 22d, 1887, same
consignee, Kessler, for twenty-five hundred pounds of fiour and bran at
eight cents per hundred pounds, making the freight two dollars, signed
be the same agent, from St. Charles to Bridgeton, distance six miles,
both of them. I will ask you to look at them ?
A. It is not necessary to look; I think I can explain it. That is
a station close to St. Louis, within a few miles. Prior to the first of
April we had special rates in there that were lower than our public
tariff rates between this station and St. Louis, where we come in com-
452
petion with the river up to St. Charles, including the St. Charles car
works. It was necessary on account of the interstate law that we
should be more careful in publishing our tariffs, and we issued none
but tariff rates and cancelled all special rates that had been in exist¬
ence prior to that time. After the first of April shipments to the St.
Charles works were consequently charged at a higher rate than they
were prior to the first of April, because of the special rates had prior
to that time; and those special rates were at once restored, and they
are in effect now. The rates that they had prior to the first of April,
they are much less than our tariff, but the same rates would apply to
any one else at St. Charles, and they are not higher than that charged*
at any station between St. Charles and St, Louis.
Q. Is Bridgeton on the Missouri river?
A. Very near it.
Q. It is not on the Missouri river ?
A. It is very near to it.
Q. Isn't it an inland station ?
A. Those expense bills were shortly after the first of April, my
recollection is, and if my instructions have been carried out all rates
that were in effect prior to the first of April at those stations have been
restored.
Q. Do you mean that the special rates were from inland stations
to St. Charles or from St. Charles out to inland stations?
A. In both directions.
Q. You mean those rates are only when you come in competition
with the river?
A. I mean such rates as we found necessary to make between St.
Charles and St. Louis, those rates have been restored.
Q. Upon what ground do you make those rates, and why ?
A. On the ground of necessity,
Q. Well, what necessity ?
A. Competition.
Q. Well, Bridgeton is an inland town; it is not on the river;
there is no other railroad crossing there, is there?
A. No, sir.
Q. Then how do you explain the difference of three cents per
hundred pounds charged on the 20th of April as against the 22d of
March on the ground of competition ?
A. Well, our rates that were put into effect on the first of April
w^ere not copied from the tariff that was in effect prior to the first of
April, and there may be, and are doubtless, variations in corresponding
distances on the line now ; but what I mean to say is our average rateg
on our line are lower than they were prior to the first of April. I have
453
heard no complaints from any shipper or receiver of freight on our line
since that time. If complaints were made, any injustice had been done
in the division of our rates since the first of April, that injustice would
at once be corrected.
Q. Now, then, I will ask you another question. Why is it that
the destination is omitted from these receipts ?
A. I don't know, sir.
Q. Isn't it the fact that the destination is omitted because you
can't tell the rate from the receipt ?
A. I don't understand what the Senator means.
Q. You have a column for putting in the name of the consignee
and the destination of the goods, as I understand fhe receipt; and the
destination is not placed in either of these receipts, but in fact the des
tination was Bridge ton.
A. I don't know why the destination was omitted.
Q. Don't you think that is the reason you would not know the
destination the goods were shipped and hence you couldn't tell- the
rate ?
A. In other words you wish to convey the idea that the agent
omitted that for the purpose of stealing something.
Q. Well, was this omission made by a general order ?
A. No, sir ; that question I can answer;
Q. Do you know Mr. Heidon, the agent at Bridgeton?
A. I don't.
Q. Are you familiar with his handwriting?
A. I am not.
Q. Do you doubt the authenticity of this receipt? Will you ex¬
amine it ?
A. I will answer that question. I don't know from what source
you received that. If there is any complaint I will take the matter up.
Q. The source I received them from is Mr. Pollard, who is a mem¬
ber of the House of Representatives ; he handed them to me.
A. I don't question the authenticity.
Q. They were sent to him from Mr. Julius Kessler, who writes a
letter stating they charged him eleven cents more per hundred pounds
since the first of April than before on the same class of goods.
A. Those are one of our blanks, sir, and I don't doubt the au¬
thenticity of them.
Q. Has your attention ever been called before to the fact that
the destination was omitted from these receipts on your road?
A. No, sir; but I don't think it customary to insert the destination
at any station on our line where the freight is billed toa consignee—to
a consignee living at a station.
454
Q. Have you observed this to be a fact heretofore that the desti¬
nation was omitted?
A. I can't say that I have ever specially noticed that. My impres¬
sion is that the expense bill clerk at St. Louis making out expense bills
against the merchants in St. Louis wouldn't write ''St. Louis" after his
name ; it is unnecessary that he should.
Q. You say that you have never specially noticed the omission of
the destination ; have you ever noticed it generally?
A. Well, I can't say that I have ; it don't make any difíerence.
Q. Oould you take this receipt and tell me how far those goods
were shipped over your line?
A. I don't know that I could.
Q. By Senator Simrall : Do you know whether the rate has been
increased from Kansas City to Liberty Landing.
A. I couldn't answer that question without comparing the two
tariffs.
Q. I am told it has been increased thirty-three and one-third per
cent, since the Ist of April.
A. It is very possible.
Q. I want to call your attention to it and see if you can't correct
it?
A. It is Very possible, Senator ; Liberty Landing being upon the
river, we make from time to time—in the past have made such rates
as was necessary in competition with the river—we may have made
rates that were lower than our tariff in the past.
Q. By Mr. Booth : In this examination you have been speaking
about special rates ; do you mean special rates—rates made by spe¬
cial contract between the road and the shipper?
A. I mean we put the rate in to apply to all shippers. Anything
that is less than our printed tariff is special.
Q. By the Chairman, Mr. Johnson : Can you submit to the
committee a schedule of your rates in force on the Wabash from St.
Louis to Kansas City, including the local rates, prior to the 1st day of
April ?
A. I would be pleased to send that.
Q. By Mr. Booth: I would suggest the propriety of the request
being so made it should give us the rates as they are charged.
Q. By the Chairman: Can you give us the special rates, through
and local, you gave to any person or places prior to the 1st of April,
between St. Louis and Kansas City ?
A. That can be done.
Q. Can you give us the revised rates since the 1st day of April?
A. Yes, sir.
455
Q. Will you do that?
A. I will if it is requested.
Senator Castleman: I move that Mr. Smith be requested to fur¬
nish the schedules, which have been mentioned by the chairman,
within time.
The Chairman : As I understand it we want the schedule—the
general schedule—the special schedules made of through and local and
special rates, prior to the 1st day of April. How soon can you submit
them?
A. Well, it will take a day or two for the clerk to go over our
books and pick out all the special rates.
Q. Can you submit them by Tuesday morning at ten o'clock?
A. Do you ask for all that were made during the year? It will
be one clerk's work ; it would take him a good while to draw them off.
Q. Prior to April ?
A. Or do you mean the rates? Please let me understand you.
Do you ask for all the rates that were made during the year 1886 ?
Q. No, sir?
A. Or the rates that were actually in effect on the 1st of April
and the rates that have been made since that time ?
Q. By Senator Castleman : What evidence do you keep on hand
of the rates charged on your road ?
A. The record in the general freight office and record in the aud¬
itor's office.
Q. You keep a general printed schedule ?
A. A printed schedule ; we have copies of it that can be furnished
of all printed schedules last year.
Q. Do you keep printed schedules of the rates actually charged?
A. Not printed schedules, no, sir; I have stated that special rates
are not tariff rates.
Q. You make a difference between a tariff rate and a special
rate ?
A. Yes, sir.
Q. The tariff rate is a printed rate which is furnished to your
agent ?
A. And the special rate—special orders are always furnished to
the agents, but they are not always printed.
Q. What you call your tariff rates are printed ?
A. They are.
Q. They are furnished to your agents at different points on your
line for their guidance ?
A. Yes, sir.
456
Q. You can send those here, can you?
A. We can.
Q. Now, special rates are made by you since the 1st of April ?
A. Yes, sir; 1 have mentioned a few; we have made special
rates ; the only one that I have made that occurs to me at the present
time is for the St. Charles Oar Company, and they were made to ena¬
ble them to exist, because they couldn't pay the local printed tariff
rates between St. Louis and St. Charles in and out on all quantities of
freist and live ; they would have been compelled to close their doors ;
to enable them to compete with other manufacturers and do business
I gave to them such rates as they had, or about the same rates as they
had last year, and such rates as enabled them to exist, and at the
same time pay a small profit to the company ?
Q. That special rate is from St. Charles to St. Louis ?
A. In both directions.
Q. And only between those two points ?
A. Only between those two points.
Q. Between St. Charles and St. Louis there is the competition of
the river with your road ?
A. Yes, sir.
Q. St. Charles being on the Missouri river, connecting by boat
with St. Louis, on the Mississippi river ?
A. Yes, sir; but that is not why we gave them those rates.
Q. Well, I am only asking for the fact, sir; that is all ?
A. That is the fact.
Q. You can furnish us the printed tariffs immediately ?
A. They can be furnished at once.
Q. You say you have only one special rate in existence since the
1st of April, and that is the St. Charles contract ?
A. Yes, sir ; the only one I have individually made.
Q. Well, have there been others made by your company ?
A. There may have possibly been some made.
Q. You say possibly; do you know of any, Mr. Smith?
A. 1 don't.
Q. Have you any information of any?
A. I have not.
Q. Who has authority to make such special rates ?
A. The general freight agent.
Q. Who is he ?
A. Samuel Smith, the assistant general freight agent; we have
none now since the separation of our system j I have assumed those
duties myself, and he makes all special rates subject to my direction ?
Q. Who is he?
457
A. Samuel Smith.
Q. What is your name ?
A. James ; but as I am away from home necessarily a large part
of my time and have other duties to perform, I don't know everything
that transpires every day in the general freight and passenger depart¬
ments.
Q. There is nobody besides Mr. Samuel Smith, except yourself,
who had authority to make special rates ?
A. Only those two, unless the general manager might see fit to
make a special rate.
Q. Your office and Mr. Samuel Smith's office are the same?
A. No, sir; not the same.
Q. Are they both in St. Louis ?
A. Yes, sir.
Q. Located where?
A. Located at the corner of Sixth and Locust.
Q. In the Gould building—Equitable building ?
A. In the Equitable building.
Q. In the same building in which the Gould offices are ?
A. Yes, sir.
Q. How long will it take you to furnish this cotnmittee with such
special rates as have been made between now and the 1st of last April.
A. It will not take long; I will have it drawn off just as soon as
possible.
Q. Then, Mr. Smith, I understand the committee request you to
deliver to the committee, on or before Tuesday morning next, copies of
all your printed tariffs which were in force immediately prior to April
the 1st, 1887, and copies of your printed tariffs in force immediately
after April 1, 1887. Now, in connection with that, did your new tariff
go into effect on the first of April?-
A. Yes, sir.
Q. It was on that day?
A. On that day.
Q. Then, if there was a change made between the tariff which
was in effect—
A. No; I beg leave to correct myself there; the tariff is dated
the 1st of April, but because of the pressure of the printing of tariffs
about that time the printers were unable to get ours out before the 5th.
Q. Then we will put the request of the committee in this shape:
You will furnish this committee, on or before next Tuesday morning, a
copy of all tariffs printed and in effect upon your system immediately
prior to the Ist day of April or on the 30th day of March, 1887; you
will furnish to this committee copies of your printed tariffs that went
458
»
into effect between the first and the 10th of April, 1887, and that you
furnish to this committee all special rates made by your company since
the 1st of day April, 1885 ?
A. There is nothing in my department that we desire to cover up
or conceal. We will give the Senators all information that they may
desire, all that 1 can furnish. Now, my understanding of the request
that has been made is this, and I desire to state it so there may be no
misunderstanding or that it may be said I have evaded any of the re¬
quirements that have been made—my understanding is that I am re¬
quired to furnish to the committee ail tariffs, schedules of rátes that
were in effect prior to the 1st day of April ; all printed tariffs that are
or have been in effect since the 1st of day April ; all special rates that
have been made to or from any station on our railway in Missouri
since the 1st day of April.
Q. That is it?
A. As I have stated, Mr. Chairman, I didn't intend to convey the
idea there had been no changes in our tariff rates since the 1st of April.
The meaning that I did intend to convey was that our present tariff
rates will average lower than they did prior to the 1st day of April;
there may be instances where they are higher.
Q. By the Chairman : I think the inquiry ought to go to the
Missouri Pacific as well as the Wabash. My reason for suggesting that
is this : Prior to the 1st day of April I believe the Wabash was run
under the direction of the United States court, wasn't it?
A. Yes, sir.
Q. When did the new management take possession of the Wabash ?
A. The present company was organized on the 1st of April.
Q. And took possession of the road at that time ?
A. Yes, sir.
Q. Prior to that time it was under the control of the receivers ?
A. It was ; I occupied the same position I do now. I would ask
further if this inquiry is simply intended to cover the tariff of the State
oí Missouri, because we have numerous others ?
Q. Only the State of Missouri, as I understand it, between St.
Louis and Kansas City.
A. It covers only one small sheet.
By the Chairman: Do I understand that the inquiry will go to
the Missouri Paciffc ?
Senator Castleman : The Missouri Pacific and San Francisco.
By the Chairman : Let it be understood the motion goes to the
three roads, the three systems, Missouri Pacific, the Wabash and the
San Francisco. Unless there is objection to that it goes to all. The
motion is carried as to all.
459
Mr. Smith : I might say our tariffs might strike you as very strange^
simply send them to you without any explanation.
Senator Hazell : I presume you can write out any explanation
you desire to the board.
Mr. Smith : Our tarijflF rate, for instance, in the State of Missouri,
is simply a distance tariff rate that applies alike between all stations
for a corresponding distance on the road anywhere, the same distance
out of St. Louis between any local stations. You take our tariff out of
St. Louis extending from St. Louis to Fonda, in Iowa, and it is made
on an entirely different basis. It might strike you very singular. For
instance, the rate from Mexico to Ottumwa, Mexico being one hundred
and ten miles from St. Louis and Ottumwa two hundred and seventy-
nine miles frommst. Louis, is the same rate throughout. After reaching
Mexico we strike what in railroad parlance we call a horizontal tariff,
and the rate is the same from Mexico all the way to Ottumwa. If the
committee desire I can explain the reason for that now.
Q. By the Chairman : I want to ask you a question now. Oan't
we understand your tariff rates as well as the public if they are put up
in the depot ?
A. Yes, sir.
Q. You say that perhaps we wouldn't understand them. I sup¬
pose the tariff you will submit to us will be the same tariffs you will
have to publish along the line of the road ?
A. Yes, sir.
Q. And the special tariffs we will understand them as your agent
would give them to the public ?
A. Undoubtedly.
Q. Then it wouldn't require a key to unlock them ?
A. It will require no key, only it might seem strange ; I have
heard the question asked why railroads carried freight so long a distance
for nothing. There is a reason for it. We would not carry freight
apparently from Mexico and Ottumwa unless there was a reason for
it; I thought perhaps the gentlemen would want to know what that
reason v/as.
Adjourned till Monday, June 5th, 2 p. m.
460
Senate Chamber, Jefferson City, June 7th, 1887.
The Committee on Internal Improvements was called to order
immediately on the adjournment of the Senate by the Chairman,
Senator Johnson.
The Chairman (Senator Johnson) : When we adjourned on Friday,
I believe there was a discussion of railway questions pending before
the committee. A resolution had been introduced by Senator Sears
closing the further hearing of evidence. That resolution was laid over,
and I suppose it will now come up for hearing; and this committee
may now determine whether we will continue the discussion, or whether
we will close the debate and go into executive session.
I
Senator Johnson (of Madison) : It seems to me that on Friday we
were waiting on the freight agents and the commissioners' report. I
don't know whether that has anything to do with the open or executive
session; but perhaps before acting upon this resolution we ought to
communicate with those gentlemen here, and see if they have anything
further to offer. Having notified them we were ready to act upon the
matter, it seems to me a matter of courtesy to give them an opportunity
of being heard before closing the open session. I therefore move you
that the chairman notify the railway agents and the commissioners that
we are ready to hear any communications they have to make, now.
The Chairman (Senator Johnson) : I will state that I saw Mr.
Smith and also Mr. Newman yesterday evening, and they told me they
would have a conference with the railroad commissioners this morning.
They had not agreed then, but thought they would agree, and as soon
as they came to a conclusion, they would report to this committee.
Mr. Sears : I do not want to interfere with any testimony that we
may hear before this committee ; I therefore move that this resolution
be passed informally.
The Chairman : Unless there is objection, the resolution will be
passed informally, for the present.
Mr. Hazell ; Mr. Chairman, under the resolution adopted, I de¬
sire to offer a freight receipt from the Missouri Pacific Railway Com¬
pany, dated May 18, 1887, for the shipment of a package of firecrackers,
torpedoes, etc., from New York to St. Louis, charges $8.38; 910 pounds
weight. From St. Louis to JeflFerson City, $8.19. Signed, John J.
Church. I ofler this receipt for this reason: It is stated here by some
of these traffic managers that the roads, the Missouri Pacific and
others, take their rates from the roads in the east from which they re¬
ceive their freight. This receipt shows that they received $8.38
from New York to St. Louis, and that the charge was $8.19 from St.
Louis here, so that they did not take their freight rate from the other
461
road. The difference in the haul is something like a thousand miles.
Still, it did not cost but a very little more to haul it from New York to
St. Louis than it did to haul it from St. Louis here. I desire to introduce
two other receipts from the Missouri Pacific Railway Company—one
dated January 18, 1887, to H. P. Andrae, Jefferson City, for one barrel
of gasoline, weight, 400 pounds, charges $1; 25 cent rate. The other
is dated May 27, 1887, 35 cent rate, two barrels of gasoline, 800 pounds
to H. P. Andrae, same place, charges $2.80. I desire to present two
other receipts, one dated March 7, 1887, from St. Louis to H. P. Andrae
of Jefferson City, of one box laisens, two boxes of pigs feet, one case
of candy, the first lot rate, 35 cents, and the second lot rate, 45 cents.
The weight of the candy is 60 pounds, and the weight of the other lot
is 65 pounds. The charge is 27 cents for the candy and 24 cents for the
other lot. This shows that the local rate has been advanced from St.
Louis since the first of April on those articles.
Mr. Castleman : Mr. Chairman, I desire to present a communica¬
tion to this committee from H. Clay Conde, of St. Louis, and to request
that it be read bv the Clerk.
•/
The Clerk read the following communication:
To the Railroad Committee of the Senate of Missouri :
Gentlemen: I wish to present to you a case which will show
you the necessity of relieving the people from unjust discrimination
and oppression of railroad corporations :
«
.
statement.
On the first day of April, 1887,1, as a member of the Missouri
and Illinois Tie and Lumber Company, commenced buying ties and
lumber at the New Lakeville and Bloomfield crossing, switches on the
line of the Cape Girardeau and Southwestern railroad, with the inten¬
tion of shipping said ties to the cities of St. Louis, State of Missouri,
and East St. Louis, State of Illinois ; which fact was well known to
Louis Houck, president of said railroad company. On the ibth day of
April, I had a number of men to make ties for our company, who were
making 500 ties per day for our company. On the 15th day of April, I
called on the president of said railroad company, and ordered cars for
the transportation of our ties, who promised them as soon as possible ;
and ever since that date, our company have ordered cars, but none
have been given us ; while a powerful competitor, named T. J, Moss,
has been furnished 30 cars per day to haul his ties over this road from
the same stations, and other along the line of said road ; said company
gave to said T. J. Moss the exclusive control and complete monopoly
of all the rolling stock on their road, for hauling his ties to Cape Gir-
462
ardeau, to our total exclusion ; and have from the said 13th day of
April, up to this date, neglected and refused to furnish our company
one car, thus discriminating against our company to the ruin of our
business ; although our company offered to pay cash for the cars we
needed, and to comply with any terms which said company desired
from the 13th of April up to this date ; said company has not furnished
us with one car, although they well knew we were buying ties, and
having ties made to ship over their road. But the officers of the road
colluded with said T. J. Moss to exclude us from all transportation.
The foregoing statement of facts I will testify to under oath,
whenever desired to do so.
(Signed.)
H. CLAY CONDE,
A member of the Mo. and Ills. Tie & Lumber Co.
Mr. Hunter: I would like to state that the matter referred to in
that paper is in litigation, I believe, in the United States court ; and I
am informed that the facts set out in that paper are not true ; that Mr.
Moss furnished his own cars. That road, like every other road, at that
time, had more business than they had cars. The Missouri Pacific has
not been able to furrdsh all the cars wanted. This road is a new road
and cannot furnish all the cars required. Mr. Moss furnised his own
cars; and I believe there has been no discrimination. 1 think Mr.
Houck should be given an opportunity to be heard.
Mr. Claycomb : I would like to ask Mr. Castleman if he knows H.
Clay Conde, who signs that communication?
Mr. Castleman : Mr. Conde lives in St. Louis ; he was an old
bosom friend and confidential adviser of Samuel J. Tilden ; that is all
I can say, sir; Mr. Conde is a lav/yer, and his standing is good in St.
Louis. he does not practice law very much, but he is a man of good
standing and character ; this communication I received through the
mail this morning, and I have presented it to the committee ; that is
all I know about it.
Mr. Hazell : I have some more reports to make ; I want to make
the shortest comparison possible so as to get at the true rates ; I have
one receipt here from the Pacific railroad company dated April 29th^
1887, from St. Louis to Speed, C. E. Harness, consignee.
Mr. Sears : Mr. Chairman, as a member of this committee I would
just like to know how we are proceeding in this matter. Let us get to
work, consider these bills and get ready to report. Some of this com¬
mittee were members of the old committee—Senator Parcher and
others. Let them inform us how to proceed. I am ready to vote upon
these bills.
463
Mr. Parcher : I will ask the Senator from Macon if he was not a
member of some important committee during the regular session ? I
will tell him in that connection that this committee did a good deal
like other committees, so that he need not be at all backward in press¬
ing his views and making the motions that suits him ; and we will con¬
sider them as favorably as possible and vote them up or down.
Mr. Hazell ; Mr. Chairman, I have some more receipts I wish to
present to this committee. Here is a receipt from the Missouri Pacific
Railway Company for freight shipped from St. Louis to Speed, dated
April 4th, 1887, one case pickles, one dozen brooms, one case matches,
one butter tub, one case cigars, two kegs of nails, one case of lye, one
box of soap and some lead. I also present a receipt dated the 29th
of April, 1887. These receipts show very clearly that they have
no regular classification for their freights, and that they charge
difterent rates at different times for the same articles, and that the rate
has been higher lor the same article since the first of April than it was
prior to that time. I have here, also, a communication from E. H.
Kubleman, a dealer in agricultural implements in St. Louis. I will
read his letter. He makes complaint about overcharges, and trouble
in collecting back those overcharges. His letter is dated June 4th,
1887 :
*
St. Lotjis, June 4,1887.
Hon. H. W. J ohnson, Chairman Committee Internal Improvements:
Dea.r Sir : The tariff I have sent you is for Kansas and Nebraska.
The railroads do not give out their State tariffs to any one except to a
few preferred, neither did they ever nor do now sign a bill of lading to
any point in the State, except it is a competition town. They do not
allow any one to control their actions as to rates and weights. They
will give a man the tariff rate to a certain shipping place, but never
sign their names to it in any shape or form.
They never allow a claim tor overfreight, except in an extreme
case, and whenever they do allow anything they use the claimant's
money for six months and more before they pay it back, or, in the
words of Gov. H. 0. Brokmeyer, ''they borrow millions from their
customers by compulsory means without paying any interest therefor."
Mr. B. did not make this remark of late, of course not.
I enclose a bunch of railroad receipts from last year. The rates
were the same in January and February, 1887. I make the following
explanations in order so that you fully understand the silliness andun-
justness of their way of doing business : Those receipts are for sample
lots of cultivators and rakes (teeth in) and one-horse plows knocked
464
down. CaltivatorSj knocked down, are 2d class ; rakes knocked down,
teeth in, 1st class ; teeth out, 2d class ; plows knocked down, 2d class.
Respectfully,
E. H. KUHLEMAN,
For the Internal Improvement Committee, Jeûerson City:
Present and last year's rale on farming implements, wagons and
such like from St. Louis, Mo., to Springfield, Mo , about 200 miles, for
car load of 20,000 pounds, $41.
Rate from Ohio points, 600 miles to St. Louis, for like freight, f 35
per car.
20,000 pounds farming implements shipped loose from St. Louis to
Springfield, Mo., or at local rates, 90 cents per 100 pounds. $180 00
Deduct two days' labor for loading car 3 00
unloading car 3 00 6 00
$174 00
Or 325 per cent. Three hundred and twenty-five per cent, over
and above a legitimate profit.
The merchant in St- Louis makes on those goods from 5 to 10 per
cent, profit, and pays his help and labor out of this profit. The mer¬
chant who retails the same does not make any more than ten per cent,
and pays his labor and help; and the railroads to whom the people
have given all their franchises, their rights, their lands, their streets,
their waterways, make of them "400," say lour hundred per cent, on
their capital invested.
Does any man mean to argue this fact away ? I dare him !
Yours truly,
HENRY KUHLEMAN.
»
CO
o
No. of
bill.
Road.
1
'Frisco
2
Í i
3
4 4
13
4 4
6
Mo. Pac
7 •
4 4
8
4 4
9
4 4
10
4 4
11
4 4
12
4 4
121-
4 4
14
4 4
15
Gulf
4
' Frico
mn'
0
4 4
Articles,
knocked
down.
1 rake
1 cultivator
1 pony pl'w
Same
Same
Same
Same
Same
Same
Same, (less
plow)
Same
1 rake )
1 c'ltiv't'r >■
1 plow J
Same
Same
Same
1 rake
6 cultlvatrs'
not compl.
1 rake
W eight
250
250
35
535
535
535
535
535
535
500
500
535
535
535
535
250
1,400
250
What over
estimated by
R. K. Co.
600
560
430
560
510
510
500
500
510
550
510
450
410
250
1,680
260
Tarifl rate.
73
73
73
80
73
69, 79
140, 55, 70
70, 87
67, 84
134, 57, 67
69, 84
55
not known,
not known.
not known,
not known.
What
over-
ch'rg'd.
83
83
73
90
100
85
83
69
55
70
67
57
69
55
100
130
84
65
Overcharge.
•1.07
/ 34
14
56 and 75 cts. for stor-
•••••* •••••••••
under estimate as to
weight
21
51
26 and 82 cts. mistake
in adding
i
36
45.6
53.8
37
under estimate as to
weight
Same
Same
2.10 on weight......
Shipping Place.
Republic, Mo.
Bolivar, Mo.
Ritchie, Mo.
Logan, Mo.
Rocks ville, Mo.
Appleton City, Mo.
Holden, Mo.
Kevada, Mo.
Sedalia, Mo.
Calhoun, Mo.
Schell City. Mo.
Tipton, Mo.
Lamar, Mo.
West Plains, Mo.
Ash Grove, Mo.
Crocker, Mo.
Ci
Ol
They claim that they w^eigh everything and will swear that their charged weight is correct, and therefore refuse to refund all and
any such claims. Compare this with Mr. Kewman's brief. All they want is to be let alone.
466
There is another gentleman, I understand, who desires to come be¬
fore this committee, Mr. 0. E. Hess, Secretary of the Gaslight Co., Jef¬
ferson City. 1 can send down and have him up here in a few minutes.
In the meantime I have some papers I overlooked a moment ago rela¬
tive to the shipment of agricultural implements. I offer these for the
purpose of showing the cost of getting agricultural implements out of
the country to be used on the farm ; and the further fact, to show that
these railroads, although the traffic managers state that they take their
rates from the roads from which they take their freight coming from
the east, do not do so, but increase them more than four fold, I have
sent down for Mr. Hess. I have been through his books with him, and
have looked at his receipts, and he has some interesting information
on the freight question. He has been here twice, but has not had an
opportunity to be heard.
Mr. Charles E. Hess appeared before the committee and was in¬
vited by the chairman to make his statement, which he did as follows :
Mr. Charles E. Hess : I have been Secretary of the Jefferson City
Gas Company since the beginning of January, and, hence, I only kno\^;
from the books what has been done before, and I have seen the re¬
ceipts. The coal and naptha we use in the manufacture of gas is de¬
livered here on the track, and the vouchers go back to the parties from
whom we purchase as part payment. All the other vouchers taken dur¬
ing our term of existence, by my predecessors, are not in the office. The
only one I now have is one I took in duplicate in the beginning of
April, for à car of anthracite coal shipped from Buffalo here. The to¬
tal charges on that were $100.43. The rate from St. Louis here is ten
and three-fourth cents per 100.
By Senator Gideon : What is the distance ?
Mr. Hess : As I understand it, the distance is about 700 miles
from Buffalo to East St. Louis. The rate from St. Louis here is ten and
three-fourth cents per hundred, which makes a total charge of $36.24,
including $5.05 for transportation over the bridge. The rate from Buf¬
falo to East St. Louis is $64.19 for a haul of 700 miles. Before that
time the rate on anthracite coal was eight and three-fourths cents,
which is a difference of forty cents per ton from St. Louis here. The
same applies to naptha and oil. I have no vouchers. The difference
is three cents. It used to be 16 cents per 100 but now it is 19 cents
per 100 since the 1st of April. Here are some letters I have had from
some parties as to what the ratevS would have been before this purchase.
The coal was purchased from Messrs. Hesser & Wickham. This letter is
as follows :
467
St. Louis, April 16, 1887.
Charles E Hess, Esq., Secretary Jeiferson City Gas Co*<¡ Jeiferson
City^ Mo.:
Dear Sir: We have your letter of the 15th and are surprised at
the heavy freight charge from St. Louis to your city. We see no way
to do but to pay the freight and charge us with the amount. Please
send us the freight bill at once and we will see if any reduction will
be allowed. We cannot make a price on further shipments until we
learn the best we can do in matter of rate. We will lose considerable
on this shipment, as our price was based on the old rate.
Kespectfull}^
(Signed) BESSER & WiOKHAM.
To that I answered them asking whether I should not pay the
amouut under protest, so that they could contest the matter. Here is
their letter, dated April 21, 1887 :
C., E. Hess, Esq., SeCy Gas Light Jeiferson Gity^ Mo.:
Dear Sir : Replying to your letter of the 18th we would state
that car—Blue Line, 6325—shipped to your company, containing an
thracite coal, took freight from Buffalo, N. Y., to Jefferson City, Mo.
TMs coal was hauled from Buffalo, N. Y., to East St. Louis—about 700
miles—for $59.14 ; the bridge transfer here was $5.05; freight from St.
Louis to Jefferson City $36.24. The freight on this car of coal, if it had
been shipped prior to February 15th last, would have been $33.86 from
Buffalo, N. Y., to East St. Louis, 111. Between February 15th and April
^th $45.15.
Very respectfully,
(Signed) HESSER & WICKHAM.
I have made a mistake in reference to the bridge charge of $5.05.
I deducted it from the $36.24, which is the charge from here to St.
JLouis, or from St. Louis here, 1 should say. Of the $36.24 no part of
that goes to the bridge and transfer company. Personally, I know
nothing of these matters, as to how it is divided. Some of the things
are a mere inference, which you, gentlemen, can draw as well as my¬
self. I received on the 17th of March a letter signed by Mr. Hatch, as
follows :
Rich Hill, Mo., April 17,1887.
Jeff. City Gas Co., Jeiferson Gity., Mo*:
Gentlemen: I quote you prices, as follows :
Rich Hill, lump, per ton $2 75
Lewis,lump, per ton ^ 2 65
Lexington, select, per ton 2 55
468
F. O. B. cars, Jefferson City, Mo. Would be pleased to receive an
order from you at any time.
Yours truly,
(Signed) J. 0. HATCH, Sales Agent.
I answered that letter and received an answer to mv letter on the
•p
30th of April, 1887, as follows :
Chas. E. Hess, Esq., Jeiferson City^ Mo. :
Dear, Sir: Your favor of the 26th, ordering one car Lexington
coal on trial, at hand.
$2.55 per ton is our cash price. The freight and coal charges are
both collected by the railway agent on delivery of coal. All our coal
is billed this way, and settled for at mine weights. If you wish, we
will be glad to ship the coal on these commissions. Please advise if
we shall ship. Yours truly,
(Signed.) J. C. HATCH, S. A.
I answered that letter, and have his reply of the 8th of April
Eich Hill, Mo., April 8th, 1887.
Charles E. Hess, Esq., Jeiferson City., Mo*:
Dear, Sir : Your favor of the 6th instant at hand.
The total cost of the coal and freight to you will be $2.55 per ton..
This includes the freight, $1.10, and coal, $1.45, making $2 55 per ton^
for which the railway agent collects the whole amount. We make no
bill against you, and your freight bill as above will be jmur receipt for
the whole amount. Hoping this will be satisfactory, and that we will
be favored with an order from you frequently.
Yours truly,
J. C. HATCH, S. A.
P. S.—The freight from Lexington to Jefferson City is ®1.10 per
ton. We get the coal at $1.45 per ton at mines; on cars, Jefferson
City, $2,55 total cost. J. C. H.
No private dealer can compete with any such rates as those, that
is my inference, though I may be mistaken in ray judgment.
By Senator Hazell : I don't understand, Mr. Hess, to make it quite
clear, as to who should pay the freight ultimately. Do I understand
that they afterwards make him a rate inclusive of freight ?
Mr. Hess: You are mistakeff^in that; the entire correspondence
is here; the first letter stated the price of the coal at $2.55 delivered
here; you did not understand that clearly ; in order that there maybe
469
no misunderstanding, and that I might be sure, I wrote to him asking
whether the price he had named included the freight; the second
letter makes that plain to me. I know a case where the railroad com¬
pany collected the freight bill and also the amount of the invoice ;
from that I conclude that it was the railroad company's business. Of
eourse the last letter shows that point clear enough. I have one
other bill here showing coal shipped about eight miles where the
freight was at the rate of two and three-fourths cents. Now Lexing¬
ton is over a hundred miles from here, and the rate was $1.10 from that
point.
Senator. Oastleman : I would like to ask a question of Mr. Hess :
Where did this coal come from that you are talking about, for which
the price was $2.55 ?
A. It came from Lexington.
Senator Oastleman : And you got it here ?
A. I did not get it at all ; I did not want it.
Senator Oastleman: Who were the parties you corresponded
with
A. J. 0. Hatch, sales agent ; I don't know who the gentle¬
man is ; his first letter was received ; I had never heard of the gentle¬
man before.
Senator Oastleman: Did you buy coal from any other parties
there ?
A. No, sir ; I never bought any coal from any other parties.
Senator Simrall : How much did you pay for the coal from
Lexington here ?
A. $1.10; about twenty tons to the car; about $23 per car.
Senator Simrall : How far is it to Lexington from here ?
A. 1 don't know : I think about a hundred miles.
Senator Simrall : And the cost is $23 from Lexington here ?
A. Yes, sir.
Senator Simrall : That is cheap enough, isn't it ?
A. Well, I showed this letter to Senator Hazell, and we talked
about the matter. I merely, at his request, brought these letters
here ; I did not think they had any bearing on the matter. It was
merely to show that a dealer outside of the company could not com¬
pete with the company. Nobody can mine coal at $1.45 per ton, and
haul it.
Senator Allen: What did you pay on the coal bought eight miles
from here?
A. I have the bill for that; it is two and three-fourths cents a
hundred.
Senator Hazell : I believe that is all Mr. Hess has to state.
470
Senator Castleman : I now move you, sir, that this committee ad-
journio meet at half past one o'clock at the committee room, ánd that
the clerk of this committee be notified to call the attention of members
of the committee to the fact that we shall meet there at that time^
and that he notify Senator Proctor and others who have bills pending
before this committee, that their bills will be taken up for considera
tion.
The motion prevailed, and the committee adjourned.
June 8, 1887.
Immediately on the adjournment of the Senate, the committee
was called to order by Senator H. W. Johnson, its chairman.
It being announced that the traffic men were ready to report, Mr.
Ripley was called upon, who came forward and said :
Mr. Chairman and Gentlemen : Before reading the report which
I hold in my had, I desire to make one statement on behalf of the rail¬
road men who are present. It came to our knowledge last evening
and this morning that a rumor had been circulated on the streets and
elsewhere, to the effect that the railroad men, on arriving here, found
themselves unable to agree on anything. I wish to correct that mis¬
apprehension. I have heard of it two or three times. I do not know
as it is of any importance, or that it will have any influence on the
mind of any one ; but I wish to state that we are in full accord in all
that we have done, and those who are here, representing as they do
four-fifths of all the mileage in the State, have not only subscribed to
this report, but I may add that there is no practical difference of
opinion among them, and has not been from the start. I desire now
toread the report of the railroad traffic men, who are by you requested
to make the report.
Mr. Ripley then read the following report:
Hon. H. W. Johnson, Chairman Committee on Railroads and Internal
Improvements : •
In compliance with resolutions adopted by your committee, we
have spent portions of two days in an eiïort to agree with the board of
471
railroad commissioners upon a schedule of maximum rates for use
upon the various railroads of the State of Missouri. We came here in
the hope that some agreement might be reached between the commis¬
sioners and ourselves which should give the people ample protection
while not materially injuring the interests we represent. In that
direction we were prepared to go to extreme limits, and were even
prepared to submit to what we considered a considerable injustice
rather than that the wishes expressed by your committee should not
be fulfilled.
We found ourselves hampered at the outset by the fact that in
response to a request of your committee, the railroad commissioners
had already promulgated a schedule of rates which was far lower, as
we believe, either than required by public policy or than prevails in
other western States. The request, in answer to which these rates
were furnished by the commissioners, was for a list of maximum rates,
but we have reason to believe that in furnishing this schedule the com¬
missioners had in mind the results which would accrue to the railroads
if the rates therein given could be applied to the whole tonnage rather
than a schedule of maximum rates, below which many of the rail¬
roads must transact their business. The difference between the two is
«
apparent, because it is not possible for the railroads to obtain, under
all circumstances, any maximum rate which the legislature may pre¬
scribe. There will always be conditions other than those contemplated
by the legislators, which will limit the rates which we can charge.
The rates prescribed therefor by the commissioners were, in our
opinion, as already stated, not intended so much as maximum rates as
they were intended for rates which should be applied to the entire
traffic of the State. Both the commissioners and ourselves were, there-
forej greatly embarrassed by the schedule already submitted. The
r
commissioners because they considered themselves committed ; and
ourselves because the rates submitted by the commissioners were so
exceedingly low as to render it impossible for us to accept them. Not-
witUstanding this, an effort was made to reconcile the difierences but
without avail, and it is with very great regret that we are obliged to re¬
port to you that we do not believe it will be possible for us under
existing circumstances to agree with the railroad commissioners upon
any schedule of maximum rates whatever.
We beg to submit herewith schedule marked ''A," being a com¬
parison of the rates in effect in Illinois, Iowa, Kansas and Missouri, as
compared with those recently submitted to your committee by the
railroad commissioners of this State, and to respectfully submit for
your consideration the question as to what circumstances can justify
lower rates in this State than in any of the surrounding Slates. There
472
is one of your neighboring States which, in its geographical peculiari¬
ties and productions, is more nearly akin to you than any other ; this is
the State of Iowa, and it will doubtless be granted that in thrift and pros¬
perity it is the equal to this or any other western State. Up to about the
year 1878 various attempts at railroad legislation were made in that State,
but in 1878 the laws were repealed and since then no maximum rates
have been fixed, notwithstanding which we believe there is no State in
the Union where fewer complaints have been made, or where there has
been a better feeling between the people and the railroads. It should
be borne in mind, also, that while Iowa is perhaps more justly com¬
parable with Missouri in this connection than any other, there is still a
very wide difference between the two. Nearly the entire surface of
Iowa consists of rich farming and alluvial lands, and the immigrant in
that State has an immediate return for his labor in his first crop. In
much of Missouri the situation differs in that mineral resources are to
be developed, necessitating inducements to capital from without the
State, and rendering growth of paying traffic a much slower process
than in purely agricultural States. A large area, also, in Missouri, is
covered with forest productions which must be removed before the soil
is in condition to cultivate, rendering the development of that portion
of the State much slower than in the case of a prairie State in which
the settler at once enters into active cultivation of the soil.
The task of prescribing rates for the railroads of a State as large
as Missouri, embracing so many varied industries; so many different
classes of traffic ; so many varying geographical features ; is so nearly
an impossibility that it is probable it will never be done without doing
serious injustice, either to the people on the one hand, or the railroads
on the other. Even in States where the entire traffic consists of agri¬
cultural products the task is a difficult one because of the varying,con-
ditions which govern the railroads, and it is complicated ten-fold when
a considerable portion of the traffic consists of minerals and manufac¬
tured articles, into the making of rates on which commercial condi¬
tions enter far more generally and to a far greater extent than in the
mere fixing of rates upon productions of the soil. It is not possible to
fix a schedule of maximum rates, and at the same time constitute them
the minimum rates, and we believe that concerning this a very wrong
impression is abroad among the people, and perhaps to a considerable
I
extent among the legislators; We have seen in the office of the rail"
road commissioner quite a number of criticisms upon the schedule of
rates presented by that board, based upon the fact that rates in diflFer-
ent parts of the State and under different conditions are even now
lower than were named by the commissoners, and the idea seems to
prevail quite generally that the fixing of the maximum rates higher
473
than the rates now existing would have a tendency to raise rates now
charged to the level of the maximum so published. This is a serious
mistake, and from it arise very many misapprehensions and com¬
plaints. The facts are that were the maximum rates within the State
to be fixed fifty per cent, higher than those suggested by the commis¬
sioners the actual rates chaged would not and could not be materially
advanced. There is always present with the railroads a commercial
necessity which is paramount and in campliance with that necessity
rates are made without reference to anything which may be upon the
statute books except that they cannot be higher than those prescribed
by law. This commercial necessity will continue regardless of any
rates which may be formulated by you or your successors.
We must now ask your further indulgence in permitting us to
make reference to matters not covered by the resolution which called
us before you. It being found so difiácult, either for yourselves or the
commissioners to determine what figures are reasonable maximum
rates, to be made applicable alike for all lines in the State, it may not
be out of place to consider what measures, other than the fixing of
maximum rates, can be adopted that will best subserve the interests of
the public and yet fairly protect those of the carrier.
We do not feel that we are here as attorneys to argue solely from a
one-sided view of the questions at issue, but we do believe that the
best interests of both the people and the railways are served when
neither is persecuted or oppressed by the other.
There are before you substantially three propositions—three metL
ods of iState regulation, from which to choose, viz.:
1. That the legislature fix certain maximum rates which the com
missioners shall have authority to reduçe.
2. That no maximum rates be fixed by statute but that, the rail¬
roads having fixed their own rates, the commission shall have power to
order changes in the same subject to appeal to the courts the finding of
the commission to he prima facie evidence before such court.
3. That the legislature fix certain maximum rates, up to which
the railroads may charge when other conditions do not prevent.
It is not in a captious or fault-finding spirit, or with a desire to ob¬
struct legislation that we object to the first two of these methods and
protest that they are unfair, that they embarrass our legitimate busi¬
ness, interfere with commerce and the prosperity and development of
the State, place us in a false attitude toward the public and prejudice
our case before the courts. We shall not object ,to any plan which
shall give us a fair opportunity to demonstrate before an unprejudiced
tribunal the justice of our cause.
m
For obvious reasons, we object to the monstrously unjust proposi¬
tion that the commissioners shall have authority to reduce below a
maximum fixed by the lei>:islature, but shall have no authority to
advance.
For equally obvious reasons, we object to a ruling that the findings
of the commissioners shall be prima facie evidence against the rail¬
road. We believe that in ninety-nine cases out of every hundred the
rulings of the commissioners, made after a full hearing of the case,,
would be respected by the railroads, rather than invite a lawsuit and a
trial by juries notoriously disposed to take the side of the individual
against the corporation; but we vehemently protest against the unfair¬
ness of a proposition which presupposes before a court of law that one
party to a controversy is right and the other wrong. We maintain that
we are not oppressing the people, and that they should not oppress us,
and that we want nothing that is unfair or unreasonable.
We believe that the present commission is a fair-minded body,
notwithstanding our inability to agree with them, and that their suc¬
cessors are not likely to be less so, and we attribute our present fail¬
ure to agree with them largely to the fact that no three men could
formulate in the time given them, and without consultation with those
interested, a schedule of maximum rates that would stand the test of
criticism. We believe that had we been given the opportunity to
appear before them, their report would have been more just to us ; but
we cannot disguise from ourselves what must be apparent to all, viz.:;
that any board of commissioners, especially if elected by the people,
will of necessity, and even with the best of intentions, represent what
they conceive to be the interests of the patrons of the railroads rather
than those of the railroads in any controversy that may arise.
But we do not wish to appear before you as simply objecting to
every proposition and concurring in no plan to reach the object you
desire and for which you are called together. Your present law is
virtually a copy of the old "Granger Law" of Wisconsin, long since
repealed, because of its harsh provisions. If for this you can substi
tute something that will satisfy public sentiment and ultimately bring:
nearer together the railroads and their patrons, you will have achieved
"A consummation devoutly to be wished."
Should you decide that it is impracticable to fix maximum rates,
it may not be amiss for us at this opportunity to say that it is our
opinion the best results have been attained in States where the powers
of the commissioners have been mainly advisory, as in Kansas and
Iowa, and that if you pass laws strictly prohibiting unjust discrimina¬
tion and providing that all rates shall be reasonable, and give the com¬
missioners full power to investigate all charges and rule thereon, such
475
ruling subject to appeal to the courts by either side without prejudice,
you will have arrived at a law which will be satisfactory to all parties
interested, and which will soon allay all clamor and excitement, if any
exist, and to such a law we pledge in advance the hearty support and
co-operation of the railroads of the State.
W. H. NEWMAN,
For the Missouri Pacific & St. Louis, Iron Mountain & Southern Railways.
JAMES SMITH,
For the Wabash Western Railway.
M. S. SARGENT,
For the Kansas City, Fort Scott & Gulf, Kansas City, Springfield & Memphis,.
& Kansas Citv, Clinton & Springfield Railways.
W. M. SAGE,
For Chicago, Rock Island & Pacific Railway.
FRED. A. WANN,
For Chicago & Alton Railway.
G. W. CALE,
For St. Louis & San Francisco Railway.
E. P. RIFLE Ï,
For Chicago, Buriington & Quincy, Hannibal & St. Joseph, and St. Louis,.
Keokuk & Korthwestern Railroad.
Representing 4,538 miles of the total 5,018 miles of railroads within
the State.
Jefferson City, Mo., June 7, 1887.
Mr. McGinnis: Mr. Chairman, when Mr. Newman was before the
committee he was asked to furnish to the committee a statement or
schedule compared with the schedule furnished by the commissioners,
showing where he believed those rates to be too high and where he
belieyed them too low, and the reasons why. That is my recollection ;
that Mr. Newman stated that the matter involved a good deal of labor,,
but he stated to the committee that he would furnish such a state¬
ment ; has that been done ?
Mr. W. H. Newman: I do not remember of such a request being
made of me.
Mr. Ripley: I think the gentleman is mistaken in the name; I
believe the request was made of me, and that I promised to make the
comparison. I will say in response to the gentleman that I have pre¬
pared such a schedule; I have prepared no argument on it; I have
prepared a schedule of rates which I believe to be fair, and which I
am willing to submit. I had no opportunity of stating the reasons of
the variance between this and the commissioners' rates ; that would
476
be a very laborious matter, and would take a great deal of time. I
have prepared a schedule, and am ready to submit it to-day.
Mr. McQinnis : The reason why the gentleman considers certain
rates too high or too low would be very desirable. If that portion of
the request could be complied with, showing the comparative schedules,
of course each Senator and Representative could examine it and com¬
pare it for himself. I hope the committee will obtain from this gentle¬
man the schedule for the use of the committee.
Mr. Sebree : I would like to ask the gentleman who has just taken
his seat (Mr. Ripley) a question. I want to ask Mr. Ripley if any of
the laws which we haye now upon the statute books in Missouri m
reference to railway legislation, have interfered with the construction
of railroads in this State, or intimidated capital desiring or seeking in¬
vestment in railways in this State.
Mr. Sears: A point of order, Mr. Ghairman. Mr. Ripley has
made a statement here, and has filed his report. We do not want to
go into other matters.
Mr. Sebree : I do not desire to obtrude my inquiries upon this
committee, but I thought that possibly the resolution was sufficiently
broad to allow me to ask the question.
Mr. Sears: If we open this matter, it is likely to continue open
for some time.
Mr. Johnson: We have not closed it yet.
Mr. Sears : We have heard this testimony, we have got this re¬
port, and I think that is sufficient.
Mr. Simrall: I don't suppose that Senator Sebree desires to ask
many questions. I would like to hear the question answered myself.
The Chairman (Senator Johnson) : Unless the committee order
otherwise, the Senator will proceed with his question.
Mr. Sebree: Did you understand the question,or shall I repeat it?
Mr. Ripley: I think I understood it; your question is, whether
the laws now on the statute books of the Scate would interfere with
4he railroad development of the State :
Mr. Sebree : Yes, sir.
Mr. Ripley : And whether they have prevented the investment of
capital.
Mr. Sebree: Yes, sir.
Mr. Ripley : Not being a capitalist myself, I don't know that I
am prepared to answer that question as fully as might be. I will say
this, though perhaps it is not a proper thing to say in the presence of
a body like this—I will say that in my opinion they have not. I will
say further that if the laws existing, upon the statute books of this
State had been fully enforced, I think it would.
477
Mr. Sebree : I want to ask that question in connection with your
objection as to maximum rates. It is your opinion, then, that if the
laws had been enforced it perhaps would have retarded the construc¬
tion of railways in this State ?
Mr. Eipley : I suppose it is a well known fact that while the law
authorizes the commission to reduce rates below the maximum rates,
that most of the railroads in the State have contested that right, and
have not conformed to the rates so reduced by the commissioners.
Mr. Sebree: You are aware then that there is now on the statute
books of Missouri a law fixing maximum rates, or authorizing the com¬
missioners to do that ?
Mr. Ripley : Yes, sir.
Mr. Sebree: Then to repeat those laws would not do anything
more towards changing the rates than what has already been done?
Mr. Ripley : If the rates now fixed by the commissioners had
obtained over the whole State—which they have not by any means—
I think the result would have been to deter capital from coming into
the State to build railways. No attention has been paid to them by"
the railroads.
Mr. Sebree : Have not some of the railroads accepted the reduced
rates from the commissioners ?
Mr. Ripley : Possibly one or two.
Mr. Sebree : The Chicago & Alton is one ?
Mr. Ripley: Yes.
Mr. Sebree : Do you think of any other ?
Mr. Ripley: I don't think of any others that have complied with
the reductions of the commissioners. It is possible that some may
have complied in certain instances; but as a whole, I think the Chi¬
cago & Alton is the only road that has adopted them, and I think the
reason for that is that their local business in Missouri is exceedingly
small as compared with other roads.
Mr. Sebree : Don't you think that other roads in the State can
haul as cheaply as the Chicago & Alton ? The average in the State is
about the same as the country through which the Chicago & Alton
runs.
Mr. Ripley: That is true, but the fact remains that probably
ninety per cent, of the business of the Chicago & Alton road is inter¬
state business, beyond the control of the S^ate of Missouri. The Chi¬
cago & Alton, rather than to court any trouble in the State of Mis¬
souri, or with the commissioners, have accepted the rates of the com¬
missioners upon the very small local traffic they have in the State,,
while the rates out of the State, under which they are doing most of
478
their business have remained unchanged, and they can very well afford
to stand it.
Mr. Se bree : You have admitted that other roads can haul as
cheaply as the Chicago & Alton.
Mr. Ripley : I said some other roads probably could.
Mr. Sebree : If they can afford to accept those rates, why don't
they do it? I don't see why the other roads cannot do it as well as the
Chicago & Alton ? That is what I am trying to get at?
Mr. Ripley : What I was trying to get at is, that other roads are
not exactly similarly situated. The Chicago & Alton has almost ex¬
clusively an interstate business. Rather than enter into a contest with
the commissioners of the State of Missouri they have accepted the
rates fixed by the commission; but as that does not affect the bulk of
their business, they do not feel the effect of any such reduction ; the
other railroads in the State, having a much larger local business, by no
means do anything of the kind.
Mr. Sebree : Do you intend to say that the Chicago & Alton has
a greater interstate tonnage than the Missouri Pacific?
Mr. Ripley : No, sir; but they have a very much less tonnage
within the State than the Missouri Pacific.
Mr. Sebree : Then on account of the large ' amount of interstate
tonnage of the Chicago & Alton, you think they can afford to accept
those reduced rates ?
Mr. Ripley : That is not exactly the way I intended to put it. What
Í tried to make clear was, that on account of the very small tonnage
they have within the State, they could better afford to sacrifice it than
the other roads could.
Mr. Sebree : that is just the converse of the proposition I put:
that the interstate tonnage was greater.
Mr. Ripley : When nine-tenths of their business is interstate, as
I have shown, without knowing exactly what the figures are, the ques¬
tion of a reduction on the other tenth is comparatively a small matter ;
but in case of roads terminating at St. Louisç having their principal
market in St. Louis, and moving ail the products of the State to that
market, w:thin the State, it presents a wholly different question.
Mr. Sebree: Don't you think the interstate tonnage of the Mis¬
souri Pacific is as great as the Chicago & Alton's ?
Mr. Ripley: That is very possible, but their tonnage within the
State is very much greater than the Chicago & Alton's. When the
'Chicago & Alton accepts the commissioners rates, they lose one dollar
where the Missouri Pacific would lose ten by doing the same thing un»
der the same circumstances.
479
Mr. Allen : What I wanted to ask, Mr. Chairman, is, if our rail¬
road commissioners have made any report?
The Chairman, Senator Johnson : They have not reported ; I un¬
derstand they will report sometime during the day.
Mr. Simrall : Do I understand that Mr. Ripley has made a sched¬
ule oí rates ?
Mr. Ripley: Yes, sir; I have.
Mr. Simrall : Can you leave a copy with us ?
Mr. Ripley : I will do so.
Mr. Hazell: In that connection, I would like to ask Mr. Ripley
his reasons for the variance in his rates. I understand that he has
some reasons for certain rates. I would like to have him submit those
reasons with his schedule of rates.
Mr. Ripley : I will comply with the request.
Representative Miller : I would like to ask Mr. Ripley a few ques¬
tions. I want to ask Mr. Ripley, in the first place, if when the railroad
commissioners of this State have made a general schedule of rates for
the government of the roads heretofore, if those schedules have not
been confined to a few special articles ?
Mr. Ripley: The action of the railroad commissioners heretofore
has been confined to reducing below the interstate rates, the rates on
a lew special articles.
%
Representative Miller : Isn't it an easy matter for the roads of the
State to comply with the orders of the commissioners on those few ar¬
ticles ?
Mr. Ripley : The difference is not so marked in the schedule they
have now presented, of course.
Representative Miller : In your replies to the questions of Sena¬
tor Sebree, you intimated that the laws of the State of Missouri in ref¬
erence to railways have not been enforced.
Mr. Ripley: As regards a compliance with the commissioners'
rates, they have not; I presume that is a well-known fact.
Representative Miller : I understood your question to be con¬
fined not to one matter, but to the laws generally.
Mr. Ripley: I intended to confine my answer to the laws govern¬
ing the rates made by the commissioners. I am not in a position to
say how well they .have been enforced in other particulars.
Mr. Miller : I want to ask you from the point of view you
occupy as one of the traffic managers of the State of Missouri, if
you can inform us where the defect is in our law—that part of it that
has not been enforced ?
Mr. Ripley : I don't know as I understand your question exactly.
Mr. Miller: I take it there is a defect somewhere in the law, by
480
reason of which it is not enforced, and is not enforceable; and I wanted
to ask 3^ou if from your point of view you are acquainted with what
that defect is, so that you can state it to us ?
Mr. Ripley : I think it is the opinion of quite a number of the
counsel of the different roads that the authority given to the commis¬
sioners to reduce the rates can be successfully contested ; and I think
the advice of counsel to a great many of the roads is, that it is not
necessary for them to pay any attention to the mandates of the com
missioners in that regard. I am not enough of a lawyer to discuss the
points as to that, but I think that is the fact.
Mr. Miller : If that be true, Mr. Ripley, as regards the present
statutes on our books, would it not be equally true in regard to any
statute that might be passed authorizing the commissiones to fix the
rates below the schedule rates of the companies ?
Mr. Ripley : That would be a mere matter of opinion ; as I said
before, I am no lawyer.
The chairman here presented the statement of the rates prepared
by Mr. James Smith, and caused to be read the following communica¬
tion from that gentleman :
Jefferson City, Mo., June 7lh, 1887.
Hon. H. W. Johnson, Chairman Hailroads and Internal Improve¬
ments Committee:
Dear' Sir : In compliance wdth the order of your honorable
committee, I beg leave to herewith present copies of tariffs that were
in effect on our line prior to the first day of April, and copies of all
local tariffs issued between stations in Missouri since the first day of
April. I also enclose a comparative statement for ready reference,
showing the actual rates in efiect prior to and subsequent to the first
of April. I also enclose, in compliance with your order, statement of
all special rates other than for railroad material in effect on our line.
Very respectfully yours,
(Signed.) JAMES SMITH,
General Traffic Manager.
Mr. Parcher : I would like to ask Mr. Ripley one question. 1
would like to ask, Mr. Ripley, if you take that one section referred to
that you disregard, where the commissioners exercise the power to
recommend a lower rate, and you disregard it—if that is not a pretty
good criterion of what the law would be if we were to recommend that
power be given to the commissioners to investigate and report, and to
rely upon public opinion to correct abuses ? The point is, whether the
single section we have got being disregarded, and public opinion being
481
the same now that it would be under the law we contemplate—whether
that is not a pretty good criterion as to what effect the board of com¬
missioners and public opinion would have upon the railroads ?
Mr. Kipley : If I understand the gentleman's question, he thinks
that, because the railroads have disregarded largely the orders of
the commissioners to reduce rates, that in case of a law which made
the commissioners the judges in the first instance, the railroads would
still continue to disregard the opinions of the commissioners. The
answer to that is, it depends very largely as to who and what the
board of commissioners is. We believe that a fair minded body of
men, with a proper feeling for both sides, and a fair show for both
sides to be heard, that there would be no great difference between the
minds of reasonable men. We think the railroads would be disposed
in a case of that kind to go a great deal farther in the direction of com¬
plying with the suggestions oí the commissioners, than they are under
the present state of things, when they feel that they aré permitted in
no event to charge but a certain amount, and are subject to reduction
below that amount. We can only speak from our experience in other
States, where the result has been in the main satisfactory. Perhaps it
has been less satisfactory to the railroads and to the community, but
still, more satisfactory than in other States where maximum rates are
fixed. I don't think the state of things that the gentleman suggests
would be likely io follow. That of course is a matter of opinion,
and one on which his opinion is as good as mine.
On motion, the committee adjourned.
June 10,1887.
The committee met shortly after 9 a. m. in the Senate Chamber, Sen¬
ator Johnson of Montgomery, chairman, presiding.
The chairman submitted the following communication which had
been received from Mr. E. P. Ripley, of the Chicago, Burlington &
Quincy R. R. Co., and which was read:
ß M—31
482
Hon. h. W. Johnson, Chairman Committee on Railroads and Internal
Improvements :
Your committee, in asking me to formulate a schedule of maximum
rates and to point out the differences between sucb schedule and that
furnished for your information by the railroad commissioners, has placed
upon me a most difficult task, and one from which I should be glad to
be excused. But having promised to do my best, I beg to hand you
herewith a schedule containing rates on the principal commodities
hauled in the State, under which I believe the first class railroads could
live, and which I believe could be in no case unjust to the shippers of
the State. In presenting this I desire to be understood as giving my
own views only, and it is quite possible I may have erred in not allow¬
ing a sufficiently high rate for some portions of the State. It should
be understood that branches and roads having a small traffic should be
allowed rates greater than these, by such percentages of increase as
may accord with the conditions surrounding thern.
If will be observed that on short hauls the schedule presented does
not materially differ from that presented by the commissioners ; it is
on the longer distances that we radically differ. Up to 100 miles we
are not far apart, and in some cases the rates I propose are lower than
those of the commissioners, notably on hogs and sheep, but upon dis¬
tances over 100 miles I propose rates ranging from ten to thirty per
cent, higher than theirs. The plan upon which the commissioners'
schedule is based is impracticable in that it ignores distances too
largely. If transportation costs anything, that cost is increased by "
every mile the property is carried. The difference between five miles
and six miles may be so slight as not to be appreciable, but the differ¬
ence nevertheless exists, and when it is a comparison between 100 and
150 miles it is a very considerable item—how much it is when applied
to any individual case might be determined with some degree of ac¬
curacy, but just how much is fair to allow for it as a general rule ap-^
plying to all roads is a much more difficult problem. I believe that the
commissioners' rates, if applied to the Missouri roads, would prove
ruinous to them, and I cannot better give you an idea of the extent of
such a disaster than to express my belief that these rates would mean
a net loss to the railroads of the Ötate on the business of Kansas,
Nebraska, Colorado and New Mexico alone of not less than two million
dollars annually. Moreover, the application of these rates would work
a reduction in all rates in Iowa, Kansas and other western States, be¬
cause the Missouri river basis would be lowered, necessitating, under
the interstate law, a reduction at all intermediate points.
483
Granting that it may be yonr duty to prescribe' such rates as wil
protect the people of your own State against railroad extortion (if such
a thing exists) I do not suppose it to be your intention to unnecessarily
reduce the revenues of Missouri railroads on the business they haul
through the State and on which your people pay no freight. Such a
course would work against the interests of your State doubly in de¬
creasing the revenue on Missouri corporations and rendering them less
able to maintain first class service, and also to maintain reasonable
rates within your own borders. The commissioners'state (what is very
apparent) that in preparing their schedule they did not consider the
effect of its adoption on the through business from other States, and
they further intimate that the railroad plan is to "recoup" from the
shippers of Missouri the losses which occur by reason of low rates on
through business. How they propose to remedy this is shown by the
following illustration : The present rate on cattle from Kansas City to
St. Louis is $47.50 per car, and we are not aware that it is considered
unreasonable by any one. This means that a car load of beef is hauled
some 280 miles for less than two mills per pound.
Ninety-nine hundredths of the shipments do not originate in Mis¬
souri, but the territory west of you. Yet the commissioners propose
that this rate be reduced to $37 per car, or about one and one half mills
per pound, thus forcing Missouri railroads to accept on the business of
another State less than is asked for, less than a fair remuneration, and
less than the sharp competition of lines outside the State has made
necessary. Thus you observe that the commissioners' schedule in this
case (and it is by no means the only one) accomplishes just the reverse
of what they intended and reduces the through rate, while not affect¬
ing the shorter hauls in which you people are mainly interested. That
the commissioners did not intend this they themselves admit; that
they unwittingly did just what they professed to condemn the railroads
for doing is perhaps not surprising, but certainly goes to show that
the time given to their report did not permit full familiarity with ex¬
isting facts. The average distance traversed by Missouri products on
the way to market probably does not exceed 150 miles, and if rates for
lesser distances than this are agreed on the most important part of the
work is done.
I have not formulated rates on general merchandise, partly because
of lack of time to give the subject proper consideration, and partly
because it has not been the pfactice in this State heretofore to prescribe
rates except upon its principal products and the heavy commodities of
supply in the cost of which the freight charges form an appreciable
part.
It is easier to ask questions than to answer them, especially when
484
the whole matter is one of judgment. I pretend to no patent process
for ascertaining what is ^'reasonable" in railroad rates, or in anything
else. I can only suggest what long experience and some knowledge of
commercial railroading lead me to beMeve to be reasonable, and express
my sincere convictions that while I may be criticised bj?- my railroad
confreres for having placed the standard too low, I cannot justly be
accused by the shippers of having placed it too high.
Respectfully,
E. P. RIPLEY.
486
SCHEDULE OF PROPOSED MAXIMUM RATES
Miles.
Wheat, flour, meal, flaxseed,
millet seed, castor beans..
Other grain, millstuffs, bran
and hay
>
Cord-wood, brick (common),
clay, stone (rough), sand,
charcoal, hoop poles
4
!
i
(
(
Lumber, logs, fence posts,
R. P.- tica
1
Lime, cement, plaster, stucco j
•b
h,
D
-1
?
Zine, ore
Per
100 lbs.
Per
100 lbs.
Ppt
100 lbs.
Per
100 lbs.
lOo'lbs.
Per
100 lbs.
Per
100 lbs.
25
Commissioners....
.06i
.07
.05i
.06
.03
.03 J
.04
.04
.04
.04
.04
nc
•
04
04
•
•
50
Commissioners
.09
.09^
.08
.08^
.03|
.05
.06
.06
.05
.06
•
05
08}
•
05
06
•
•
75
.12
.10
.06
.07}
.07}
09}
06|
•
•
100
Commissioners....
.11
.14J
.10
.111
.05
.06 J
.08}
.09
.07
.09
.07
m
«
07
7}
2
•
«
125
.15 J
.12i
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.10
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150
Commissioners....
.13
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.12
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.06}
.07}
.10}
.11
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•
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09
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175
.17i
.14i
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200
Commissioners....
.14
.181
.13
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.13
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.13
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13
•
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•
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225
.19 J
.16 J
.09
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.14
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250
Commissioners....
.15
.20i
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.17 J
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•
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275
.21Î
.18^
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.15
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300
Commissioners....
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325
.23i
.201
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350
Commissioners....
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.16
.21i
.11
.12
.15
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•
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15
.
•
487
FOR MISSOURI RAILROADS OF FIRST CLASS.
-i
D
3
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-í
3
:
:/5
Î0
Soft coal. — Car load mini¬
mum weight 24,000 lbs
Agricultural implements,fur¬
niture, wagons
m
S
CTQ
H
P
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c+-
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Horses and mules
p
r+-
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h—'
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13
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30
t-
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trr
05
<!
M
100 lbs.
Per
100 lbs.
Per
100 lbs.
Per
100 lbs.
Per
100 lbs.
Per ear of
20,000 lbs.
Per car of
20,000 lbs.
Per car of
20,000 lbs.
Per car of
20,000 lbs.
CO CO
o o
• •
«
•
05§
05
.02^
.03|
.06
.07
.06
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$16 00
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488
The Chairman also submitted the following, which had been re¬
ceived from Mr. G. W. Gale, general freight agent of the 'Frisco line :
St. Louis, June 9th, 1887.
Hon. H. M. Johnson, Chairman Committee on Railroads and Internal
Improvements^ Jefferson City, Mo.:
Dear Sir : I have been shown a letter addressed to your committee
byjyir. Henry Kuhlman of St. Louis of date, in which he states the
present and last year's rates on farming implements, wagons and such
like, from St. Louis, Mo., to Springfield, Mo., (about 200 miles) a car
load of 20,000 pounds, is $41.
For your information, and for the benefit of the committee, I enclose
herewith copy of freight tariif of this company No. 106, dated August
1,1886, which shows the rate from St. Louis to Springfield to have been
20^ cents per 100 on car load of 20,000 pounds from August 1, 1886.
This rate was in effect until April 1st last, when the rate was reduced
to twenty cents per 100 pounds, as you will see by referring to copy of
our tariff No. 126, effective April 1st last. The rate on similar articles
for a distance of 200 miles from St. Louis, you will find by referring to
tariff No. 126 to be 17 cents per 100 or $34. per car of 20,000 pounds
(taking Conway Station âs a basis, that being 198 miles from St. Louis*
the nearest distance to 200 miles). You will see that the rate, instead
of being $41 per car of 20,000 pounds, as claimed by Mr. Kuhlman, for
a distance of 200 miles that it is but $34 per car of 20,000 pounds.
Again Mr. Kuhlman states that the rate on similar articles shipped
loose would cost 90 cents per 100 pounds or $180, less $6 for labor of
loading and unloading the car, leaving a net balance of $174. You will
find by consulting tariff No. 106 that the rate on shipments of agricul¬
tural implements, in less than car loads from St. Louis to Springfield,
Mo., has been 80 cents per 100 pounds since August 1st, 1886, and not
90 cents, as stated by Mr. Kuhlman, and since April 1st, 1887, the rate
has been but 70 cents per 100. The distance irom St. Louis to Spring¬
field is 238 miles.
While we disclaim any intention on the part of Mr. Kuhlman to
mislead in his statement, I think you will agree with me that the
records I present herewith will not bear him out. Again, it is a well
known and established fact that railroad companies do not charge more
for a lesser shipment of any article to one consignee than the car load
rate that applies on the same commodity, or in other words, a shipment
of agricultural implements, in less than car loads, would be taken from
St. Louis to Springfield at the present time at $40, should the weight
for the shipment, when calculated at the rate per 100 pounds for less
than car load, exceed the car load rate, the car load rate would apply.
489
I trust I have made myself sufficiently clear to your committee
and have answered the communication to your entire satisfaction.
Yours truly,
G. W. GALE, G. F. A.
Accompanying this letter were three schedules of tariffs, entitled
as follows:
Tariff No. 105, 'Frisco Line, St. Louis & San Francisco Railway
Company, applying between St. Louis or Carondelet, and points to
Missouri, Arkansas, Indian Territory and Kansas, taking affect Febru¬
ary 1, 1886.
Tariff No. 106, same line, applying between St. Louis, Mo., Caron¬
delet Mo., or East St. Louis, Illinois, and points in Missouri, Arkansas,
Indian Territory, Kansas and Colorado, taking affect August 1, 1886.
Tariff No. 126, same line, applying between St. Louis, Mo., Caron¬
delet, Mo., or East St. Louis, 111., and points in Missouri, Arkansas,
Indian Territory and Kansas, taking effect April 1, 1887.
(These were filed with the committee.)
The Chairman: I also submit the following letter from Mr. Henry
Kulhman, which seems to be a counter statement or reply to the letter
of Mr. Cale :
Fot the International Improvement Committee :
Present and last year's rates on farming implements, wagons and
such like, from St. Louis, Mo., to Springfield, Mo.—about 200 miles, for
car load of 20,000 pounds f41 00
Rate from Ohio points to St. Louis (600 miles) for like
freight, car 35 00
20,000 pounds farming implements shipped loose from St.
Louis to Springfield at local rates, 90 cents per 100 pounds 180 00
Deduct two days' labor for loading $3 00
Two days labor for unloading 3 00 6 00
Net.... $174 00
or 325 per cent, over and above a legitimate profit. The merchant in
St. Louis makes on his goods from five to ten per cent, profit, and pays
his help and labor out of his profit. The merchant who retails the
same, does not make any more than ten per cent., and pays his labor
and help; and the railroads, to whom the people have given all their
franchises, their rights, their streets, their lands, their waterways,
make off them 400 per cent., say four hundred per cent, on their capi¬
tal invested.
490
Does any man mean to ar^ue this fact away ? I dare him.
(Signed)
Yours truly,
HENRY KUHLMAN.
Senator Mansfield : Does Mr. Kuhlman submit any schedule of
rates or receipts to sustain the declaration in his letter.
The Chairman : He has submitted documents heretofore. As I
understand Mr. Call's letter is in explanation of what he submitted
before, and he comes in with this counter statement.
Senator Johnson of Madison: When Mr. Newman of the Missouri
Pacific was on the stand, I asked him the question whether it were
not the fact, that since the first of April they had increased the freight
rates on some commodities on the Iron Mountain R. R. ; he stated it
was not so, and if I remember right, said that rates had in fact, been
reduced. I wish to submit some receipts:
1. A receipt dated December 13, 1886, in which they charge eight
(8) cents per 100 pounds on corn from St. Louis to Kimmswick, Mo.
2. A receipt dated February 22, 1887, in which they charge eight
(8) cents on corn per hundred pounds on corn from St. Louis to Kimms¬
wick. (These two receipts being previous to tbe first day of April.)
3. A receipt dated April 30, 1887, in which they charge on corn
from St. Louis to Kimmswick, the same commodity, twelve (12) cents
per hundred pounds; fifty per cent, higher than it was previous to the
first day of April, between the same points, St. Louis and Kimmswick.
4. A receipt dated November 10, 1886, for a shipment of wheat
from St. Louis to Pevely, on which the rate was six cents and five-
tenchs per hundred pounds.
5. A receipt dated May 31, 1887, for a shipment of wheat from St.
Louis to Pevely, on which the rate is fifteen (15) cents per hundred
pounds.
In the same connection I want to introduce a letter from W. T.
Anderson & Co., to Hon. Reed McCormack. The letter was as follows :
St. Louis, Mo., June 4, 1887.
Hon. Reed McOormack, Jefferson Gity^ Mo.:
Dear Sir: Your favor, 2d, came duly to hand, and in reply
will say : The Missouri Pacific Railroad Company have advanced rates
very materially, also the Iron Mountain Railroad, as you can see by en¬
closed freight bills which explain themselves. You will notice the
rate on wheat from Pevely, Mo., was 6| per hundred previous to the
passage of the interstate bill. The rate now charged is 15 cents per
hundred pounds. The rate to Kimmswick is now 12 cents on corn and
formerly only 8 cents. There are many things to be considered it
491
seems to me in reference to railroad legislation, but it would take too
much space for me to explain my views on paper, and will not make
any suggestions, hut hope jou will be able to pass a bill that will give
satisfaction to the people and at the same time do justice to railroad
companies.
Yours truly,
0. H, SPENCER.
The receipts mentioned above were filed with the committee.
The committee then went into executive session for the purpose of
considering matters before it and afterwards adjourned to meet at 9
a. m. to-morrow.
June 11,1887.
Letter from railroad commissioners, with schedule of maximum
rates attached ;
Also, letter from railroad commissioners making a report of their
conference with the traflSc managers of the railroads ;
Also, a communication from Mr. Louis Houck, President of Cape
Girardeau & Southern Railroad Co., in reply to a -letter submitted by
Mr. H. Clay Conde.
State of Missouri, Office of Railroad Commissionebs,)
Jefferson City, May 24, 1887. [
Hon. H. W. Johnson, Chairman on Railroads and Internal Improve¬
ments Committee:
Sir: In compliance with Senate resolution, adopted on the 20th
inst.,we have the honor herewith to submit the accompanying schedules
of maximum rates.
For car load lots, the initial charge is for twenty-five miles, or any
part thereof ; beyond that distapce the hauling charge, as shown in
written explanation herewith, applies to each mile hauled. For less
than car load lots, the initial charge is for ten miles or any part
thereof, the hauling charge beyond that distance applying to each mile
hauled.
492
We would recommend, in the event of new schedules of maximum
rates being established by the General Assembly, that the schedules
be made to apply to roads of the first class, and that the roads of the
State be classified into such other classes as the judgment of the Gen¬
eral Assembly may deem proper. The rates for classes of roads other
than the first class, should in our judgment be from ten to twenty-five
per cent, higher than as provided for the first class roads.
We fully appreciate the difficulty of making schedules of reason¬
able maximum rates for transportation of freights by railroads in Mis¬
souri, and we submit the accompanying schedules, not claiming by any
means that tjiey are perfect, but such as in our judgment are reason¬
able at this time for roads of the first class.
Very respectfully,
JAMES HARDING,
WM. G. DOWNING,
Railroad Commissioners.
Commissioner Breathitt concurs in schedule of rates accompany¬
ing this, but is absent from the city.
JAMES HARDING, Chairman.
First Class. For the first 10 miles or any part thereof, 16 cents per
100 lbs.; for the next succeeding 15 miles 6-10 of one cent per 100 lbs.
per mile hauled; for the next succeeding 25 miles 36-100 of one cent
per 100 lbs. per mile hauled ; for the next succeeding 50 miles 2-10 of
one cent per 100 lbs, per mile hauled ; for the next succeeding 150 miles,
1-10 of one cent per 100 lbs. per mile hauled ; and for each succeeding
mile 6-100 of one cent-per 100 lbs. per mile hauled.
Second Class. For the first 10 miles or any part thereof, 14 cents
per 100 lbs.; for the next succeeding 15 miles 1-3 of one cent per 100
lbs. per mile hauled ; for the next succeeding 25 miles 32-100 of one
cent per 100 lbs. per mile hauled ; for the next succeeding 50 miles 2-10
of one cent per 100 lbs, per mile hauled ; for the next succeeding 100
miles 7-100 of one cent per 100 lbs. per mile hauled ; and for, each suc¬
ceeding mile 6-100 of one cent per 100 lbs. per mile hauled.
Third Class. For the first 10 miles or any part thereof, 13 cents
per 100 lbs.; for the next 35 miles 2-10 of one cent per 100 lbs. per
mile hauled ; for the next succeeding 100 miles 1-10 of one per cent,
per 100lbs. per mile hauled; for the next succeeding 100 miles 6-100of
one cent per 100 lbs. per mile hauled ; and for each succeeding mile
5-100 of one cent per 100 lbs. per mile hauled.
Fourth Class. For the first 10 miles or any part thereof, 9 cents
per 100 lbs.; for the next succeeding 15 miles 2-10 of one cent per 100
493
lbs. per mile hauled ; for the next 25 miles 16-100 of one cent, per 100
lbs. per mile hauled ; for the next succeeding 50 miles 1-10 of one cent
per 100 lbs. per mile hauled ; for the next succeeding 200 miles 5-100 of
one cent per 100 lbs. per mile hauled, and for each succeeding mile
3-100 of one per cent, per mile hauled.
Fifth Class. (Oar loads.) For the first 25 miles or any part thereof,
9 cents per 100 lbs.; for the next succeeding 25 miles 12-100 of one
cent per 100 lbs. per mile hauled ; and for the next succeeding 50 miles
1-10 of one cent per 100 lbs. per mile hauled ; for the next succeeding
50 miles 6-100 of one cent per 100 lbs. per mile hauled ; for the next
succeeding 50 miles 4-100 of one cent per 100 lbs. per mile hauled ; and
for each succeeding mile 3-100 of one cent per 100 lbs. per mile hauled.
Class A- For the first 25 miles or any part thereof, 6 1-2 cents per
100 lbs.; and for the next succeeding 25 miles 1-10 of one cent per 100
lbs. per mile hauled ; and for the next succeeding 100 miles 4-100 of
one cent per 100 lbs. per mile hauled; and for each succeeding mile
2-100 of one cent per 100 lbs. per mile hauled.
Class B. For the first 25 miles or any part thereof, 5 1-2 cents per
100 lbs.; and for thô next succeeding 25 miles 1-10 of one cent per 100
pounds per mile hauled; and for the next succeeding 100 miles 4-100 of
1 cent per 100 pounds per mile hauled; and for each succeeding mile
2-100 of 1 cent per 100 pounds per mile hauled.
Class C. For the first 25 miles, or any part thereof, 13 cents per-
barrel; and for the next succeeding 25 miles 2-10 of 1 cent per barrel
per mile hauled; and for the next succeeding 100 milesS-lOO 1 cent per
per barrel per mile hauled; and for each succeeding mile 4-100 of 1
cent per barrel per mile hauled.
Class D. For the first 25 miles or any part thereof, 17 cents per
barrel; and for the next suceeding 25 miles 2-10 of one cent per barrel
per mile hauled; and for the next succeeding 50 miles 1-10 of one cent
per barrel per mile hauled; and for the next succeeding 200 miles 8-100
of one cent per barrel per mile hauled; añd for each succeeding mile
3-100 of one cent per barrel per mile hauled.
Class E. For the first 25 miles or any part thereof, $12 per car
load, and for the next succeeding 25 miles 12 cents per car load per
mile hauled; and for the next succeeding 150 miles 6 cents per car
load per mile hauled ; and for each succeeding mile 4 cents per car load
per mile hauled.
Class F. For the first 25 miles or any part thereof, $16 per car load,
and for the next succeeding 75 miles 12 cents pernear load|per mile
hauled; and for each succeeding mile 10 cents per car load per mile
hauled.
Class G. For the first 25 miles, or any part thereof, $14 per car
494
load; and for the next succeeding 50 miles 12 cents per car load per
mile hauled; and for the next succeeding 100 miles 10 cents per car
load per mile hauled ; and for the next succeeding 100 miles 6 cents
per car load per mile hauled; and for each succeeding mile 4 cents per
load per mile hauled.
Class H. For the first 25 miles or any part thereof, $12 per car
load; for the next succeeding 125 miles, 8 cents per car load per mile
hauled; for the next succeeding'100 miles 6 cents per car load per mile
hauled; and for each succeeding mile 4 cents per car load per mile
hauled.
Class 1. For the first 25 miles or any part thereof, $12 per car load ;
and for the next succeeding 25 miles 24 cents per car load per mile
hauled; and for the next succeeding 100 miles 12 cents per car load per
mile hauled; and for the next succeeding 150 miles Scents per car load
per mile hauled; and for each succeeding mile 4 cents per car load per
mile hauled.
Class J. For the first 25 miles or any part thereof, $8 per car load;
and for the next succeeding 75 miles 8 cents per car load per mile
hauled; and for the next succeeding 100 miles 7 cents per car load per
mile hauled; and for the next succeeding 150 miles 4 cents per car load
per mile hauled ; and for each succeeding mile 2 cents per car load per
mile hauled.
Class K. For the first 20 miles or any part thereof, 60 cents per
ton, and for each additional mile 1-2 of one cent per ton per mile
hauled.
Class L. For the first 20 miles or any part thereof, 50 cents per
ton, and for each additional mile 1-2 of one cent per ton per mile
hauled.
495
(RAILROAD COMMISSIONERS.)
o
m
25
50.
75
100
125
150
175
200
225
250
275
300
325
350
375
400
425
450
A.
O
0
03 H-
t—' O
CT' p
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1 m
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6.5
9
10
11
12
13
13.5
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14.5
15
15.5
16
16.5
17
17.5
18
18.5
19
B.
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CD tj-
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5.5
8
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11
12
12.5
13
13.5
14
14.5
15
15.5
16
16.5
17
17.5
18
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26
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36
37
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er* 3
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p CD
>^3
ts per
•el
0
P
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3
17
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24.5
27
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35
37
39
41
43
44
45
46
47
48
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15
16
18
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24
25
27
28
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31
32
33
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00
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50
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50
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00; 50
00 52
00| 55
OOj 57
00 60
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$14 00 $12 00 $12 00
17
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p et) 3
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P
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: 3 g
* 3 s
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25
27
30
31
33
34
36
37
38
39
40
41
42
43
00
00
50
00
50
00
00
50
00
00
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00
00
00
00
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14
16
18
20
22
23.
50, 25
26
28
29
30
31
32
33
34
35
36
00
00
00
00
00
50
00
50
00
00
00
00
00
00
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00
18 00
21 00
24 00
27 00
30 00
32 00
34 00
36 00
38 00
40 00
42 00
43 00
44 00
45 00
46 00
47 00
48 00
^ 8 00
10 00
12 00
14 00
15 75
17 50
19 25
21 00
22 00
23 00
24 00
25 00
26 00
27 00
28 00
29 00
30 00
31 00
CLASSIFICATION.
Class A comprises wheat.
Class B comprises mill stuffs and all grain other than wheat.
Class C comprises ffour in lots of 50 barrels or more, or like quanti¬
ties of flour in sacks or bags.
Class D comprises salt in lots of 50 barrels or more, or like quantities
of salt in sacks and stucco in lots of 24 pounds or more.
Class E comprises lumber N. O. S. walnut, maple, ash, cherry and
hickory lumber, also lath and shingles.
Class F comprises horses and mules.
Class G comprises cattle and hogs.
Class H comprises sheep.
Class 1 comprises agricultural implements, emigrants' moveables,
graders' outflts, furniture, wagons.
Class J comprises lime in barrels or in bulk, cement in barrels or in
sacks, charcoal in barrels, sacks or in bulk, hard coal, coke, fer¬
tilizers, except guano, ores, except iron ores, ice, plaster, rail¬
road ties, and all other heavy fourth class articles in car loads.
Class K comprises cord wood,common brick, stone, saw logs, N. O.
S. unsawn fence posts, hoop poles and iron ores in car loads.
Class L comprises soft coal, sand and clay.
CD
00
K.
C
o ^
S-4
m
• I—"
O
CD P
hi P
O
3 »-**
r p
20
60
50
30
65
55
40
70
60
50
75
65
60
80
70
70
85
75
80
90
80
90
95
85
100
100
90
110
105
95
120
110
100
130
115
105
140
120
110
150
125
115
160
130
120
170
135
125
180
140
130
190
145
135
200
150
140
210
155
145
220
160
150
230
165
-t ^ ^
1.10
240
170
160
250
175
165
260
180
170
270
185
175
280
190
180
290
195
185
300
200
190
310
205
195
320
210
200
340
215
205
350
220
210
360
225
215
370
230
220
380
235
225
390
240
230
400
245
235
410
250
240
420
255
245
430
260
250
440
265
255
450
270
260
xs o
CD P
4 a
rh CO
O
t-, M.
9 ö
Articles not enumerated should be classified by the commissioners, in either
of the general or special classes, as found necessary and proper.
496
EATES FOR THE FIVE GENERAL CLASSES.
1st Class.
2d Class.
»
3d Class.
4tli Class.
5th Class.
Miles.
L. C. L.
L. C. L.
L. C. L.
I.Í. O'. Ij.
Car loads,
cents per
cents per
cents per
cents per
cents per
100 lbs.
100 lbs.
100 lbs.
100 lbs.
100 lbs.
10
16
14
13
9
9
15
19
15.66
14
10
9
20
22
17.35
15
11
9
25
25
19
16
12
9
30
26.8
20.16
17
12.8
9.6
35
28.6
22.2
18
13.6
10.2
40
30.4
23.8
19
14.4
10.8
45
32.2
25.4
20
15.2
11.4
50
34
27
21
16
12
60
36
29
22
17
13
70
38
31
23
18
14
75
39
32
23.5
18.5
14.5
80
40
33
24
19
15
90
42
35
25
20
16
100
44
37
26
21
17
110
45
37.7
27
21.5
17.6
120....
46
38.4
28
22
18.2
125
46.5
38.75
28.5
22.25
18.5
130
47
39.1
29
22.5
18.8
140
48
39.8
30
23
19.4
150
49
40.5
31
23.5
20
160
50
41.2
31.6
24
20.4
170.
51
41.9
32.2
24.5
20.8
175
51.5
42.25
32.5
24.75
21
180
52
42.6
32.8
25
21.2
190
53
43.3
33.4
25.5
21.6
200
54
44
34
26
22
210
55
44.6
34.6
26.5
22.3
220
56
45.2
35.2
27
22.6
225
56.5
45.5
35.5
27.25
22.75
230
57
45.8
35.8
27.5
22.9
240
58
46 4
36.4
28
23.2
250
59
47
37
28.5
23.5
260
59.5
47.6
37.5
29
23.8
270
60
48.2
38
29.5
21.1
275
60.5
48.5
38.25
29.75
24.25
280
61
48.8
38.5
30
24.4
290.
61.5
49.4
39
30.5
24.7
300..
62
50
39.5
31
25
310
62.5
50.6
40
31.4
25.3
320
63
51.2
40.5
31.8
25.6
325
63.5
51.5
40.75
32
25.75
330
64
51.8
41
32.2
25.9
340
64.5
52.4
41.5
32.6
26.2
350"
65
53
42
33
26.5
375
66.5
54.5
43.25
34
27.25
400
68
56
44.5
35
28
425
69.5
57.5
45.75
36
28.75
450
71
59
47
37
29.5
497
Hon. h. W. Johnson, Chairman Senate Committee on Railroads and
Internal Improvements :
Sir: In accordance with a resolution of your committee of date
June 1, we haye held conferences with the representatives of the prin¬
cipal railway companies of the State with the view of preparing a
schedule of rates, to be submitted to your committee, as being, in the
judgment of the confreres, reasonable rates for the transportation of
commodities by railroads within the limits of this State. We regret to
report that we were unable to agree with the gentlemen representing
the railways upon a schedule as proposed. We deem it proper to
state here, that had the question been as to agreeing upon a schedule
of maximum rates, below which rates applying to the several railroads
could be regulated by the commissioners, as from time to time might
be found equitable, there would have been, so far as we are concerned,
no difiiculty in agreeing upon a schedule, as under the conditions
named, it would be immaterial how high the rates might be placed.
The consultations were had, first upon the schedule of rates fur¬
nished your committee in accordance with Senate resolution of 24th
ult., said rates, as stated in our letter to you of date 24th ult., being in
our judgment, reasonable for our first class roads at the present time,
it being recommended by us that for roads other than first class the
stated rates be increased from ten to twenty-five per cent., as in the
wisdom of the General Assembly should seem proper.
Our schedules were objected to unanimously by the freight man¬
agers as being, in their judgment, much too low. But their argun^ents
failed to convince us that our conclusions were wrong. It was then
suggested that schedules be prepared by the freight managers, such as,
in their judgment, were reasonable, which suggestion was adopted. A
schedule was accordingly prepared by them and submitted to us. A
hasty examination of the schedule submitted showed that the pro¬
posed rates averaged about 20 per cent, above the rates proposed in
our schedule, and further, the schedule submitted proposed rates on
leading commodities only, the idea being that on articles other than as
specified in the schedule submitted, the rates were to be made by the
freight managers themselves without restriction. We declined to ac¬
cept the compromise proposed, believing that the circumstances would
not justify us in so doing.
The schedules handed you by us were based primarily upon the
schedules of the Illinois commissioners, in force Nov. 1,1886, our judg¬
ment being, after careful consideration, that freight rates on roads of
RM—32
498
the first class in Missouri, should not be much, if any higher than
those on similar roads in Illinois. In proposing these schedules we
considered Missouri interests only, fully appreciating the important
relation of the railways to those interests, believing that the interests
of the railways within her borders are identical with those of the
entire State. We did not nor could we consider the effect of competi¬
tive rates on traJffic coming from or going beyond the limits of Missouri.
We do not doubt that competitive rates are oftentimes too low,
whether based upon the mythical and mysterious ^'cost of service, in¬
terest upon investment, etc.," or upon, perhaps, the only principle ever
considered in making a rate : "what the traffic will bear," and we con¬
sider it at least debatable, whether the greatest good to the greatest
number of our citizens, and here we include our incorporated citizens
—the railways—should require that the loss upon commodities carried
in large quantities, at competitive rates be made up, or to speak ex¬
pertly, "recouped" on the strictly local, and much smaller traffic. We
think further, that the effect of the interstate commerce law will be to
equalize interstate rates, thus allowing our railroads better rates for this
traffic, and at the same time enabling them to make a proportionate
reduction in their local rates. If the argument of our railroad friends,
that their local business constitutes but a small proportion of their entire
business, be correct, then it would seem that to make up their losses
on a large through business by high rates on a small local business, is
on any other principle than that of "recouping," unjust.
Our law expressly requires us to make rates from the point where
freight is received in this State, and in making our proposed tariffs, we
did not for a moment consider that we were proposing rates for any
but Missouri traffic. We did not think any rate made by State author¬
ity could affect a rate made in Kansas for freight to be delivered in Il¬
linois and hauled across this State. Any interference with this kind of
traffic is prohibited by our organic law.
The gentlemen representing the railways with whom, for the past
few days we have been in conference, are of course entirely competent
to manage the very important matters committed to their charge, and
very properly endeavor to do so to serve the best interests of their em¬
ployers. As the representatives of the people of a great State, we
have also very important duties to discharge, and our endeavor is to
discharge those duties impartially and.understandingly. We fully
recognize the responsibilities of our position, and also appreciate the
difficulties in the way of any equitable solution of the question of reas¬
onable maximum rates. We understand the disadvantages we labor
under in contact with recognized experts representing the freight de¬
partments of some of the mightiest of the great corporations of the
499
country, but believing we are right in our conclusions, we re-affirm our
statement made in our letter to you oí date 24th ult., that in our judg¬
ment the rates there named are reasonable at this time, for railroads
of the first class in Missouri.
Very respectfully,
JAMES HARDING,
WM. G. DOWNING,
J. B. BREATHITT,
Railroad Commissioners.
To the Senate Committee on Internal Improvements^ State of
Missouri :
Sirs: In reply to the statement of Mr. H. Clay Conde, a "'mem-
ber of the Missouri and Illinois Tie and Lumber Company," the Cape
Girardeau Southwestern Railway says, that said Conde sometime early
last April made his appearance as the representative of said ''Missouri
and Illinois Tie and Lumber Company" on the line of our road, repre¬
senting that the concern consisted of Chicago citizens, who had organ¬
ized a company to purchase ties on this road ; further, this company
says that when said concern began to buy ties the T. J. Moss referred
to in the statement of said Conde had on the road and in the woods
adjacent to this road about 700,000 manufactured ties, and that he had
paid large sums of money for the same, and made contracts to deliver
them to other railroads, and receiving the assurance of this company for
transportation and in full faith on the assurance that said material so
purchased by him should be promptly moved, he expended his money
for said ties. And said company further states that many thousand of
said ties had been along the road of the railroad for many months be¬
cause it was unable to provide rolling stock and power to move said
accumulated stock. The said Chicago concern represented by said
Conde, however, began to purchase some ties on our road without in any
way inquiring as to the capacity of this company to move said ties with
reference to its accumulated business on its line of road so caused by
the want of a sufficient amount of rolling stock. And said company
further says that at no time prior to going into business on this line did
said concern represented by said Conde make any inquiry from and of
its officers within what time it would be able or could move additional
business. This company states that its yard at the city of Cape Gi¬
rardeau is small and that when said Chicago concern came on the road
to do business said yard was blocked with many thousand ties afford¬
ing no room for additional business by any one else, and that said
Conde and his partners could and did see this crowded condition of af¬
fairs, and that in order to handle their business it would be necessary
500
to enlarge the yard of this company, in order to afford more loading
room, and this company says that to so enlarge the yard will require
time as well as the expenditure of at least $2,000, if not more.
Farther, this company states that this Chicago concern aforesaid
after having operated on the road for about only one week and pur
chased several hundred ties presumably addressed the company the
iollowing letter under date of April 12th:
''We will be ready to ship ties early next week and would like to
have a good place at Cape Girardeau to unload them for reloading on
barges. We shall manage to. be as little in the way of Mr. Moss as pos^
sible. Please let us know when we can ship and have a place to un*
load in your city."
It is to be noted that "early next week" would be about April
the 20th.
In reply to this letter under date of April 13th, we answered Mr.
Conde as follows: "Keplying to your favor, wish to say that the whole
river front here is occupied by the T. J. Moss ties and material, and I
do not see any place where I can wedge you in. As soon as I see an
open space will let you know, so that you can put in your ties. I shall
be glad to facilitate your business as much as our limited ground here
will permit."
Said company further states, that within a week after this letter,
finding that new yard room was absolutely necessary in order to
handle this proposed new business, it instructed its roadmaster to lay
out a new side-track for the business of this new company, which, from
the language of said Conde we were led to believe would be very great
and important to us; and that its roadmaster began to get ready to do
80 by getting together rails, etc. And further, this railway says that
the Chicago company began to daily clamor for cars from the 13th day
of April, and that this company, anxious to aid and facilitate said con¬
cern, began to investigate the amount of ties said concern had on the
road, and found that at the end of the month of April said concern
did not have exceeding 2,500 ties on the line of road. When it is
remembered that the said company proposed to ship ties by barge, and
that a barge load of ties runs from 7,000 to 12,000 ties, according to the
size of the barge, the useless anxiety of said concern to have ties ship¬
ped to Cape Girardeau will be understood. This company further says
that in a personal interview, in reply to the statement of the want of
yard room, th^ Chicago concern proposed that it would mix up and
throw its ties on top or into the Moss tie pile, and desired us to aid in
this project. Further, in reply to our request that they get out 50,000
ties on the road, as Mr. Moss had done when he went into business on
the road, and give us a chance to provide yard room, rolling stock and
501
motive power, we were threatened in an indirect manner with lawsuits
and legal complications; and in addition, in a letter of April 30th, Mr.
Conde wrote us: " We have not as much invested here at this time as
Mr. Moss, but we believe we have as much time and money to stagnate
his business as he has ours, and as much money to make it interesting
and expensive in court." In view of the fact that at the time Mr.
Conde wrote this letter, his concern had only been on the road a few
weeks, only had about 12 car loads of ties to ship, not enough to load
even one-sixth of a small barge, this statement ^Ho stagnate" the busi¬
ness of Mr. Moss becomes highly significant. In the meantime, for
about fifteen days in April, this Chicago concern clamored daily for
cars and pretended to be sorely disappointed in not receiving cars from
this company; but since the concern never had a barge load of ties on
the road, and hence was not ready to ship from Cape Girardeau, the
impartial mind not as anxious "to stagnate" the business of Mr. Moss
as Mr. Conde, will not be able to perceive why Mr. Conde should so
loudly clamor for cars to ship ties to Cape Girardeau, where he well
knew the yard room was fully occupied, unless it was to " mix his ties"
with the Moss ties there, and to so " stagnate" Mr. Moss' business.
This company, in reply, further states that at the time said Chicago
concern came on this road this company had not more than forty-five
serviceable cars in all. Of these about twelve were used in company
work and the balance had been boxed up for tie hauling by Mr. Moss
at his own expense. In addition, a lot of Union Pacific, C., B. & Q.,
and Rock Island cars, were used to haul the ties of said Moss, these
cars having especially been billed to said Moss for his material since
he was supplying the said companies with ties. This company says
that as a matter of fact, it was unable to furnish said Chicago concern
with cars, even if it had material enough on the road to load a barge
with ties, and not merely to " stagnate " the business of Mr. Moss. The
president of this company and the transportation master so informed
Mr. Conde, and he was informed that we would buy additional rolling
stock for the business of his concern ; he was also requested to get the
companies his concern was furnishing with ties, or intended to furnish
with ties, to bill cars to his concern to be used solely for its business.
But Mr. Conde and his enterprising Chicago association would not be
satisfied.with this, they wanted cars; they wanted the cars that other
companies had billed to Mr. Moss; they wanted the cars that Mr. Moss
had " fitted " up for his own business ; nothin g else. They seemed anxious
in fact to " stagnate" Mr. Moss' business. This company of course was
not anxious "to stagnate" the business of anybody, but anxious to do
all the business it could, the only trouble being that more business
was offered than could be done on the "spot." But this Chicago con-
502
cern, doing business on this railroad only about three weeks, with less
than one-sixth of a barge load of ties on the railroad, and which were
just as safe on the road of the company as mixed up" with the ties
of Mr. Moss on the river bank, on May 2d write the company that it
proposes to file a bill in equity enjoining your company from shipping
»
anything for Mr. Moss or others."
When it is remembered that said Moss had over 700,000 ties on the
road, operated twenty barges and three steamboats on the river, and is
one of the largest tie operators in the country, and that this Chicago
concern had only 2,500 ties on our road and begun work only a few
weeks before, the threat to legally '^stagnate" the business of Mr. Moss,
and, in a measure, this company, is quite clear, and its object also be¬
comes more apparent to the intelligent mind, familiar with some
"business" methods. On May 3d Mr. Conde again candidly writes us,
"He (Moss) is the man we would like to make pay," but regrets that
he cannot reach Mr. Moss, and therefore will have to sue this company,
and on the 7th day of May he promptly files a suit in the United States
circuit court for the Eastern District of Missouri. This suit, however,
within less than three weeks, the said Chicago concern as promptly
dismissed. After the institution of this suit on May 11, Mr. Conde
wrote us as follows : "This opens up a fruitful field for Mr. Moss, and
will soon result in his own ties going slowly to market." Mr. Conde
still seems determined "to stagnate" the business of Mr. Moss, but he
proceeds to say: "Had he (Moss) have used us as gentlemen and said
to us I will save you harmless for your investment, we might have
been diflFerent." What Mr. Conde means by this, he does not explain.
His investment was safe; he had the assurance of the company that
it would and intended to move the ties he pretended to intend to ship
by barge, and his concern has not now nor at any time has it had a
barge load of ties on the road, and could not be injured until it was
ready to ship, not only to Cape Girardeau, but via. barge to East St.
Louis or elsewhere. This company desires the committee to bear in mind
that all this alleged discrimination is alleged to have occurred between
April 13 and the 7th day of May, when this Chicago concern brought
suit in the federal court, and that no chance was given this company
to either build more side-track or buy more rolling stock, but that the
idea of these Chicago parties seemed to be "to stagnate" the. business
of some one else, and because they were not able to do so, with the
connivance of this company, they seem to think that they were "dis¬
criminated " against.
We will leave this charge, under the circumstances detailed, to the
fair judgment of your committee.
In addition, we desire to say that in the middle of April we began
503
to negotiate for more cars, so as to do this additional business, since
these Chicago parties were unwilling to furnish cars. But cars cost
money, and we, therefore, in order to ascertain for a certainty that our
inyestment would prove remunerative in the new business we were
assured would be given us by this tie company, made inquiry as to the
financial standing of the concern, and found that its capital stock was
$1,000, just enough to buy about 3,000 ties.
» In conclusion, this company says that it did not discriminate against
said Conde or his enterprising associates from Chicago, but that on the
contrary it made every eflort to accommodate their business, and in
pursuance of its policy to build up business on its line, furnished said
Conde and associates free passes to ride on its road, and otherwise en¬
deavored to aid them in a legitimate business, but not in an attempt to
injure the business of some one else, and that this company is now and
has always been ready to extend to said Conde and partners every
facility in its power, but that it desires a reasonable time to provide
rolling stock and more side-track, and also in view of the large expend¬
iture of money necessary in that behalf to be at least satisfied that
the said Conde and his Chicago friends are acting in good faith and
mean what they say, and not something else.
All of which is respectfully submitted.
CAFE GIRARDEAU SOUTHWESTERN RAILWAY,
By Louis Houck, Pres.
P. S.—In the foregoing statement reference is only made to the tie
business, but this company has also been greatly hindered in doing
business for other shippers by its want of rolling stock; that is to say,
it has frequently been unable to furnish cars to saw mills and stave
factories on its line, and all its patrons have appreciated this difficulty,
and it has been reserved for this Chicago concern, after being on the
road the short space of three weeks, to bring suits, etc.
5556 042
58766
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