THE PEOPLE AND THEIR RAILWAYS
Address by
EDWARD T. JEFFERY,
President of the Denver and Rio Grande Railroad Company,
Before
The Annual Convention
of the
Interstate Commerce Commission
and the
Boards of State Railway Commissioners
of the United States,
Held in the City of St. Louis, May nth, 1897.
NEWS PRINTING COMPANY, DENVER
1 897
THE PEOPLE AND THEIR RAILWAYS
Address by
EDWARD T. JEFFERY,
President of the Denver and Rio Grande Railroad Company,
Before
The Annual Convention
of the
Interstate Commerce Commission
and the
<•
Boards of State Railway Commissioners
of the United States,
Held in the City of St. Louis, May nth, 1897.
News PRINTING COMPANY, OCNVER
1 897
''I/O
THE PEOPLE AND THEIR RAILWAYS.
Mr. Chairman and Gentlemen:
So much has been said and written in recent years upon
the transportation question that it is difficult to deal with it in
an interesting manner and almost impossible to say anything
new about it. Yet it is a subject of vital importance, is still
unsettled and must be considered, discussed, and examined
from all points of view until generally accepted practice and
legislation and judicial decisions and a line of precedents make
certain the doubtful problems of today and mark with greater
precision the path that shall be followed in the mutual interests
of the public and the carriers. For I take it for granted that
these interests are mutual; that it is impolitic and injurious to
unduly burden the public for the sole advantage of the carriers
and equally so to unduly oppress the carriers for the benefit of
everyone else. I question, however, the possibility of severely
oppressing the carriers without affecting all other important
interests in the Republic. In fact, I am strongly inclined to
affirm that there are many illustrations before us of languishing
industries and stagnant trade because of the impoverished con¬
ditions of the great transportation companies. There may be a
difference of opinion as to the causes which produced these con¬
ditions. I freely accord to everyone the right to exercise inde¬
pendent judgment as to the causes, for it is a right I claim
3
for myself. But as to the conditions being of an unsatisfactory
character I think there can be no difference of opinion. Were
they satisfactory there would be no discussion of the transpor¬
tation question, nor diverse views upon it, nor public hearings
before commissions and courts, nor presentation of it in the
newspapers, nor bankruptcies of carriers, nor efforts by the solv¬
ent ones to avoid the same fate. As I have said before, there may
be differences of opinion as to the causes, but there cannot be
as to the existence of conditions unsatisfactory to all concerned.
Nor is it necessary for me to state with much detail before so
enlightened a body of men the nature of the conditions to
which I refer. To do this would be to assume a superiority
of information and intelligence, which a knowledge of my
shortcomings and limited attainments warns me I do not pos¬
sess. I am honored by having been invited to speak to so dis¬
tinguished a gathering. Your attention for a short time is a
compliment I do not merit, though I deeply appreciate it, and
if at the close of my remarks you are unable to say that I have
helped a little in working toward a solution of the problem you
will, I trust, be able to say that I am honest in thought, candid
in expression and sincere in purpose.
I shall not burden you with many figures and statistics for
you have all and more at your command than I have. We know
that our country has a railway mileage as large as all the rest of
the world and that tonnage and passengers carried are enor¬
mous in volume. We know that when Abraham Lincoln and
General Graut were born there was not one mile of railway in the
United States. We know that the rapid growth of our railway
system in less than two generations stimulated emigration, agri¬
culture, mining, manufacturing and trade and commerce of all
4
kinds. Our nation has grown in that time from infancy to
lusty, vigorous manhood. Education has become general, in¬
telligence widespread, wages have advanced, independence has
become almost aggressive, home comforts have increased and
life has been made more desirable than ever before in any country
or in any age. All this and much more we know, glory in
and proudly proclaim to the world. We know that in three
years our railways carry as many people as are estimated to in¬
habit the earth and that these people are safer in trains than
when traversing the thoroughfares of large cities. We know
that the fastest time ever made by a railway train was on an
American road ; that the most luxurious passenger cars, the
most powerful locomotives, the most capacious freight cars, the
largest systems of railway, the lowest rates for freight and pas¬
sengers, the greatest number of bankrupt companies and the
most dissatisfaction generally about transportation matters are
found in this beloved Republic of ours. So, having the
best of every nation in all these things and in a great many
others, such as the greatest chain of inland lakes, the greatest
extent of navigable rivers, the greatest area of farming lands,
the greatest growth of cereals, the greatest railway centers, the
longest stretches of continual rail travel without reaching our
boundaries, the greatest production of the precious metals, and
above all the greatest individual liberty, it behooves us to see if
we cannot in righteous ways, alleviate the confessed troubles of
all, including the carriers themselves, from the unsatisfactory
conditions connected with transportation. If we cannot be en¬
tirely happy, let us be as happy as we can.
I am not before you to defend the rail carriers. I freely
admit that they have done many things they ought not to have
5
done, but how, under the circumstances, could it have been other¬
wise? They sprang from nothing to 185,000 miles in less than
two generations; from nothing to 700,000,000 tons of freight
annually; from nothing to over 500,000,000 passengers annually;
from nothing to nearly one million employes; from nothing to
over ten thousand million dollars capital; they felt their way
quickly because they had to; they had no precedents, no text¬
books, nothing in the way of a landmark to guide them. Judg¬
ment is fallible and human nature is weak and the great wonder
in all minds ought to be that mistakes were not graver, more
numerous and less defensible than they were.
In 1850 there were nine thousand miles of railways in the
United States which were multiplied by twenty in the succeeding
forty-five years. One-half the railway mileage of 1850 was in
the New England and Middle Atlantic States and the rest was
o
scattered over other States east of the Mississippi river. Illinois
now in the lead with her 10,500 miles had then but 111 miles.
These facts are well known to you all and I mention them now
for the sole purpose of holding before us the construction of
171,000 miles of railway in forty-five years with all the won¬
derful development that the stupendous expenditures and
unparalleled work made possible. Railway managers faced new
and vital questions and carried greater responsibilities than they
realized. Emigration preceded slightly and followed densely
transportation facilities. Farms were opened, cities were born,
trade was started, mining was undertaken, industries w^ere
planted and unprecedented activity prevailed throughout the
land. In this the managers of railways were necessarily leading
participants. The growth of our country in population, agri¬
culture, mining, manufacturing, commerce and wealth during
6
the period mentioned, is evidence that in the main these men
did their work well. Kates, classifications and regulations were
gradually formulated for the continuous carriage of thousands
of things over thousands of routes in all directions. Sections
widely separated competed in remote markets. Cities vied with
each other in securing trade, and water-ways were vigorous in
controllinor commerce ao^ainst the rail carriers. Manufacturers
o o
at times made active war upon each other. Foreign nations
competed in our markets with home industries. These peculiar,
far-reaching and potent factors brought the carriers into frequent
struggles amongst themselves. While, as a rule, desiring to be
reasonable and just and aiming to conserve as best they could
the general interests dependent upon them as well as those
especially entrusted to them, railway managers at times failed
in both objects and were condemned equally by both interests;
the commercial which they sought to aid and the financial which
they were expected to reward with a reasonable return upon
investment. To accentuate the difficulties parallel and compet¬
ing lines were in some important instances constructed, without
the slightest public necessity and solely for the pecuniary profit
of the projectors. These divided the traffic with older lines and
in doing so reduced rates so that the revenue derived by two
carriers from the carriage of a given volume of traffic was less
than when it was carried by one. The fixed expenses per unit
of traffic were of course greater with two carriers than they
would have been with one, because the denser the traffic on any
^ e/
line the less per unit is the proportion of fixed expenses.
I need not recite the reductions made voluntarily or other¬
wise by our carriers from year to year in transportation charges.
They are all of record, are well known to you and are generally
7
understood by intelligent persons. In tabulated form they have
been printed frequently for a number of years and bear witness
to the continued shrinkage and to the low prices at which trans¬
portation is now sold. Nor need I recite the achievements of
American managers in economical operation. They stand
unrivalled in this respect. American rail carriers sell trans¬
portation at lower prices and move freight at less cost per mile
than the rail carriers of any other nation. The prpht per
unit of traffic, where any is found, is less than in any other
country. But we have reached a level below which it is not
possible to go even to a moderate extent in cost of car¬
riage and consequently in price of transportation unless the
prices paid for labor throughout the land are materially reduced.
The rails, ties, bridges, roadway, buildings, equipment and
transportation expenses are all mainly labor in one form and
another. The difference in value between the ore in the ground
and the steel rail in the track is mostly labor. The difference
in value between the coal in the earth and in the locomotive
furnace is largely labor. The enhanced value of timber in the
bridge, car or cross-tie over what it was in the forest tree is
labor. So we see that labor cannot remain unaffected if trans¬
portation prices are to be materially reduced, for maintenance
and operation expenditures must fall proportionately and labor
constitutes by far the greater part of them, either directly or
in an indirect manner, as already indicated. The situation is
confessedly a grave one. It is entitled to broad and statesman¬
like consideration, for on the one hand are millions of workmen
whose interests may be injured and on the other vast invest¬
ments of capital which may be affected disastrously. In truth,
the latter contingency carries with it direct and immediate in-
8
jury to the great army of American workingmen. But the
situation does not receive broad and statesmanlike consideration
throughout the land. The gravity of it is not realized. The
far-reaching and depressing effects of even a continuation of
present transportation conditions are not generally admitted.
Facts as to this are not understood or if understood are mis¬
stated. Demagogues acquire temporary prominence and polit¬
ical preferment by indiscriminately assailing the carriers, mis¬
leading still farther the public mind and building up with
greater force public prejudice, and, I suppose, this will continue
until it is comprehended that the vital interests of great masses
of voters are jeopardized. Then these same demagogues, or
their counterparts, will espouse the cause of these voters for
their own aggrandizement; will defend the corporate employers
they now attack and insist that their ability to pay fair wages
shall not be impaired. The working classes of the country, the
mass of laboring, struggling, thinking voters will, in time,
demand that the capital which affords employment to them,
which pays them their wages, which maintains scales of wages
higher than are paid in any other country, shall not be shorn
of its ability to properly repay them for their toil. The great
fact will be clearly perceived that the wages of nearly one mil¬
lion railway employes are more stable, less subject to variation
than are those of any other class of labor, and that they bear
favorable comparison with those paid all other classes. The
men themselves are intelligent, trustworthy, independent and
influential, and they will secure and hold the sympathy and
support of all classes of labor in their efforts to uphold tlie
general average of wages, and in making these efforts they will
necessarily sustain just prices for transportation to the end that
9
labor directly employed by the carriers and indirectly dependent
on them, as hereinbefore explained, will not be made to snifer.
Although our railways are generally in fair physical condi¬
tion, and the leading ones exceptionally good in the older and
more densely populated States, there must be great expendi¬
tures upon them in future years to make them meet in a satis¬
factory manner the growing requirements of the public. There
must be thousands of miles of second main track constructed,
terminal facilities in leading trade centres must be enlarged,
station facilities in growing communities must be added to,
locomotives and cars must be increased in number and larger
ones substituted for nearly one-half those now in use. Bridges
of steel and masonry must replace wooden structures, tracks
must be raised or lowered, as the case may be, in cities of im¬
portance so that streets shall pass above or below them, and
public highways must be carried over or under tracks outside of
towns and cities. These important and necessary works, and
many more which I will not mention, will require very large
expenditures. The question therefore presents itself of how
they shall be met ? If paid for out oE earnings rates must be
advanced slightly above the present averages, or tonnage and
travel must greatly increase in volume at the prevailing rates.
If sales oE new issues of stocks are to provide the money the
outstanding issues must first be made valuable before attempt¬
ing additional ones. If more mortgage bonds are to be placed,
the credit and standing oE those heretofore marketed under
more auspicious conditions must be improved or else the new
ones must be sold at a large discount.
The plain and indisputable fact is that at prevailing rates
and with the present volume of traffic our railways generally
10
cannot be materially improved nor their facilities substantially
increased out of earnings. But the expenditures will in time
be required, because improved fixed plant, higher speeds, heavier
locomotives, larger freight cars and greater safety at highway
crossings are growing necessities. In mechanics speed and
power are synononious terms, and with the higher speeds
smaller trains must be hauled, hence a larger number of them
must be provided to move even the present volumes of passen¬
ger and freight traffic.
The relentless wars of capital against capital have done
much to bring about present conditions. A parallel and com¬
peting line of railway is not built by demagogues, it is not con-
t
structed by hostile legislation, it is not conceived by boards of
railway commissioners. It is deliberately planned and con¬
structed by capital, and, for a time at least, is operated for the
purpose of securing by fair means or foul a share of the traffic
in transit in the territory traversed. The breaking down of
rates, revenues and previously invested capital in such cases has
been done by capital itself. This destructive work cannot be
unloaded on legislative bodies and commissions and courts and
newspapers and demagogues. The responsibility rests upon
capital. If a broader and more statesmanlike course is essen-
tial for the conservation, on just lines, of the interests we are
deliberating upon, the reasonable protection of vested capital
from the attacks of capital is necessary.
Why ought new, unnecessary and parallel lines of trans¬
portation be permitted ? Why ought the public to grant them
charters ? Why should any railway be allowed to come into
existence unless it be shown before a lawful and duly constituted
board that it is a public necessity ? The public is better served
11
between given points by one or two first-class lines than by
several poor ones. Why shonld traffic be burdened with the
additional fixed expenses of new and unnecessary railways ?
Why should the wages of masses of workingmen dependent
upon existing lines and the aggregations of money invested in
them be jeopardized when public necessity does not require nor
even suggest their existence ? If further legislation is conceded
in the mutual interests of the public and the carriers it must
prevent this unbridled use of capital against vested capital.
The most advanced legislation here and in other countries de¬
bars the building of new railways unless a competent tribunal
has decided that public necessity demands them.
The relentless wars of capital against capital have been
carried on in other ways, so far as railway investments are con¬
cerned, than building parallel and useless lines. Old established
lines with large local traffic have rivalled each other in rate
reductions, secretly and openly, in their efforts to control what
seemed to individual judgment the share of traffic each ought to
have. This action was not forced by legislative bodies, was not
decided upon by courts, was not inaugurated by commissions,
not put in force by demagogues. Secret as well as open con¬
tracts for traffic, and private rebates thereon were made and
paid by the corporations themselves. The managers, the direc¬
tors, the stockholders of these organizations performed these
acts. They were corporate acts. It is no use to mince words
regarding these things. It is no use to attempt to deceive the
public mind. If stockholders objected to these procedures in
the past thev could have turned out their directors, dismissed
their managers and put in control those who would not do these
things. The plain truth is that these methods were used by
12
those who thouo-ht themselves a little smarter than others of
o
their class and who sought to obtain undue advantage over
them. Certain portions of invested capital sought to take from
other capital a portion of the traffic carried upon its lines of rail¬
way. It was capital warring against capital with the usual and in¬
evitable results to all concerned. I do not criticise those who
have acted in self-defense, but I do blame and denounce the
aggressors, those who have destroyed values, wrecked properties
of great magnitude, ruined innocent and confiding investors and
to an extent precipitated present conditions. Systems of rail¬
way that were honestly built, the capital of which represented
actual money invested, have been reduced to narrow straits;
other systems which have through bankruptcy been reorganized
on a low basis of capitalization have been still further im¬
poverished, and all because of the opinions entertained by a few
men in corporate service that they were a little smarter, a little
abler, a little greater and a little wiser than others of their class
and occupation. It may be said with apparent force that if
capital sees fit to war on capital in this manner and with these
results it is no concern of the public. It has been argued that
the public is benefited thereby. But this seems to me to be a
narrow view and an incorrect conclusion. I take it to be the
broader and wiser course for the public to require that public
corporations shall be curbed in folly and wrong-doing, and
sustained in wise and right-doing, so that any individual, an
innocent and ignorant holder of their securities, shall be pro¬
tected.
The views I have just expressed apply with equal if not
greater force to railways controlled by receivers. Some of
these properties in the hands of the courts and managed by
13
officers of the courts have been foremost in making private
arrangements, and paying secret and unlawful rebates, and in
inaugurating so-called railway wars to the injury of the solvent
carriers and without benefit to themselves. One of our leadino-
O
railway presidents, Mr. M. E. Ingalls, in some recent remarks
before the St. Louis Eailwav Club on The Turnino- Point in
o
Pail way Reforms," expressed himself in regard to this in the
following language:
One of the strano-e anomalies of the times, and one which
o '
shows how the public conscience is debauched and has lost its
regard for the law, is the fact that there seems to be more
trouble today in maintaining tariffs and obeying the law^ in the
cases of railways in the hands of receivers than in any others.
In other words, some of these railways are still reported to be
securing business by secret contracts and illegal rebates. I have
no question but that these practices are unknown to the court.
One of these days some judge will wake up to the situation
and put an expert upon the accounts of his receiver, and then
we shall get an example that will be useful. An officer of the
court surely should not be a violator of the law."
A corporation is given existence by the sovereign people,
they give it powers and privileges, it goes before the world as
the offspring of the people, it invites public confidence and the
money of the people. People of all classes, the laboring with
their small savings, the shop-keeper with the proceeds of his
trade, the bankers and merchants with their wealth, the widow
with her dower, the orphan with a legacy in trust—all classes
and all conditions are invited to partnership in this public enter¬
prise of a public corporation, and I urge that it is incumbent
upon the commonwealth to see that its corporate offspring is
14
wisely as well as lioiiestly conducted. The stockholders, or
partners, or co-operators, call them what you will, cannot object
to haying all possible safeguards thrown around the manage¬
ment of their affairs. If they are honest persons they will
support the enforcement of honest methods, if wise they will
welcome wise management, if candid they will honor candor
even though it is enforced. If dependent for their daily bread
on the income from their investment they will bless the power
that protects them and procures a reasonable and reliable return.
I am aware that in this I am going somewhat farther than most
men are willing to go, but I aver that experience warrants the
suggestion and entitles it to consideration by students of eco¬
nomic questions.
I have thought for many years that the corporate plan of
conducting extensive business and prosecuting great enterprises
is the practical application of the co-operative idea. In these
days of intercommunication the world over by telegraph, rail¬
way and steamship, ten thousand persons remote from each other
can unite in a great undertaking which is beyond the power of
any one man. Time was when this could not be done. Now
by concentrating the money and brains of many for the consum¬
mation of a great purpose success is achieved. Works which
are practical in no other way are in this manner made compara¬
tively easy of accomplishment, the world moves forward and
mankind is benefited. How can possessors of large and small
accumulations of money co-operate in a more efficient way and
share more equitably the proceeds of joint investment ? How
can labor and capital properly co-operate, share in responsibility
and join in directing and controlling large undertakings except
on the corporate plan ? If the plan is imperfect in detail let us
15
perfect it. If it affords opportunities for dishonesty let n&
throw safeguards around it. If it permits making fraudulent
statements let us prevent it. If under it the avaricious and self¬
ish and grasping can and do endanger the small interests of
partners of average means and intelligence let us curb them in
a judicious way. If corporations be too secretive let us make
them candid. The abuses and vices, the faults and follies of
many men do not make us condemn all mankind, but on the
contrary they invite us to study human nature, to combat the
wrono; and vicious and work out reformation. Let it be so as
to corporations. Reform their conduct, prevent their abuses,
restrain their dangerous tendencies, but cease wholesale denun¬
ciation of the only plan by which civilization can be advanced,
progress be made and peace and universal brotherhood be
attained by a community of interests in a commerce world-wide.
The corporate plan is the outgrowth of the efforts of our
race through the centuries to make possible the achievement of
worthy things which in past ages were impossible. I have
dwelt a little on this branch of the subject because the railway
transportation business is conducted of necessity upon the cor¬
porate plan. The requisite capital is so vast, the operations are
so extensive, the service is of such a peculiar character and is so
closely linked with the public welfare that no other pl^n seems
feasible ; hence the incorporation of transportation companies,
the right of eminent domain accorded them, the liabilities im-
o '
posed upon them and the legislative control exercised over them.
It would be an unnecessary occupation of your time for me
to enter into a discussion of the commercial course of the carriers
in the past, their attitude in regard to public control of them,
their alliances and dissensions in their attempts to better them-
16
selves, their just complaints, their present poverty, and their
fears for the future, and, moreover, on some of these points we
might not fully agree. You have at your command all railway
history and legislative enactments; you have on tile in Wash¬
ington and at the capitols of the different states you represent
all, or nearly all, the agreements, the tariff sheets and the rules
and regulations of the carriers. You have sat in many public
hearings, have heard many arguments from all sides, have
passed judgment in innumerable cases and T am sure have be¬
come satisfied that there are at least two sides to the questions
which have been presented for adjudication. I will therefore
avoid dwelling at length upon them, and after a rapid glance
at the tendency and the efforts of our generation will limit my¬
self to endeavoring to present a few suggestions upon which we
may, and I believe we will, all agree and thus, perhaps, a
glimpse may be had of a possible course which, if followed,
should lead to pleasanter fields and clearer skies than those we
now^ wander in and under.
We come now to the regulation of carriers as practiced by
duly constituted commissions and by the courts of the land in
decisions handed down from time to time upon the various
questions submitted to them. The fundamental principles of
our nattonal law are that all charges on interstate commerce
shall be reasonable and just; that there shall be no unjust dis¬
criminations in favor of individuals, firms, corporations, cities
or sections of country; that all charges shall be open to the pub¬
lic and shall have reasonable stability; that classifications of
articles and rules and reo;ulations for their, carriage shall be
o o
reasonable; that carriers shall not unjustly discriminate in
interchange with connections on traffic destined to points be-
17
yond termini ; that dissimilar circumstances and conditions
may justify a lesser charge for a longer than for a shorter haul
and that the national commission shall pass upon alleged viola¬
tions of these principles and pronounce judgment subject to
appeal to the courts. The basic principle is that all charges
for transportation must be reasonable and just. This really
comprehends all that follows, because unreasonable or unjust dis¬
criminations affect comparative charges on traffic, and unfair
classifications and unjust roles and regulations burden it to an
extent that may cancel the benefit of just and reasonable charges.
I think, therefore, that we may stand upon the proposition that
the fundamental or underlying principle is that all charges
must be reasonable and just, even when different circumstances
and conditions, as for instance direct water competition, justify
a lesser charcre for a lono-er than for a shorter haul. Under the
o o
opinion of the Supreme Court, March twenty-second, 18dT, this
is supplemented by a decision that carriers of interstate com¬
merce must not combine for the purpose of maintaining even
reasonable and just charges. On our great network of railways
and throughout our vast territory and with our 700,000,000 tons
of freight and 500,000,000 passengers annually, our innumer¬
able routes, and our throuorh billino; and ticketino; all inter-
' o o o'
state charges must be reasonable and just but the carriers must
not agree between themselves to make and keep them so!
Except as to the Supreme Court opinion mentioned, which
is new and was unexpected, the underlying principle of our national
law governing carriers was recognized before it was put in statutory
form. Common law required that this public, or semi-public
service, should be performed for reasonable and just compensa¬
tion; that is, just and reasonable alike to the served and the
18
servant. 'Not more favorable to the served than to the servant,
nor more favorable to the servant than to the served; bnt jnst
and reasonable to both. It carried into the large affairs of life
the admitted truth that " the servant is worthy of his hire."
More than a quarter of a century ago some of our states sought
to put in statutory form this idea, but with results, in some in¬
stances, so extreme as to almost confiscate the servants' property.
But in the older states, as a rule, this extreme has been modi¬
fied, so that we can say the basic principle stands for enforce¬
ment that all charges must be reasonable and just upon state
traffic; that is, traffic havino- oriö:in and destination within a
~ ' o o
state, as well as upon interstate traffic. Two-thirds of our states
have commissions empowered to practically apply the principle,
as best they can, and some of these exercise in addition a super¬
visory jurisdiction over the physical features of railways and
the accommodations and facilities and service offered for the
use of the public. The trend of public thought for a generation
has been toward statutory regulation of carriers and supervision
of them by boards of commissioners acting under authority of
law. Yet the basic principle of all this is, as I have before
stated, that charges must be reasonable and just for the service
performed by the carrier for the public. This opens a vast field
of enquiry to those who are charged with determining scales of
reasonable and just charges under different circumstances and
conditions throughout the land.
The problems before commissions have been perplex¬
ing in the extreme. They have been presented under
strong public feeling generally on one side and have been
met under disadvantages on the other. They have been
interwoven with politics and in fact have often been politi-
19
cal issues. Partisanship has run riot over them and abuse and
denunciation have often taken the place of facts, figures and
judicial reasoning. The complex problem of determining in a
scientific and judicial manner reasonable and just compensation
for given services between given points has often been obscured
by party feeling for political purposes. Injustice has been done
in this way to the carriers, which added to the results of their
own follies, prove to be too heavy a burden for the strongest
and best to bear. There are railways that have cost, for all their
fixed and rolling plant, an average of more than $200,000.00
per mile, and others that have cost $10,000.00. There are systems
with their terminals that cannot be duplicated for twice what they
cost, and others that might be reproduced for less than tliey
cost. There are nearly level lines with tonnage and travel ten
times as dense as others of like gradients. There are mountain
systems with steep grades, sparse population, small tonnage and
very heavy operation expenses. There are railways paralleling
water routes and railways nearly a thousand miles from naviga¬
ble water. Some of our systems have maximum grades of
twenty feet per mile and others of over two hundred. Some
have a maximum curvature of three deo;rees and some sixteen
in standard gauge and twenty-five where gauge of track is three
feet wide. Some are subjected to fioods and inundations and
others to snow-slides and avalanches and still others to all these
combined. Some furnish luxurious transportation for passen¬
gers at speeds of fifty to seventy-five miles per hour, while
others can provide only doubtful accommodations at less than
one-half these speeds. Some have a preponderance of passenger
and others of freiofht traffic. Some have four excellent main
tracks to insure safety and despatch, while others have but an
20
inferior single track which is maintained in passable condition,
with difficulty, by small traffic and from narrow revenues. The
securities of many railways represent actual money expended,
while those of some others stand for fictitious values. Some
corporations are candid in their statements and others are secre¬
tive; some have large floating liabilities which they show, others
have them and hide them, and still others have none at all.
Some few have had fairly steady revenues for the last five yeais
and others have had reductions of thirty per cent, and more.
Some use coal at a cost of five and six dollars per ton and others
at a dollar or less because of proximity to mines; some pay
tliirty and others sixty cents for cross-ties; some, owing to lo¬
cality, pay twenty-five per cent, more for steel rails than others,
and in some sections of the country labor is paid twenty per cent,
more than it is in others. I mention these few of the many
things that enter into a consideration of what is reasonable and
just compensation for the public servant to receive, so that T
may illustrate the difficulties that confront a commission or a
court in determining fairly and intelligently an issue presented.
It may be said that I state only some of the considerations
lhatmustmovein behalf of the carriers and none on what is wrong¬
fully designated as the side of the public; but for reasons given
in the early part of my address, it seems to me that both sides
are the sides of the public. It is evident that a compensation
which is reasonable and just for the carrier to receive is equally
so for the public to pay, and if, in view of the nature of the ser¬
vice performed, the circumstances and conditions of the traffic
and the burdens resting on the servant, a compensation is fixed
on a reasonable and just basis, nothing more need be said.
However, I am well aware that our stagnant trade, lagging
21
industries, large surplus of cereals and low prices for them, the
large number of unemployed and the feeling of general dissatis¬
faction at existino; conditions, have much to do with the issues
o ~
brought before railway commissions. These honorable bodies
are confronted constantly with the query, are the carriers doing
all they can and ought to do for farmers, miners, manufactur¬
ers and merchants'^ So the serious question of reasonable and
just compensation for a carrier is to some extent obscured by
the desire to have carriers act as nurses to sickly industries,
unproductive farms and stagnant commerce, without much
reference to some of these interests lacking strength and vital¬
ity to stand on merit and sustain themselves if they can on
business principles, as the transportation companies must do.
When trade is depressed the carriers are often expected to
stimulate it; when mannfactures decrease it is supposed that
carriers can broaden the field of consumption, and when farm
products are low in market value the carrier is requested to
reduce charges to the end that the farmer may receive better
prices. The usual result has been that trade, manufacture and
agriculture remain practically unchanged, unless improved
under the unerring law of supply and demand, while the carrier
becomes nearly or quite bankrupt by these well meant, philan¬
thropic but futile efforts.
Too often have honest rivalry, open warfare or secret
rebates precipitated calamitous struggles for traffic. Too often
in the past have manufacturing and mercantile interests suf¬
fered for a time from the disturbance of trade channels by
heedless, unexpected and unnecessary reductions of rates. Too
often have secret contracts for traffic been made at reduced
rates with subsequent announcement of them instead of pre-
22
vioiis notice as demanded by law. Zealous, short¬
sighted, scheming men have taxed their ingenuity in devising
ways to obtain a little extra traffic by secret arrangement and at
the same time apparently comply with the provisions of the in¬
terstate commerce law requiring three days notice of rate reduc¬
tions. Even the charges approved by commissions as being
reasonable and just have been reduced openly or in secret by
certain carriers for improper ends. Associations of railway
officers,from presidents down, have been formed to eliminate these
disturbances, both before and since state and national legislation,
and to maintain with some stability established tariffs under
t/
agreed divisions of traffic or revenue between competing car¬
riers. Agreements of various kinds without the pooling feature
have been made for the same purpose, with money penalties fol¬
lowing bad faith. Differences became so frequent, contention
so rife, rivalry so heedless and rate wars proved so injurious to
all interests, that at last permanent arbitrators for matters in
dispute became indispensable. Statistics of nearly all competi¬
tive business were accurately kept for the information of car¬
riers and arbitrators and to enable the latter to reach equitable
conclusions. The machinery for intended fair dealing was
nearly complete and quite comprehensive. The efforts in this
behalf were made in good faith and with worthy motives by a
large majority of carriers, and yet the dissatisfied minority often
nullified them by secretly or openly breaking the compacts
they made. The lowest rates given for selfish ends were
regarded by the public as proper and just charges for like ser¬
vice for all shippers, irrespective of cost of service or the
peculiar and unsatisfactory, and I may say inexcusable condi¬
tions under which they were temporarily given. Again
23
and again leading and conservative carriers returned to the
apparently hopeless task of maintaining reasonable and
just charges, of dealing equitably with all interests and lo¬
calities and of saving from bankruptcy the vast aggregate of
capital invested in American railways.
I am personally acquainted with many of the executives
of our leading transportation companies and know be¬
yond question or doubt that they have been for years
and are to-day sincere and earnest in their efforts to
accomplish what I have stated. The interstate commerce
law, after some hesitation, has been taken by them
as a text; in support of it new associations were formed; to
strengthen it new agreements were made; in pursuance of it
tariffs were published; under it many public hearings have
been had, and step by step the conservative, law-abiding and
experienced railway managers have sought to weave a fabric of
reasonable and just transportation charges throughout the Re¬
public. As this work progressed they associated themselves
still more closely for the objects of the law and to maintain the
schedules of charges made in pursuance of it. They have de¬
clared themselves unequivocally committed to the basic princi¬
ple of the law that all charges must be reasonable and just, and
they have embodied this commitment in various agreements.
At all times ready to respond to the summons of the national
and state commissions, and attend hearings and obtain rulings
for or against them, the conservative carriers have sought to
secure from commissions and courts a line of opinions that
would mark with some precision the charges which, under dif¬
ferent circumstances and conditions, might be regarded as rea¬
sonable and just. I am aware that in some instances repre-
24
sentatives of transportation interests have been " backward in
coming forward," bat as a rale the attitade and coarse of action
have been as I have stated.
I have briefly, hastily and in ansatisfactory order oatlined
the condition of the pablic mind toward and the coarse fol¬
lowed by carriers from before a railway existed an til the present
time. I have said that common law and asage reqaired that
reasonable and jast compensation shoald be charged for pablic
or semi-pablic service; that this crystallized into statutory law
after the birth of rail-carriers; that it led to state commissions,
with more or less power, in a majority of oar states; that it
culminated in a national law and commissioa; that many car¬
riers, afraid of results at first, reluctant next, and obedient at
last, joined in earnest efforts to conform to law and pub¬
lish and maintain thereunder reasonable and just charges and,
finally, that the Supreme Court, in a recent opinion, has de¬
cided that, under a law subsequent to the act regulating inter¬
state commerce, carriers cannot asree between themselves to
' o
maintain even reasonable and just charges on interstate traffic,
although reasonable stability in charges is essential for the pre¬
vention of unjust discrimination.
The general situation is unique and peculiar. Tlie people
assert that all charges shall be reasonable and just; in their
national legislature they enact a law requiring them to be rea-
sonable and just; commissioners appointed in pursuance of law
insist that they shall be reasonable and just; the courts decide
that under the law they must be reasonable and just; the rail¬
way corporations, through their managers, affirm that they
desire to make them reasonable and just, but a Supreme Court
decision says that it is unlawful for the carriers to agree be-
25
tween themselves to maintain what the people demand, Congress
has enacted, commissioners insist upon and the carriers them¬
selves desire. I can see many opportunities for differences of
opinion as to what are reasonable and just charges; in fact rail¬
way history is replete with many painful and ruinous illustra¬
tions of opposing views between carriers on this very point, so
we need not wonder when commissions and ordinary citizens
take issue with them. But when competent public authority,
after careful investigation and patient hearing, concludes and states
that, under the circumstances and conditions, given charges be¬
tween given points are not unreasonable nor unjust, it seems
proper and right and good business policy, and best of all, good
citizenship, for those who must publish what are admittedly
just and reasonable charges, to agree between themselves to
maintain them until commissions and courts modify their opin¬
ions about them. If the law prohibits such agreement, then
the law itself is not founded on common sense. I have deep
reverence for the Supreme Court as a body, and profound
respect for the members individually. I have faith in the aver¬
age wisdom of our national legislature and in its desire to ad¬
vance the interests of our people. I am an upholder of law and
of good government, and an ardent supporter of constituted au¬
thorities. I believe in our Republic and its institutions and
the principles upon which it is founded. I am proud to be an
almost invisible fraction of so free, so enlightened and so great
a people, and therefore it is with diffidence that I saj^, so soon
after the Supreme Court opinion of March 22nd, that our
methods in business and commerce, in public policy and private
enterprise ought to be grounded on common sense. I have yet
26
to learn that it is contrary to common sense to agree to main¬
tain what is reasonable and just in relations between man and
man.
I trust I am not trespassing too long upon your time nor
bearing too heavily upon your patience; but the subject is of
such magnitude and importance, is so complex and so generally
misapprehended that it has seemed proper for me to make a
modest effort to bring to your attention some salient points in
the interest of all concerned, because I doubt for a
.moment your familiarity with them, nor for the reason that I
possess superior knowledge, but because I have been engaged in
railway vocations for forty years, from apprentice boy in a
machine shop to president, have at heart the public welfare, the
leo-itimate and vital interests of labor, the desirable safeguards
Ö ' o
for invested capital, a love of fair-dealing and Justice, an abiding
faith in the principles of our government and, moreover, I come
to you from a State that at present entrusts its transportation in¬
terests to the common-sense, fairness and integrity of its carriers
unrestrained by statutory provisions but governed by common
law. I feel deeply my responsibility to the public for the con¬
fidence reposed in me, thus far, as a railway manager, and
because I have always endeavored to consider in a dispassionate
manner the commercial as well as the corporate aspect of the
transportation question. Observation has taught me that where
all interests aspire to attain an acknowledged desirable result
and differ only in detail as to the best method of procedure for
accomplishing it, free interchange of thought, candid discussion
and calm deliberation by representative men in conference to¬
gether are the surest means for uniting in a common conclusion.
Iior does it weaken in any way this method, nor impair its
27
application when some representatives are from the governing
class and others from the governed. In truth this method of
procedure is more appropriate in such cases, under our Repub¬
lican form of government, where all powers spring directly from
the governed and those in authority are for the time being the
servants of the people.
You have already perceived the suggestion I am about to
make, that joint conferences be held between commissioners and
railway managers for the purpose of determining how they shall
unite in presenting to the people reasonable, just and stable
transportation charges, without discrimination, as contemplated
by law. How the people and the law-abiding carriers shall be
protected against law-breaking ones. How violators of trans¬
portation law can be speedily brought to bar. What legisla¬
tion, if any, is necessary to accomplish these ends.
I beg that you will not think lightly of the suggestion and
dismiss it from your minds as a chimerical, impracticable or
impolitic one. The highest ambition of every citizen, in private
occupation or in public position, should be to sustain the
majesty of the law and aid in its enforcement. If a public desire
is put in statutory form and fails in controlling as intended,
because of incomplete legislation, it stands to reason that ad¬
ditional leorislation should be had to the end that the orio-inal
o o
object will be attained.
Bear in mind the basis upon which my suggestion rests
and pardon me for repetition: common law, running through
generations, that transportation charges shall be reasonable and
just and free from unjust discriminations ; statutory provisions
by a majority of our states and by our national legislature
formulating the usage of generations in regard to public car-
28
riers; the appointment of commissioners by state governments
and by the national government to make effective these trans¬
portation laws ; the inability thus far of the state and federal
governments, and their boards of railway commissioners, to
enforce the laws and to bring law-breakers to bar in the courts;
the desire of all conservative, self-respecting and law-abiding
rail carriers to comply with these laws and give to the public
reasonable and just and stable rates without unjust discrimina¬
tion, and their powerlessness to do so because of the dis¬
regard of law by some shippers and some carriers and
their freedom thus far from well-merited punishment. Be¬
fore any so-called railway laws were enacted in this country the
rail carriers tried as best they could by various kinds of joint
agreements to establish and maintain what seemed to them just
and reasonable rates, but they failed in their purpose. State
governments have tried to accomplish the same object on traffic
within their respective states ; the federal government has made
a comprehensive effort for a similar purpose in respect of inter¬
state traffic, and inany conservative railway managers have eii-
deavored to co-operate with the federal and state governments in
accomplishing the end in view, but thus far these efforts have
been unsuccessful.
The fabric of rates throughout the land is so peculiarly
woven that one part cannot be materially strengthened or weak¬
ened without affectino; the whole. The rates on traffic within
states are so closely interlocked with and dependent upon rates
on traffic between states, and at times on that with foreign
countries, as to make their readjustment coincident in the gener¬
ality of cases. Hence, co-operation on right lines between the
state boards of commissioners and the national board is desir-
29
able, and conferences and co-operation between state and inter¬
state carriers are necessary. There are instances where three or
four liundred out of onr one hundred and eighty-five thousand
miles of railway have seriously disturbed rates from St. Paul to
the South Atlantic Coast, and from St. Louis and Chicago to the
Gulf of Mexico and the Pacific Ocean. A State, either by legis¬
lative enactment or through its commission, can affect the whole
fabric of rates unless the action is so palpably wrong as to war¬
rant the intervention of a court of competent jurisdiction.
Therefore 1 say that co-operation on just lines between the fed¬
eral and state boards and between the various state boards
is almost essential.
The conditions when regarded geographically and commer¬
cially point with unerring finger to the absolute necessity oE
conferences and understandings between carriers, co-operation
between boards of commissioners, and concert of action between
commissioners and carriers for the fulfilment of the laws
requiring reasonable and just rates, free from unjust discrimi¬
nation, throughout the land. So I return to my suggestion that
railway managers and commissioners have joint conferences for
the object already stated. But for fear it may be thought that
I speak with some degree of authority for the transportation
companies, it is well to say that I alone am responsible for the
suggestion. I have not counseled with a single president or
manager upon the subject and I doubt if one of them in the
entire country is aware that you honored me with an invitation
to address this convention.
The carriers are not fully agreed amongst themselves as to
what ought to be done to perfect legislation in the mutual in¬
terest of the public and themselves, and perhaps the honorable
30
commissioners are similarly conditioned. If duly appointed
committees of representative railway men from the various
sections of the country covered by the different traffic associa¬
tions would meet and confer, they would, no doubt, reach a
reasonable conclusion which could be entrusted to a sub¬
committee empowered to ask for a conference with the federal
commission in relation to interstate legislation, and with repre¬
sentatives of state boards as to state leg-islation if it be neces-
sary in connection therewith. As there would be no vexed
question at issue, no matter of rates to pass upon, no transpor¬
tation principle to determine, I am persuaded to believe that
the federal commission would accord a conference, or a series
of them if need be, for the purpose of endeavoring to formu¬
late a recommendation to the national lec^islature, so fair and
o ^
just to all concerned as to insure its approval and its crystalli¬
zation into law. It may take time and patience and protracted
conferences to come to a joint conclusion grounded upon jus¬
tice and common sense; but can time be spent more advan¬
tageously and beneficially and can united effort on anj other
great question produce more satisfactory results to the country
at laro-e ? I shall not venture any suo-aestions about the
o J oo
additional legislation that is desirable, beyond stating that it is
clear to me agreements between carriers for maintaining
reasonable and just rates under the approval of the commis¬
sions, should be legalized, and when entered into the people and
the carriers who may be injured by violations of them should
be able to sue and recover damages in courts of law; and per¬
haps the incorporation of joint traffic bureaus or associations
or clearing houses should be authorized and persons who manage
them be held directly responsible to commissions and amenable to
31
law as recognized agents of carriers so associated together. I pur¬
posely refrain from speaking farther upon this point because I
do not know the views of those who have broader minds, larofer
^ o
responsibilities and greater opportunities for formulating just
and proper recommendations.
Federal and state laws for the regulation of railways,
rulings of national and state commissions and the general
methods of interstate and state carriers should be substantially
alike in all important matters. The basic principle governing
cliarges is the same the country over, as heretofore shown and
for the reasons stated; therefore all legislation should be upon
the same lines to accomplish the same end, regardless of whether
carriers have a preponderence of interstate or of state traffic.
What is most reasonable and just to all interests, state and
national, should be attained, and the machinery of government,
of transportation companies and of traffic associations should be
worked in harmony with each other for the benefit alike of the
public and the carriers. Not for the purpose of oppressing the
carriers, but to protect them equally with all other interests in
the Republic. There are large areas of our country to be opened
up to settlement, and transportation facilities will be their lead¬
ing necessity. Capital must be enlisted in this behalf or else
we shall stand still as a nation. For these enterprises, and for
all other material development, capital and labor are the factors,
and to succeed they must work in close co-operation under laws
equally just to each and inspiriting to both. The sentiment or
legislation that cripples either will injure both.
In conclusion, Mr. Chairman, permit me to invite this
distinguished body to hold its next convention in the capitol
city of the Rocky Mountain state, tlie fair city of Denver. I
32
can insure you a cordial welcome, warm hospitality, sunny skies
and a balmy atmosphere. The Denver and Rio Grande Rail¬
road will be at your service and the gold, silver, iron, coal,
lead and copper mines of Colorado will be of easy access from
its rails. You need have no hesitancy in accepting, for you
will be most welcome guests of the citizens, and thé railway
company I represent does not seek any favors at your hands. Y ou
can view mountain scenery that is beyond description, pass over
summits two miles above sea level, through deep canons and
gorges so narrow that the railway can scarce find room, you can
climb grades of two hundred and eleven feet to the mile, can
ride on standard-gauge or three-feet gauge or three-rail track^
just as you prefer, and observe that which is unique and inter¬
esting and exceedingly instructive in railway operations. I
thank you all for the attention you have given me.
33
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