/?
OF THE
RAILROAD COMMISSION
TO THE PUBLIC AND THE RAILROADS.
COHCLUDIHG PART OF THE ARGUMENT
OF
MAJOR JOSEPH B. GUMMING
For the Railroads
Before the Honorable Railroad Commission of Georgia
To the Application of the Savannah Cotton Exchange
and others, for Reduction of Cotton Rates,
on Angnst 4, I89T
DUTIES AND RESPONSIBILITIES
OF THE
RAILROAD COMMISSION
TO THE PUBLIC AND THE RAILROADS.
COHCIUDIHG PART OF THE ARGUMEHT
OF
MAJOR JOSEPH B. GUMMING
For tlie Railroads
Before the Honorable Railroad Commission of Georgfia
To the Application of the Savannah Cotton Exchange
and others, for Rédaction of Cotton Rates,
on August 4, 1897
ATLANTA, ÜA.:
Lraiiktin Printing and Publishing Company,
1897
Puhlldir'l íiii'l diMributeil at request of the Railroads interested
in the (ippliewtion for redui'tloii of cotton rates before the Honorable
Railroad Commission of Georgia.
Dllties and RespoiisiMIties of ttie Railroad Coiiiiiiission
TO THE PUBLIC AND THE RAILROADS.
Concluding Part of the Argument of Major Joseph B, Gumming'
for the Railroads before the Honorable Railroad Com¬
mission of Georgia, to the Application of the
Savannah Cotton Exchange and others,
for Reduction of Cotton Rates,
on August 4, 1897.
The theorv on which rallroads were originally operated
was that of private property. The stockholders controlled
and managed their railroad as they would any other prop"
erty which they owned, and would resent outside inter¬
ference witit as sincere and genuine indignation as if it
were their factory or plantation which was invaded. Of
course, that theory of railroad management has jtassed
away. The most extreme champion of railroad rights rec¬
ognizes the fact that the railroads iiave, in their relation
to the public, taken the place of the highways of the coun¬
try. They can no more be permitted to prescribe the
terms on which the citizen shall use these new highways
than private citizens could fi.x charges to be paid bv trav¬
elers and carriers on the old highways.
The recognition of this truth—a recognition which, look¬
ing back, we must consider to have been tardy—led to the
establishment of Railroad Commissions. It was but natural
that under the circumstances of their creation, all concerned,
railroads, legislators and people, should have regarded
(3
litem only in the liolit of machinery to ent down rates of
freight and passenger carriage. Dunbtless tliis was the
jtiirpose which alone, at the inception of tiio system of
commissions; was naturally in the minds of all persons.
But a different view was obliged to be evolved from the
facts as they developed. It was obliged to follow, that if
the railroads were deprived of the jtower to take care of
themselves, it became the dnty of the power which strij)ped
them of the right of self-preservation, itself to take care of
them. Ilonbtless the view still })revalent in the jiopnlar
mind is, that it is the sole mission of the Commission to
<'nt down rates. The peo])le, at least the unthinking jiart
of the public, very probably looking npon railroads as
their natural enemies, consider the Railroad Commission as
jnlmarily, if not altogether, a weapon of attack and defense
against the railroads.
I do not hesitate to say that this conception is radically
■wrong. The Commission must begin with the recognition
of the absolute necessity of railroads to every civilized
society. 1 shall not, of course, dwell on this necessity. It
is admitted by all without argument. We can contemplate
the existence of a civilized, industrial society without rail-
I'oads no more than we can conceive of life without food.
The first thing, therefore, to be secured to the people of
Georgia is an ade(juate supply of railroads. They must be
supported, whatever their support may cost. If they can
be supported by low rates, let low rates prevail. If they
require high rates for their support, as I shall hereafter
define suj)port, then the rates must be high. In a word,
the paramount business to engage the attention of the
Commission is the su¡)})ort of the railroads, whatever they
may cost the peojile in the way of rates.
i
Tliis is no preference of the railroads over tiie i)eople;
it is securing to the people that instrumentality of civiliza¬
tion which is of paramonnt importance to the people.
Therefore, whatever may have been the original con¬
ception of a Railroad Commission in the mind of the Legis¬
lature, whatever may have been the sense of injustice and
oppression felt by the people, out of which the device of a
Commission sprung, however natural it may have been,
in vi(>w oí the circumstances of its creation, to regard the
Commission wholly as machinery devised to curb the rail¬
roads, in the advance of ideas, we must recognize that the
true mission of the Commission is to raise an adequate
revenue for the support of the railroads.
The Federal Government cannot go on without an ade-
q\iate revenue. Xo one ever questions that statement. In
the aversion which the American jieople have for direct
taxation, their policy has always been to levy this revenue
by duties on imports. There has never been, I believe,
any difference of opinion among them on this main propo¬
sition. The divergent opinions have related to tariffs for
revenue only, tariffs with incidental protection and tariffs
in which protection has been the primary pur|)ose.
The Commission is in a position strictly analogous to a
Congress of the United States engaged in arranging a
O o o Ö M
tariff for revenue only. The railroads cannot be turned
loose to collect such freight and j)assenger rates as they
choose, and as before the days of regulation they were ac¬
customed to do. The Government cannot levy taxes arbi¬
trarily, as is the way with absolute governments. The
analogy between an absolute^ government raising revenue
without uniformity and regidarity at the will of the sov-
8
ereigu aud the former management of railroads without
State regulation, is at least close. The analogy between
a government proceeding constitutionally and according
to law and the railroads under State regulation is ])erfect.
Perfect, also, is the analogy between this Commission
and the Congress of the United States engaged in fram¬
ing a tariff' for revenue only. Perhaps the analogy
would be more strict if the Congress were also providing
in its tariff for incidental protection for weak industries.
The Government mnst be supported. The revenue for its
support must be raised by legal means. Not less clear is
it that the railroads must be operated. The means for
operating them must be raised by rules prescribed by this
Commission. But supjiorted they must be, aud the ])riinary
and paramount function of this Commission is to see to it
that their regulations effect that purpose. If it can be at¬
tained by low rates, let low rates prevail. If high rates
are necessary for its accomplishment, high rates must be
imposed. The failure of this Commission to prescribe
high rates, where they are requisite, would be quite as fla¬
grant a breach of duty as the omission to cut down high
rates when they are not needed for the suj)port of the
railroads.
Believing, as I do, that, whatever may have been the
original spirit moving the Legislature to create the Com¬
mission, aud even wduitever may be the language of the
creating Act, the evolution of the Commission idea and the
practical development of railroad regidation by Conunis-
sions ? bring us to the position I have taken, I ask wduit
would be thought of a Congress that took one leading ar¬
ticle of imports and dealt with it alone, fixed the duty on
9
it without reference to other articles or to the general
revenue?
Whenever, therefore, the attention of the Commission is
given to a change of rates, it becomes its duty to start
with the inquiry whether the existing schedule, tahen as a
whole, furnishes enough revenue for the support of the
railroads. And here I would bring to the front the propo¬
sition that support means more than making both ends
meet in operating expenses. It includes also a fair and
steady return for the capital judiciously invested and eco¬
nomically managed in the railroad. There is no soundness
of policy, ex])ediency or justice in holding the view and
acting on it, that railroad investments are any less entitled
than any other to receive a fair return for the investors.
I shall not argue this proposition ; it is admitted at once
in every candid and 0])en mind, and it is a waste of time
to argue with minds of a different character. It is with
such views as these that the Commission should act.
First, operating expenses in the most comprehensive
meaning of that phrase—covering all parts of railroad
administration—are to be provided for. The expenses to
be thus provided for are not the expenses of a ram-shack¬
ling railroad, a railroad which can manage to run after
some unsatisfactory fashion, but a railroad brought up at
least to the average standard of the age in speed, safety,
comfort and general efficiency. While this branch of the
subject is under consideration by the Commissioners, their
minds should be absolutely closed to the minor interests
of the public in the matter of rates. For the time being
the interest of the public should be considered only in its
relation to its prime necessity of having an efficient rail-
10
road. This first necessity being provided for, the consid¬
eration of the adjustment of rates in the interest of the
public may be entered upon, but of course without dis¬
turbance of the essential status of a sufficient revenue for
the railroads—a thing far more important to the public
itself than a mere adjustment of rates.
Let the Honorable Commission, therefore, start on the
consideration of this application by deciding in their own
minds whether the railroads can stand a reduction of the
revenue which the Commissiouers' schedule of rates, as a
whole, provide. If the Commission reaches the conclusion
that the railroads cannot submit to any reduction, that
ought to end the matter, just as much as a conclusion,
reached by Congress, that the revenue raised for the gov¬
ernment was not more than sufficient for its just needs
ought to produce the result of no reduction in taxes, how¬
ever onerous the taxes may be.
These views are strictly iu accord with the position taken
by the courts, which in effect is, that the Commission
schedules must be considered as a whole in ascertaining
their justness and legality, which depend upon the ques¬
tion whether as a whole the rates prescribed will "pay the
cost of the necessary skilled service and best appliances
and keeping the same in proper condition, interest on
bonds and then leave something for dividends."
Ry. Co. V. Dey et al, Ry. Commissioners, 35 Fed. Rep.
866.
Stone V. Trust Co., 116 U. S. 307.
Mercantile Trust Co. v. T. & P. R. R. Co., J. H. Reagan
et al., 51 Fed. Rep. 529 (50 Am. & Eng. R. R. Cases, 559).
Southern Pac. R. Co. v. Commissioners, etc., 78 Fed.
Re])orter, 236.
11
DECISION OF THE RAILROAD COMMISSION
DECLINING THE APPLICATION FOR
REDUCTION OF 25 PER CENT.
IN COTTON RATES IN
GEORGIA.
W. H. Brewer et al., and "j August 6, 1897.
Savannah Cotton Exchange, I Application for reduction of
V. I 25 per cent, in cotton
Railroad Companies. j rates in Georgia.
The Commission having taken up the above stated
cases for consideration and action, passed the following
resolution :
"Whereas, At a hearing of the petitions filed by the
Griffin Board of Trade and the Savannah Cotton Exchange
for a reduction of twenty-five per cent, in the rates on
cotton, this Commission, after having heard the evidence
introduced, and from the information received by them at
the hearing, are of the opinion that the revenues received
by the various railroads in this State do not at present
authorize any reduction in the rates on cotton ; therefore,
be it
" Re.^olved, That the application of the Griffin Board of
Trade and the Savannah Cotton Exchange for a reduction
of twenty-five per cent, in cotton rates be, and the same
is, hereby denied."
( copy.)
The above is a correct copy of the resolution adopted
by the Railroad Commission of Georgia in the cases stated.
J. D. Massey, Secretary.
This August 17th, 1897.