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fj^'RE^LA'TjON OF ALL RAILROADS THROUGH THE 
 STATE-OWNERSHIP OF ONE. 
 
 SPEECH 
 
 OF 
 
 CHAKLES TMNCIS ADAMS, JR. 
 
 ON BEHALF OF TJiE 
 
 Jptasi;. |Smml of Hattroad-^flmmissujnm, 
 
 MADE BEFORE THE 
 
 JOINT STANDING LEGISLATIVE COMMITTEE ON RAILWAYS, 
 
 February 14, 1873. 
 
 BOSTON: « 
 
 JAMES R. OSGOOD AND COMPANY, 
 
 (Late Ticknor & Fields, and Fields, Osgood, & Co.) 
 
 i«?3. 
 
THE REGULATION OF ALL RAILROADS THROUGH THE 
 STATE-OWNERSHIP OF ONE. 
 
 SPEECH 
 
 OF 
 
 CHARLES FRANCIS ADAMS, JR. 
 
 ON BEHALF OF THE 
 
 Jfoisa. |kant Bjf llaHroad-^ommiaswttm, 
 
 MADE BEFORE THE 
 
 JOINT STANDING LEGISLATIVE COMMITTEE ON KAILWAYS, 
 
 February 14, 1873. 
 
 BOSTON : 
 
 JAMES R. OSGOOD AND COMPANY, 
 
 (Late Ticknor & Fields, and Fields, Osgood, & Co.) 
 
 I873- 
 
M&V\ 
 
 SeL o 
 
 ! % '1 3 A 
 j'y 
 
In Board of Railroad-Commissioners, 
 Feb. 26, 1873. 
 
 Voted, That the speech of Mr. Adams, delivered before the Joint 
 Committee on Railways, Feb. 14, be printed, as the authorized expression of 
 the views of this Board. 
 
 WM. A. CRAFTS, Clerk. 
 

 
 
 
 
SPEECH. 
 
 [The attention of the Legislature was called, in the annual address 
 of the Governor, to the approaching completion of the work on the 
 Hoosac Tunnel, and the consequent necessity of some immediate action 
 towards putting the railroads connecting with the tunnel in a condition 
 to accommodate the expected traffic. Two petitions had been referred 
 to the Committee, and measures framed in accordance with them sub¬ 
 mitted. The first, on behalf of the Vermont & Massachusetts railroad 
 company, looking to a consolidation of all the roads constituting the 
 Tunnel line; the second on behalf of the Boston & Lowell and of the 
 Fitchburg railroad companies, looking to the incorporation of the latter 
 into the Great Northern consolidation. The Board of Railroad Com¬ 
 missioners had, in three consecutive annual reports, from 1871 to 1873, 
 recommended the assumption of the Fitchburg road by the Common¬ 
 wealth, with a view to the ultimate formation of a through railroad line 
 from Boston to the Hudson River, owned by the State, and operated, 
 through the medium of trustees, as a public road. On the eighth day of 
 the hearing, Mr. Adams appeared and spoke as follows : —] 
 
 Mr. Chairman and G-entlemen of the Committee , — In 
 compliance with your request, as expressed in a formal 
 vote communicated to us, I am instructed by the Board of 
 Railroad Commissioners to appear before you and public¬ 
 ly submit certain views in relation to the subject of state 
 railroad. ownership, as bearing upon the matter now before 
 you; which views that Board has arrived at after long and 
 anxious deliberation. 
 
 And in the first place I desire to lay before you the fol¬ 
 lowing draught of a resolve, as a practical question for im¬ 
 mediate consideration: — 
 
 5 
 
6 
 
 Resolved, That the Governor and the Council be requested to ascer¬ 
 tain and inform the Legislature, as soon as may be practicable, upon 
 what terms, if any, the Commonwealth can purchase the rights, titles, 
 property, and franchises of the Fitchburg, the Vermont & Massachu¬ 
 setts, and the Massachusetts Central railroad corporations; and further, 
 to ascertain and report what legal measures it would be necessary or ad¬ 
 visable to take, to enable the Commonwealth to assume possession, un¬ 
 der any powers reserved to it by law, or under the right of eminent do¬ 
 main, of the roads, properties, and franchises aforesaid, with estimates as 
 to what would be the probable cost to the Commonwealth of so doing. 
 
 Now, gentlemen, in presenting to you what I have to 
 say, I shall try to confine myself very strictly to the mat¬ 
 ter in hand. I shall neither ask you to go back with me 
 into the early records of American civilization, nor into 
 any other branch of pre-historic inquiry. Neither shall I 
 seek to transfer you across either ocean to consider the 
 probable effect of any decision at which you may arrive 
 upon the future destinies of China or of Russia. And, in 
 case I should wander away into these fields of rhetoric and 
 of imagination, I sincerely hope that you will recall me to 
 realities, and will not hesitate to direct my attention more 
 particularly to the very important questions under imme¬ 
 diate consideration. 
 
 In order to sweep awa} r much of the unnecessary pre¬ 
 liminary matter which has accumulated, as it seems to me, 
 in the course of these hearings, I shall take three things 
 for granted: — 
 
 I shall, in the first place, assume that a large and re¬ 
 munerative business awaits the completion of the Tunnel 
 route. This may be inferred from the notorious fact, that, 
 after mature discussion in years gone by, the Legislature 
 authorized the construction of the tunnel at a cost of 
 some twelve or fourteen millions of dollars. It must be 
 presumed that your predecessors were men of reasonable 
 discretion, and that, before embarking in this costly 
 enterprise, they fully satisfied themselves as to its expe¬ 
 diency. Even if they failed to do so, it is now too late 
 repair tieir negligence. I lie tunnel approaches com- 
 
7 
 
 pletion : it remains for us only to develop its utility to the 
 utmost. 
 
 I shall, then, further assume, that, in order to accommo¬ 
 date this expected traffic, a united corporation is neces¬ 
 sary. This, I fancy, no one will deny who has any famil¬ 
 iarity with railroad economy. The day for disunited, 
 squabbling, connecting lines is long past. They can nei¬ 
 ther fulfil the reasonable demands of modern business de¬ 
 velopment, nor, in competition, can they hope to hold 
 their own against united corporations. This fact is so 
 well settled, that it seems a mere waste of time to prolong 
 its discussion. 
 
 Finally, I shall ask you to consider all discussion of de¬ 
 tails as premature at this stage of our investigations. We 
 have as yet neither reliable statistics nor legal advice ; nor 
 can I pretend to have myself bestowed that careful con¬ 
 sideration upon the subject, in all its remote bearings, 
 which would alone entitle any opinion I might advance to 
 a moment’s consideration. Hereafter, when you shall 
 have upon your table the information called for in the 
 resolve I have read, we may more properly enter upon 
 minutiae. To-day I propose to confine myself to general 
 principles. We are now to consider a policy ; its detailed 
 development will follow at another time. 
 
 Now, gentlemen, in appearing here to urge upon you 
 the taking of the preliminary steps which are to result in 
 the Commonwealth of Massachusetts “going” (as it is 
 commonly expressed) “ into the railroad business,” I am 
 fully sensible — the Board of Railroad Commissioners is 
 fully sensible — that a heavy burden of proof rests upon 
 us. We do not in any respect desire to shirk or to reduce 
 it. We propose an innovation, — an innovation upon a long- 
 established and, it was supposed, firmly-settled principle, 
 which lies at the foundation of our industrial and political 
 systems. Could I state the case in broader language, I 
 would do so, to make clearer yet our deep sense of the re¬ 
 sponsibility under which we act. In proposing this inno- 
 
8 
 
 vation, therefore, we are bound to show, not only that a 
 change of policy might be beneficial, but that some change 
 is necessary; not omy that what we suggest promises good 
 results, but that what exists is producing bad results ; not 
 only that there is a balance of probabilities on the side of 
 the innovation we recommend, but that it could hardly 
 result in a worse condition of affairs than now is, or is 
 obviously impending. 
 
 No principle is or should be more firmly established at 
 the base of our American polity, than that our governments 
 should have the least possible connection with industrial 
 enterprises. This great principle, pardon me for adding, 
 has few more ardent or earnest advocates than myself. In 
 my own place, I look upon every breach of it with pro¬ 
 found regret. I respect every man who maintains it, even 
 after reason has got the better of my own strong prejudice 
 in its favor. Yet there are occasions, as I think I shall 
 demonstrate to you, when an innovation upon this great 
 principle is necessary, and when, to save it, its wiser 
 friends concede an exception to it. When that occasion 
 arises the innovation cannot be too speedily made, if we 
 would save the principle trom the great popular discredit 
 which follows its apparent failure. 
 
 The class of occasions in which this innovation is neces¬ 
 sary is well and clearly defined in an article in this paper 
 which I hold in my hand. It is the New York “ Nation,” a 
 paper well known for its ability and for its free-trade pro¬ 
 clivities, -- a determined opponent of the whole theory 
 and system of paternal meddling and Government inter¬ 
 ference. The article from which I read is in the issue o>. 
 6th February, and is on the subject of the postal tele¬ 
 graph, — a scheme which meets with no favor in that quar- 
 ter. The principle is here laid down, that the Government 
 ought not to interfere with industrial undertakings; and 
 the writer then proceeds to say, “There is but one case 
 wnch warrants such interference, and that is essentially 
 the same for all departments of industry. That case arises 
 
for a republican government when any one branch of the 
 business of the community is so monopolized that citizens 
 can no longer share in or control it, and so mismanaged 
 that they can no longer endure it. When that day comes, 
 either in the shoe trade or the coal trade, in the conduct 
 of a Pennsylvania petroleum combination, or of railroads 
 and telegraphs, Government is warranted, when all other 
 remedies have failed, in prostrating private enterprise by 
 the crushing hand of power, and supplanting private in¬ 
 dustry as best it may.” 
 
 I accept this definition as laying down the principle on 
 which we appear before this committee to-day. Accepting 
 it, I at once take the parallel which is usually advanced in 
 these cases. I have myself seen it advanced within the 
 last week in the columns of the daily press, and I have 
 heard that it has been advanced in the discussions held in 
 the Boston Board of Trade on this very subject. That par¬ 
 allel is usually thus expressed : “ The Government has no 
 more to do with the railroad business than it has to do with 
 the business of making shoes, or spinning cotton, or baking 
 bread.” I accept this parallel, as presented by the oppo¬ 
 nents of the innovation now proposed; and I proceed to 
 point out where the distinction which has escaped them 
 lies. 
 
 What is the principle upon which the cotton-factory, 
 the shoe-factory, and the bake-house are by common con¬ 
 sent exempted from all Government interference? — It is 
 simply because those conducting business in them are com¬ 
 pletely subject to what are known as the laws of supply 
 and demand and of competition. If these persons were 
 to realize from their business an inordinate profit, other 
 persons, without any intervention of Government, would 
 enter into it, and the rate of profit would speedily fall to 
 the average rate of profit in the community. Under these 
 circumstances the exceptional condition of affairs referred 
 to in the article from which I have quoted cannot arise. 
 Where capital and industry are free to flow, no monopoly 
 
10 
 
 can exist. Now, what is the case as regards railroads? 
 You, gentlemen, perfectly well know that wherever com¬ 
 bination is possible (it is the shrewd aphorism of old 
 George Stephenson), competition is impossible. The only 
 thing which can enable competition to exist is the presence 
 of competing forces too numerous to combine. Look 
 abroad over this country, and you will see at a glance what 
 competition amounts to so far as railroads are concerned. 
 Take, I pray you, the case of New York and Chicago, two 
 cities a thousand miles apart, between which railroads 
 have been constructed as fast as private capital could con¬ 
 struct them. Every gentleman on this committee knows 
 that not a rate is charged between New York and Chicago 
 which is not established by combination. You know that 
 every time the tariff is to be raised or lowered, the freight- 
 agents of the several companies meet in convention, and 
 they decide how much it shall be raised or how much it 
 shall be lowered, and the change agreed upon takes effect 
 upon all the roads on a given day. You know — every 
 man who has looked into this subject knows—that the 
 only competition which exists is between land trasportation 
 and water transportation. When water enters into the 
 struggle, — when navigation opens, — then the freight- 
 agents meet, and rates are reduced ; when the lakes freeze 
 up, then the freight-agents meet again, and the rates are 
 raised. Whether reduced or raised, however, the change 
 always is the result of combination. 
 
 Again, let us look at this question from another point of 
 view. The idea of competition certainly implies the ex¬ 
 istence of several agents. As regards railroads, however, 
 even the combination of competitors is limited to a few lo¬ 
 calities. Except at competing points, — points, that is, upon 
 which railroads converge, — transportation by rail is a pure, 
 absolute monopoly, affected only by municipal law and 
 considerations of self-interest, and in no degree subject to 
 the influence either of competition or of supply and de¬ 
 mand. Now, how large a proportion of all the towns on 
 
11 
 
 our railroads are points of railroad convergence? — In 
 other words, how many of them can look to competition for 
 even a pretence of protection against monopoly? Take, 
 for example, the Boston & Albany road. It runs through 
 a densely-inhabited region filled with manufacturing cities 
 and towns ; it is two hundred miles in length ; it has eighty 
 stopping-places : but of points of railroad convergence — 
 places at which a possibility of competition exists — it num¬ 
 bers just seven. Take, again, the Central Road of New 
 York: including its Auburn division, it has four hundred 
 and five miles of road in the very garden and central 
 thoroughfare of the continent; on the whole four hundred 
 miles there exist, just nine points of convergence. Six 
 hundred miles of railroad with sixteen competing points; 
 and those inhabiting all the other localities may use the 
 Central or the Boston & Albany, as the case may be, or they 
 may stay at home, — whichever they prefer. But is it not 
 something of a mockery to refer this system for its regulation 
 to the principles which control the production of boots 
 and cotton cloth ? And if this is so here, in the manufac¬ 
 turing East, it is not hard to imagine what must result in 
 the agricultural West, where the very nature of the leading 
 industry renders it impossible for population to concentrate 
 at points of railroad convergence. In the West, the mass 
 of the people feel themselves helpless ; and hence the angry 
 feeling now prevailing against the railroad companies 
 throughout that region. 
 
 Nor is the fact that railroad competition is limited to 
 competing points, which necessarily are, and must always 
 remain, so small a proportion of the whole, a merely theo- 
 retigal or fancied evil. Far from it; our statute-books 
 bristle with futile laws enacted in the vain hope of putting 
 a stop to the practice of charging more for transportation 
 over a less than over a greater distance. In this State of 
 Massachusetts, since I have been a commissioner, a rail¬ 
 road-superintendent has frankly acknowledged to me, that, 
 where freight was shipped and paid for to the end of his 
 
12 
 
 line, if that freight was switched off at a non-competing 
 point hut ten miles from where it came on to his line, and 
 a hundred miles short of its paid destination, he always 
 charged the car containing that freight $20 extra. Twenty 
 dollars for not hauling it a hundred miles ! And he justi¬ 
 fied his extortion. He said that his road must live, and 
 that if he had to haul for cost to competing points, he 
 must get double profits out of points which couldn’t com¬ 
 pete ; “ or,” he added, “ if people prefer, I will carry 
 their freights by their doors to the point to which it is paid 
 a hundred miles further on, and then haul it back to them 
 at local rates.” In other words, gentlemen, — and this fact 
 will bear some degree of reflection, — while the result of or¬ 
 dinary competition is to reduce and equalize prices , the result 
 of railroad competition is to produce local inequalities , and to 
 arbitrarily raise and depress prices .* And yet, the working 
 of this system, this necessary and avowed mixture of pure 
 monopoly with systematic combination, is continually com¬ 
 pared, by men who profess to think, with the production 
 of boots and cotton cloth ! 
 
 This argument, however, is but the popular one, —-it is 
 one of those shallow formulas which are continually clat¬ 
 tered out through the editorials of the daily press and in 
 the discussions of the market-place. No sound thinker 
 
 * “ At a meeting of Rochester ” (a point of railroad convergence) “ business 
 men, in the winter of 1871-2, the following facts, among others, were brought to 
 notice, illustrating the evil in question : Goods could be sent from New York to 
 
 Indiana for twenty-five cents per one hundred pounds, when the freight from Roch¬ 
 ester to the same State was one dollar to one dollar and twenty-five cents. One 
 firm had paid one dollar and thirty cents per hundred from Rochester to Hannibal, 
 Mo. ; while, at the same time, the same class of freight was shipped from Worcester, 
 Mass., to Hannibal for sixty cents, and from Philadelphia for forty-five cents. In 
 shipping to Minnesota, the same firm had paid at the rate of eighty cents per car¬ 
 load per mile from Rochester to Buffalo, and from Buffalo to Minnesota at the rate 
 of nineteen cents. 
 
 “It is also alleged, in Connecticut, that a car-load of lumber will be brought from 
 the West through a town in central Connecticut, and delivered at New Haven, for 
 fifteen dollars less than the railroad company demands for dropping the car at the 
 first Mentioned town.” — Note to article on “ The Railroads ; Servants or Masters!” 
 tn Old and New,” February , 1873, p. 161. 
 
13 
 
 that I am aware of has ever lent his authority to so trans¬ 
 parent a fallacy. Still, it has weight among men, — and 
 among intelligent men at that, — who will repeat and repeat, 
 as though some virtue lay in the very words, — “ The gov¬ 
 ernment has no more to do with the railroad business than 
 it has with the shoe business.” Therefore let us turn from 
 argument, and see what the authorities say on this subject. 
 Let us go to an opponent of the whole system of govern¬ 
 ment meddling, to an eminent and consistent free-trader, 
 — to John Stuart Mill, the greatest of living economists. 
 Upon this subject, Mr. Mill says, —“ There are many cases 
 in which the agency, of whatever nature, by which a ser¬ 
 vice is performed, is certain, from the nature of the case, to 
 be virtually single ; in which a practical monopoly, with all 
 the power it confers of taxing the community, cannot be 
 prevented from existing. I have already more than once 
 adverted to the case of the gas and water companies, among 
 which, though perfect freedom is allowed to competition, 
 none really takes place, and practically they are found to be 
 even more irresponsible and unapproachable by individual 
 complaints than the Government. ... In the case of 
 these particular services, the reasons preponderate in favor 
 of their being performed, like the paving and cleaning of 
 the streets, not certainly by the general government of the 
 state, but by the municipal authorities of the town, and the 
 expense defrayed, as even now it in fact is, by a local rate. 
 But in many analagous causes which it is best to resign to 
 voluntary agency, the community needs some other se¬ 
 curity for the fit performance of the service than the 
 interest of the managers; and it is the part of government 
 either to subject the business to reasonable conditions for 
 the general advantage, or to retain such power over it that 
 the profits of the monopoly may at least be obtained for 
 the public. This applies to the case of a road, a canal, or 
 a railway. These are always in a great degree practical 
 monopolies; and a government which concedes such mo¬ 
 nopoly unreservedly to a private company does much the 
 
14 
 
 same thing as if it allowed an individual or an association 
 to levy any tax they chose, for their own benefit, on all 
 the malt produced in the country, or on all the cotton im¬ 
 ported into it.” * 
 
 Now, then, by authority as well as reason, I have sought 
 to show you that railroads are not subject to those laws 
 which are safely relied upon to protect the community 
 against the exactions of cotton-spinners and shoemakers. 
 But there is one more point about this. Let us suppose 
 for a moment that we concede the proposition that the 
 government has no right to “ go into the railroad business. 
 If we concede this, however, we must concede it in its 
 full length and breadth. The government must exercise 
 no supervision whatever over railroads any more than it ex¬ 
 ercises it over cotton-mills or shoe-factories ; the railroads 
 must be absolutely free to get all they can in exchange for 
 what it may be their interest to furnish to all who have to 
 
 * Principles of Political Economy, Book V., chap, xi., §11. 
 
 “ Nothing, perhaps, is now clearer, even to the most uncompromising adherents 
 of that school of political economy which would leave most to unfettered personal 
 action, than that competition cannot be depended upon to regulate railroad accom¬ 
 modation, whether in respect to quantity or extent, or in respect to quality, con¬ 
 venience, or price. No proposition has been generally admitted as more distinctly 
 axiomatic in former discussions than that which experience and reason now unite in 
 meeting with this simple negative. Yet if any one to-day should answer, to a com¬ 
 plaint that the public in this or that case is inadequately supplied with roads, or 
 ill-served, or over-charged, that the unchangeable laws of demand and supply will 
 correct all that, if only given time and room to operate, the civility or timidity of 
 his hearer is alone likely to save the speaker from the charge of being personally in¬ 
 terested in maintaining the existing state of things. In fact, the greatest fallacy is 
 involved in the attempt to apply to such a subject the economical law in question. 
 The circumstances which make competition possible are wanting to the very nature 
 of the case. To give scope to competition, there must be not only large and free de¬ 
 mand, but the possibility of supplying, by many persons, from many sources, the very 
 commodity demanded. Such possibility the nature itself of railroad traffic, except 
 it very special cases, excludes. The best route is from necessity already occupied. 
 A new line must be longer, costlier, more difficult; and what men were asking was, 
 to go, and to send their goods, by the shortest, the safest, and the speediest routes, 
 as well as by the cheapest. The shortest, safest, and speediest, is what the old line 
 can alone supply ; and the fact that it can also, if it will, supply them cheapest 
 must, except in the rarest cases, deter capital from intrusion.” — Mr. Theodore, Ba¬ 
 con in" Old and New” February , 1873, p. 155. 
 
15 
 
 deal with them. This, however, I do not understand that 
 the enemies of state ownership at all admit. On the con¬ 
 trary, they strenuously insist that the government should 
 supervise and regulate the railroads, should limit their 
 profits, should fix maxima to their charges; that it should, 
 in a word, confine itself to an unlimited meddling, and 
 should never own. Then, after all, railroads do not occupy 
 a position similar to that of cotton-mills. What, indeed, 
 would be the consequence to-day should this Legislature 
 assume towards manufacturers the attitude which it as¬ 
 sumes, and which the opponents of state ownership call 
 upon it to assume, towards railroads ? Suppose you ap¬ 
 pointed your commissioners, and obliged your cotton-mills 
 to render annual returns of all the details of their business; 
 and then you provided that they should not divide more 
 than so much per cent, or increase or combine their mills ; 
 and for a certain class in the community they should 
 manufacture goods at a nominal price : in what would this 
 result ? — It would indeed bring your cotton mills into the 
 same category as your railroads ; but it would reduce your 
 industrial system to a chaos. 
 
 In fact, there is a cant about this whole analogy which I 
 wish with all my heart we could get out of the heads of 
 .the community. It has got to come out before we can ap¬ 
 proach this railroad problem with any hope of a solution 
 of it. It is indeed the opponents of state ownership who 
 are the firm, consistent friends of governmental meddling 
 in industrial enterprises. They insist that the government 
 shall do the work of the railroad managers ; and they call it 
 “ regulation.” They insist that the government shall re¬ 
 duce meddling to a system ; and they call it “ supervis¬ 
 ion.” They muddle our railroad legislation into a mass 
 of absurdities; and they call that, leaving the railroads 
 alone. We have, I insist, as regards our railroad system, 
 been on a wholly wrong track. We have been trying to 
 regulate it, and all the while say we were not regulating 
 it ; we have been trying to meddle, and say we were 
 
16 
 
 not meddling; we have been trying to manage, and con¬ 
 trol, and supervise, and all the while we have chattered 
 and canted about competition and the law of supply and 
 demand. It is high time that we began to see things as 
 they are, and to call them by their right names. There is 
 nothing which renders legislation more difficult or more 
 subtly pernicious than this getting hold of a correct prin¬ 
 ciple, and, in a dull, monotonous, parrot-like manner, mak¬ 
 ing a false application of it. As regards railroads, we have 
 been doing this for forty years. 
 
 If, then, the fundamental principle which forbids the in¬ 
 terference of government with industrial enterprises must 
 in this case be sacrificed, — if a lamentable innovation on 
 it is indeed necessary, — how can this be effected with the 
 least degree of public detriment ? That some detriment 
 must result, that some public danger must be incurred, we 
 all agree : how can it be reduced to a minimum f 
 
 The opponents of state railroad management, or own¬ 
 ership in any form, say, 46 It should be effected, as it always 
 has been effected for forty years back, by the passage of 
 statute laws regulating fares, freights, profits, the issue of 
 stock, and all things else. This is the least dangerous way.” 
 Well, gentlemen, let us see ! The passage of a statute-law 
 is the natural remedy to which every American has recourse 
 in presence of any matter calling for reform. It is a species 
 of popular political pill, — a panacea good for all social dis¬ 
 orders. As a general rule the remedy is found to rather 
 aggravate the disorder than to remove its cause ; but faith 
 is strong, and the nine failures out of ten trials do not in 
 this case greatly shake it. An act of legislature is still our 
 sovereign specific. As a means of efficiently regulating 
 railroads and transportation by rail, it has, during the last 
 forty years, been tried very persistently in many countries 
 and in all conceivable forms. So far as my investigations 
 have gone, it has uniformly failed. They are still trying it; 
 in this country alone one Congress and some forty State 
 legislatures turn out more or less statutes every year to the 
 
great benefit of the legal profession, but with results small 
 enough so far as the end in view is concerned. But I do 
 not propose to enter further into this branch of the discus¬ 
 sion, because, under a resolve of the last Legislature, the 
 Board of Railroad Commissioners was directed to investi¬ 
 gate the whole question of the regulation of fares and 
 freights by law. We did so to the best of our ability, and 
 we believe that we have conclusively shown that it is im¬ 
 practicable. At any rate, whether conclusive or not, the 
 results of our examination are now before you in our last 
 annual report, and to further enlarge upon them would be 
 a mere waste of time. 
 
 But if the regulation of railways, which all agree to be 
 necessary, cannot be accomplished by legislation, how 
 can it be accomplished ? How has it been accomplished 
 elsewhere ? —It has been accomplished by what is known 
 as the state ownership of railways. But what is this 
 state ownership of railways ? The general idea, and I 
 think it is the idea which pervades the minds of gentlemen 
 who come up here day after day, is, that the government 
 is to own railroads, and to run them as it does the postal 
 system; that it is to assume every railroad in the country, 
 large or small; that, in a word, it is to go into the rail¬ 
 road business full tilt. In other words, the subject of 
 state ownership of railroads is not at all understood. 
 People talk very learnedly about it, without any knowl¬ 
 edge of it. 
 
 So far as I know, no government ever has, and I ven¬ 
 ture the opinion that no government ever will, own all the 
 railroads subject to its jurisdiction. In the first place it is 
 impracticable ; in the second place it is both unnecessary 
 and inadvisable. Let me refer to the Belgian system, 
 which is the one most commonly discussed. The essence 
 of the Belgian system is found, not in an exclusive state 
 ownership, but in competition arising from a mixed owner¬ 
 ship, part public and part private. The Belgian system, 
 therefore, goes back to first principles; competition plays 
 
18 
 
 a far more important part in that system than in our own. 
 The state railroads and the private railroads work inces¬ 
 santly side by side.* The result is, that the one keeps the 
 other pure, and up or down to the mark, just as you choose 
 to put it. They are now discussing in Belgium the expe¬ 
 diency of the State assuming all the railroads. I venture 
 the opinion that if this is done, they will find that they 
 have destroyed that to which hitherto they have owed 
 their success. They will have eliminated that element of 
 competition which it should be their great aim jealously to 
 preserve. For the very essence of the system of state man¬ 
 agement lies not in the ownership of all the railroads by the 
 government , but IN THE CONTROL AND REGULATION OF THE 
 WHOLE, THROUGH THE OWNERSHIP AND MANAGEMENT OF 
 A part. Upon this fundamental principle I feel that I 
 cannot place too strong an emphasis. In these few words 
 are included the whole theory of state ownership, which 
 I am instructed to urge upon you. And with this state¬ 
 ment I come hack to my original proposition, and we can 
 now formulate a rule. The admitted general principle is, 
 that the government should have no connection with in¬ 
 dustrial undertakings. If I have established an exception 
 to that rule, as regards some degree of supervision and 
 
 * “ The experience obtained in Belgium of the working by the State of at least a 
 portion of the railways existing in that country, is entirely in favor of that system. 
 The lines worked by the State have been the most successful financially, and are 
 also those kept in the best order and the working of which gives the greatest satis¬ 
 faction to the commercial world and the public in general, as regards regularity of 
 conveyance, cheapness of transit, and the comfort o. travellers. 
 
 “ The State not being solely guided by the prospect 01 financial gain, but having 
 constantly in view the interest of the public which it represents, is in a better position 
 than private companies to introduce all desirable improvements, not only as regards 
 the efficient performance of the service, but also as respects the cost of conveyance, 
 without, however, altogether disregarding the increase of revenue which its operar 
 tions may bring into the public treasury. 
 
 “ The State railways thus find themselves placed in constant comparison with the 
 railways worked by private companies, on the one hand stimulating them to gener¬ 
 al improvements, and on the other acting as a sort of check against any attempt 
 to realize extravagant profits at the cost of the public.”— Memoranda oj C. A. Fas- 
 siaux, Director-General of Belgian Posts , Railways, and Teiegraohs. Royal Commis¬ 
 sion on Railways (1866), Appendix M. See also Evidence, Questions 3058-3181. 
 
19 
 
 regulation to be exercised in the case of railroads, then, 
 the exception being conceded, we must also add that in 
 this case the least degree of interference shall be exercised 
 which shall be sufficient to secure the desired result. To 
 this part of the discussion I shall hereafter recur. 
 
 But the moment it is proposed that the government shall 
 own and operate through its trustees any part of the rail¬ 
 road system, we are met at the threshold with the cry of 
 corruption. Our opponents exclaim, “ See what our gov¬ 
 ernment bureaus are ! You will introduce into our politics 
 a larger element of spoils than we even now have. The 
 State government, instead of owning the railroad, will be 
 hut a stepping-stone to the possession Of the road.” I do 
 not wish to depreciate this danger. The “ spoils ” system, 
 as it now exists in our politics, is degrading and pernicious 
 enough, and I should be loth to do any thing calculated to 
 increase it. But would this measure increase it ? — Let us 
 see. 
 
 I do not hesitate to maintain, that, of all the devices for 
 introducing corruption into politics and the government 
 which could emanate from the unconscious ingenuity of 
 the most stupid legislator, not one could be found equal to 
 the existing system of railroad supervision and regulation, 
 — that system so dear to the opponents of state ownership. 
 Upon what does that system depend ? — It depends upon 
 this, that one man is to regulate and supervise the affairs and 
 property of another. Is it consistent with ideas of common 
 sense, is it within the bounds of reason, to suppose that 
 the man who owns will not do his best to control the man 
 who regulates ? We know perfectly well how rapidly the 
 movement in this direction is now going on. The sway of 
 the railroad-man and the lobbyist is notorious in half the 
 legislatures of the country. And why are they there ? 
 They are there because your false system of legislation 
 has effected a separation between the ownership of a thing 
 and its regulation, and he who owns the thing knows he 
 must also own the legislature which regulates the thing. 
 
20 
 
 And just so long as you pursue this false system under 
 correct principles; just so long as you deceive yourselves 
 with the idea that you are not meddling, all the while that 
 you are doing your best to reduce meddling to a system; 
 just so long as you make one man own a thing, and em¬ 
 power another to regulate the value out of it, — just so 
 long legislative venality and political corruption will in¬ 
 crease. And yet the tendency to aggravate this artificially 
 created conflict of interest,—the disposition to make 
 inevitable this marriage of individual greed with legis¬ 
 lative venality, is no less apparent than it is alarming. 
 All over the country, — more elsewhere than in Massa¬ 
 chusetts, — we see legislatures year by year, insensibly and 
 as a matter of course, assuming the functions of irrespon¬ 
 sible boards of general railroad directors. And by the 
 term irresponsible, I mean not amenable to that caution 
 which is inseparable from ownership. In the State of Illi¬ 
 nois this position is avowedly assumed. We believe that 
 it must result, that it cannot but result, in grave public 
 and private disaster; that it will result in abuses and 
 scandals and corruptions, in comparison with which those 
 which have hitherto startled and shocked us will be but 
 as the dust in the balance. 
 
 But it would be a mere waste of time to cite examples 
 of what I have been asserting from the recent history of 
 State legislation. They are only too notorious, — not, 
 perhaps, in Massachusetts, but not far from her borders. 
 Let us go at once to high places; let us glance at that 
 national scandal and disgrace which is now uppermost in 
 all minds. Let us see what the principle of supervision 
 and regulation, unaccompanied by ownership, leads to at 
 Washington. Who owns the Pacific Railroad? — It was 
 not built by West-Point engineers: it was indeed paid 
 for out of the national treasury, but not directly; it is 
 not owned by the United States. No ! If it was, the 
 road would have been built much better, and for half its 
 cos . s t re country has good cause to know, it was built 
 
*21 
 
 by an institution known as the Credit Mobilier. The 
 Credit Mobilier owned the property, but Congress reserved 
 a power to supervise and regulate it. What was the re¬ 
 sult ? — Bills were introduced into Congress to regulate the 
 rates of transportation over the line; and to these those 
 who owned it were naturally opposed. What did they do 
 about it ? — They did not bribe, oh no ! — but they pro¬ 
 ceeded to “ place the stock where it would do most good,” 
 for they “ wanted more friends in Congress.” The record 
 shows whether or no they got them. Those who had pro¬ 
 posed to regulate charges over the Pacific road did not 
 prosper thereafter in public life. And all this resulted 
 because the Government would not own, and would med¬ 
 dle. They would bring two great principles into conflict, — 
 the principle of ownership in one man, with the duty of 
 control in another; and as it was in this case, so in the 
 long run will it be in all others, time without end. The 
 man who owns will possess himself of the man who regu¬ 
 lates. 
 
 But let us take a few analogous cases, — cases in which 
 the government owns, and cases in which it supervises. 
 From them let us see where corruption comes in. The 
 subject is rich in analogies; let us take a few of those 
 which most readily suggest themselves. At Washington 
 there is the whole postal system on the one side, and the 
 Union Pacific railway on the other. I will not waste 
 time by more than suggesting the comparison. The Gov¬ 
 ernment owned and managed the one, and did not own , 
 but supervised, the other. Which has been the prolific 
 source of corruption? But let us come nearer home. 
 Not a year passes here in Massachusetts that the Legisla¬ 
 ture does not authorize some city or town to supply itself 
 with water. Why should our municipalities go into the 
 water business any more than into the bread business? 
 Cannot aqueduct companies be organized as readily as gas 
 companies? — There is your analogy: now work out the 
 result. Our communities supply themselves with water; 
 
22 
 
 private companies supply them with gas. The one is 
 owned by the public, the others are supervised by the Legis¬ 
 lature. Are your water-boards always in the lobby? 
 Are they represented in the halls of legislature ? — I have 
 never known the time when they were ; and I have never 
 known the time when the gas companies were not. Let us 
 take another case. Here is our educational system. Why 
 should the Government enter into the school business ? 
 Is it not to many a profession and a source of profit? 
 Why not leave it to competition and the law of supply 
 and demand ? Has this violation of our fundamental prin¬ 
 ciple as to governmental interference with business under¬ 
 takings proved a fruitful source of political corruption ? 
 I am not aware that either your committee-rooms or the 
 lobby is thronged by your school-teachers or their attor¬ 
 neys. Why are they not here ? — It is simply because you 
 have not sought to divide the ownership of the system 
 from the control of the system. Suppose you treated your 
 schools as you treat your railroads. Suppose that you went 
 out of the school business yourselves, and proceeded to 
 peddle out charters to others, who went into the business 
 to make money. Then suppose you went to work to su¬ 
 pervise and to regulate, — providing that every one should 
 be educated, and that working-men’s children should be 
 educated at less than cost; that such and such things 
 should be taught, and that so much should be charged for 
 tuition, and so on through all your precedents of railroad 
 legislation. How long would it be before your school¬ 
 teachers would have a lobby up here which would give the 
 Committee on Education as much to do as this committee 
 has now ? Fortunately, the State has long since entered 
 into certain of the few exceptional lines of business which 
 are practical monopolies; and the harmless, innocent, 
 guileless system of supervision and regulation has been 
 chiefly confined to railroads and gas companies. 
 
 And now, gentlemen, if I have succeeded in establish¬ 
 ing my several positions as I have advanced, I may as well 
 
23 
 
 state a few reasons why it would be eminently expedient, 
 from a practical point of view, for the Commonwealth at 
 this time to assume the whole of the Tunnel line. In the 
 first place, the proper and immediate development of this 
 enterprise will necessitate a heavy expenditure of money. 
 There is no dollar which could be put into that line during 
 the next ten years with any degree of judgment, which 
 will not earn its twelve per cent per annum. Any amount 
 of bonds of a state road, with the guarantee of the Com¬ 
 monwealth upon them, and bearing an interest of six per 
 cent, could be sold at par. Money could in this way be 
 procured at the lowest rate, and without the intervention 
 of a Credit Mobilier. The indorsement of the Common¬ 
 wealth is good in money markets where private corpora¬ 
 tions are unknown. If you wish, through the outlay of 
 capital at a low interest, to rapidly develop the traffic of 
 this unformed enterprise, in this way you can do it best. 
 
 But there is another and very important consideration 
 in favor of this step. The Legislature year by year has 
 pending before it or before you (if it has not any this year, 
 it is the first time I have ever known them to be wanting) 
 divers propositions looking to the trial of experiments in 
 transportation. Last year you passed a law compelling 
 the running of cheap early and late trains in and out of 
 Boston; and I well remember that measures were intro¬ 
 duced looking to the very cheap transportation of coal. 
 These experiments are always opposed by the railroad cor¬ 
 porations, who meet them with arguments not easy to dis¬ 
 regard. They insist that the Legislature has no right to 
 hazard their property by making them try experiments for 
 the public good, in which they do not believe, but of which 
 they must bear the cost. There is reason in this objection. 
 If you turn your railroads over to private corporations to 
 make money out of them, it seems to me they have a right 
 to say, “We cannot carry goods or persons at a loss; and 
 you have no more right to compel us to do so than you 
 have to compel the cotton-factories to turn out certain de- 
 
24 
 
 scriptions of clotli at a fraction of a cent per yard.” Yet 
 that is exactly what yon did as regards the early and late 
 trains by the law of last winter. You compelled the rail¬ 
 roads to transport persons in certain trains at a dead loss. 
 Therefore, I say, if the Legislature wishes to pursue these 
 experiments — (and there is no man in Massachusetts who 
 wishes to see them pursued more than I do: I have 
 been preaching them for years) — they could best and most 
 successfully pursue them at their own cost. If ever the 
 State owns a portion of its railroad lines, then, and not till 
 then, can these most interesting experiments be systemati¬ 
 cally and fairly tried. You may then test the advantages 
 of cheap passenger-trains, and of cheap coal-trains; and the 
 people will pay the bills. Now the Legislature apportions 
 the benefit to the people, and the bills to the stockholder. 
 
 But it is said by certain of the many counsel here present, 
 “ If you make this consolidation of the Boston & Lowell 
 with the Fitchburg road, what enormous terminal facilities 
 for the new line will be secured in Boston. No such facili¬ 
 ties can be secured in any other way. Here they are, ready 
 to your hand, — passenger depots, freight depots, elevators, 
 wharves on deep water, — every thing, indeed, that is requi¬ 
 site. I agree, sir, that these facilities are very admirable. 
 At the same time I insist that there is one way of getting 
 even better terminal facilities than these. There is one 
 power which can supply this line with grounds more ample 
 than those of the Fitchburg and the Boston & Lowell 
 corporations combined; and that is the Commonwealth 
 of Massachusetts. Let us see. The State Prison is to be 
 moved away from Charlestown : there, then, is the State 
 Prison estate. I do not know why that could not be easily 
 and profitably applied to railroad purposes. But the Com¬ 
 monwealth of Massachusetts is no ordinary private cor¬ 
 poration. It can even deal with the United States on 
 terms of equality. Why may it not, then, go to Washington, 
 and say to the National Government, — “ We want the Na¬ 
 vy aic foi our State railroad.” Would her senators and 
 
representatives have great difficulty in securing it ? The 
 necessary measure, I fancy, could soon be put upon its 
 passage. 
 
 But it is said that the Commonwealth cannot hold or 
 operate roads beyond the limits of the State ; that it is neces¬ 
 sary the Tunnel line should stretch out to Ontario, to Detroit, 
 and to Chicago, — yes, to Montana and to Puget Sound ; 
 and this can only be done through the agency of private 
 corporations. These visions, gentlemen, partake perhaps 
 a little of the nature of day-dreams ; but yet, in all sobriety, 
 I would insist that the Commonwealth is in quite as good 
 a position as any private corporation to deal with this class 
 of questions, whenever they shall present themselves. Not 
 that I care to precipitate them to an unadvised solution. 
 After the bitter experience we had three years ago, I 
 would never appear here to forward, by word or deed of 
 mine, the grant of one dollar of the public money to be 
 expended in aid of any private railroad enterprise beyond 
 the limits of the State; and only on the most extreme 
 compulsion would I advocate it within the State. The 
 Hartford & Erie business, and the Union Pacific experi¬ 
 ence, if they proved any thing, proved how dangerous and 
 how unadvisable are all these alliances between the State 
 and private companies. It is best — far best — for the 
 State to hold itself wholly aloof; but if it must intervene, 
 it should, we insist, do so as a sovereign, and not as a part¬ 
 ner. Let it take none if it can be avoided; but if it must 
 take any, let it take all. But beyond the limits of the 
 State, Massachusetts certainly would never plunge into any 
 work of railroad construction which would not return upon 
 its cost its ten per cent per annum. Private capital is 
 always ready to construct whatever promises a return of 
 ten per cent. But if private capital will build, cannot the 
 State authorize trustees to lease and operate ? Why should 
 the State not do for itself in Massachusetts what a pri¬ 
 vate corporation has long done for a railroad company in. 
 Pennsylvania ? The Pennsylvania Railroad Company does 
 
26 
 
 not own or operate a mile of road beyond the limits of the 
 State which chartered it. But there is a wheel within a 
 wheel: there is a Pennsylvania Company , which leases and 
 holds and operates railroads all over the West in trust for 
 the Pennsylvania Railroad Company. Why should not 
 Massachusetts, if it be found necessary, do that which has 
 elsewhere been found expedient, and empower its board of 
 trustees to lease and operate roads connecting with its 
 State road, and to hold them to the use of the people of 
 this State, as the other company hold them to the use of 
 the railroads of another State ? 
 
 But we are met with a new objection to the experiment. 
 After insisting upon it, that the State cannot possibly oper¬ 
 ate a railroad economically, or so as to compete with pri¬ 
 vate corporations, our opponents, and with equal earnest¬ 
 ness, insist that the cheap transportation which would re¬ 
 sult from State management would rum the private cor¬ 
 porations. In other words, they argue that the cost of 
 transportation must be kept up, that railroads may be re¬ 
 munerative. The argument is slightly suggestive of a 
 confusion of ideas as to whether railroads were made to 
 carry persons and property, or whether persons and prop¬ 
 erty are kept in motion in order to support railroads. It 
 might also be used to recall certain interesting reminiscen¬ 
 ces of forty years since, when railroads were themselves 
 denounced on account of the injury they involved to such 
 vested interests as turnpikes and stage-coaches. Let these 
 pass, however, and meet the argument on its merits. We 
 have authorized private capital to build our railroads, in 
 order to make money out of them ; and now we propose to 
 compete with them, perhaps to reduce their profits. Yes! 
 We do propose to do just this: we want to stop trying to 
 reduce profits by law, and to try henceforth to do it through 
 honest competition. Let us see, in the first place, how 
 what we propose would naturally be expected to operate, 
 *and then we will see how it actually has operated elsewhere. 
 
 And remember, gentlemen, we propose just so much 
 
27 
 
 public ownership as shall enable the State, through the 
 management of a part, to regulate the whole, without re¬ 
 course to its legislative power; to this extent our experi¬ 
 ment goes, and no further. But how practically would the 
 management of a part serve to regulate the whole ? — for 
 this is purely a practical question. If experience showed 
 that the road owned by the State was operated at a greater 
 expense than private roads, and money was lost on it, and 
 taxes incurred through it, is it not natural to suppose that 
 the people of other sections of the State would very de¬ 
 cidedly decline to be taxed to make good a loss on a road 
 which did not benefit them ? They would say, “ Private 
 roads pay, and the public road ought to pay. If it can’t 
 be made to pay, then we are not going to be taxed to sup¬ 
 port it as well as the private roads : it has got to be sold.” 
 The railroad corporations are, as every one knows, poor, 
 weak, powerless organizations; yet, with all their weakness 
 and all their impotence, I should not fear to expose them 
 to such a competition as this : they would, I fancy, make 
 very short work of it. On the other hand, if the State 
 road should pay, the people of other sections would be apt 
 to ask, “ Why should not private roads pay when operated 
 on similar principles ? ” If, then, the road lost money and 
 became a burden on the whole State, the people would in¬ 
 sist upon the abandonment of the experiment, just as they 
 have done elsewhere and heretofore. If the road paid, the 
 private roads would be forced to adopt its system. The 
 people would say to the private corporations, “ You see 
 what the State road is doing. It gives cheaper transpor¬ 
 tation and better accommodations than you, and yet it 
 pays both interest and dividends ; why cannot you do the 
 same? You have always asserted that the Government 
 could not compete with private enterprise. How do you 
 account for the facts ? — This won’t do ! You must adopt 
 a system as literal to us as that of the State road is to its 
 people, or we will assume your roads too. And the 
 private corporations would speedily experience light. In 
 
28 
 
 the one case the people would refuse to be taxed to make 
 good the losses of the State corporation ; in the other case, 
 they would refuse to pay to keep up the extortions of the 
 private corporations. Either way the phantom of ruin 
 would vanish into air. 
 
 But it will be said, “This is all theory — very pretty, 
 no doubt, but pure theory, — and, like most theories, not 
 well calculated for rough use.” Very good: so be it! 
 But we wish our case to be armed on every side; and so 
 we will now abandon theory, and have recourse to prece¬ 
 dent. Here is a little volume of about the size of a Web¬ 
 ster’s Dictionary unabridged, which has recently been 
 published by order of the English Parliament. I do not 
 propose to read it through to the Committee : I have 
 read it through myself, and I would not visit a similar in¬ 
 fliction upon any other man, except as a punishment for 
 crime. As is the case with most legislative documents, its 
 dulness is intolerable. This volume contains a very full 
 report of the evidence submitted to a joint committee of 
 Parliament, to which was referred a year ago the whole 
 subject of the consolidation of railways in Great Britain. 
 To procure official and reliable information, the English 
 Board of Trade sent their assistant secretary, Mr. Malcolm, 
 to the continent to report on the railway systems of other 
 countries. That gentleman submitted the very thorough 
 results of his inquiries to the committee in a document in¬ 
 cluded in this volume, and stamped throughout with that 
 peculiarly unimpassioned, business-like method of state¬ 
 ment so characteristic of English official reports. He con¬ 
 fines himself to facts, and leaves inferences to others. After 
 giving a sketch of the history of the Belgian railroad 
 system (a small portion of which is reproduced in a popu¬ 
 lar form in the Railroad Commissioners’ report for this 
 year), he concludes with this extract, which reads as if it 
 were written to bear upon this discussion : — 
 
 “ It is clear that in Belgium competition is most effectu¬ 
 ally killed ; and yet, at the same time, that the difficult ques- 
 
29 
 
 tions of special contracts, through rates, traffic arrange¬ 
 ments, and running powers have been solved; while the 
 service is performed at rates which are satisfactory, at all 
 events, to the public. 
 
 “ That this has been the result of the action of the gov¬ 
 ernment, there can, I think, be little doubt, though circum¬ 
 stances in some degree fortuitous have helped to set the 
 government in motion. 
 
 “ The State, acting as an independent company, has been 
 able to make bold experiments, and, by the mere force of 
 its example, to coerce the private lines into following its 
 lead; at the same time, there is at least room for doubt, 
 whether, if it had not been for the pressure of competition 
 from lines running in and out of its own system, the State 
 would have been so active. 
 
 “ The measures of the State have been most vehemently 
 criticised on the part of the companies, who have com¬ 
 plained that their property was being unjustly depreciated 
 by the lowering of tariffs made without sufficient cause and 
 upon unsound principles, and which, from their position, 
 they were in whole or in part compelled to adopt. . . . 
 The State having this power, having the public purse to 
 back it, being supported by public opinion, and having a 
 dominant position from being owner of the best or nearly 
 all the best lines, had no need of any further power to con¬ 
 trol the private companies when once it began to act in 
 earnest; and hence the State, though always acting on a 
 footing of equality in matters of rates, facilities, or purchase, 
 has been able to lead or drive the companies to adopt its 
 principles without putting in force parliamentary powers, 
 or having recourse to any thing but the moral influence of 
 its position. . . . For, in spite of the hostility and criticism 
 of its opponents, the State has been able to carry through 
 its measures, and has made a fair financial success, inas¬ 
 much as the present year will probably show a net return 
 of six per cent upon the invested capital.” * 
 
 * Report of Joint Select Committee on Railways Amalgamation, Appendix L, 
 
 p. 794. 
 
30 
 
 That covers every position I have taken to-day ; covers 
 them, not as the theories of a doctrinaire , but as the expe¬ 
 rience of the life of a railroad system. And mark the result, 
 I pray you ! The questions which perplex and agitate this 
 people are settled in Belgium, settled on terms “ satisfactory 
 to the public.” And this has been done through competi¬ 
 tion, and without recourse to that legislative action which 
 has failed so ignominiously in this country and in Great 
 Britain. It even sounds strange to us, living in the midst 
 of those who love to regulate and to supervise, — who an¬ 
 nually formulate much profound wisdom into futile statutes, 
 — to learn that, in the country of state ownership, the gov¬ 
 ernment interferes in the administration of railways only 
 on questions of safety and police; and that, further than 
 this, they do not even compel the rendering of an account. 
 They compete with the private railroad corporations, but 
 they do not meddle with their profits or their management. 
 And has this policy resulted in ruin ? — Not to any alarm¬ 
 ing extent. The net return upon the capital invested in the 
 state roads of Belgium in 1872 is stated at six per cent; and 
 that on our Massachusetts roads, during the same year,was six 
 and three-tenths per cent. But in Belgium money rules at 
 perhaps four per cent per annum ; and with us, during the 
 last year, it has averaged at least eight. An interest of six 
 per cent in Belgium is somewhat the same as an interest 
 of twelve per cent here. It is not too much to say, that, in 
 1872, the state railroads of Belgium returned to those who 
 owned them a profit fifty per cent greater, in proportion to 
 the cost of money, than did the private roads of Massachu¬ 
 setts. This does not look like ruin to the private corpora¬ 
 tions. That talk has stopped in Belgium. 
 
 But there is one more argument against state ownership ; 
 an argument which, I see by the papers, was pressed upon 
 your attention yesterday afternoon by an eminent gentle¬ 
 man, with whom it gives me satisfaction to say I have had 
 many pleasant relations, — Mr. James F. Joy of Detroit. 
 He told you that this experiment of state ownership and 
 
31 
 
 management had been tried, and failed repeatedly. He 
 should, however, have gone one step further, and should 
 also have shown you that private ownership had never 
 failed; that we had never heard of railroad manias and 
 panics, and that ’57 was only a horrid dream. It is true 
 that the experiments at state ownership attempted thirty 
 years ago, when no one knew any thing about railroad econ¬ 
 omy, failed; and they had companions in misfortune, for all 
 the railroads in the country failed too. The simple differ¬ 
 ence was, that the States could afford to throw their rail¬ 
 roads over, and did; and the private parties couldn’t af¬ 
 ford to do so, and had to carry them through. Mr. Joy 
 told you that the Michigan Central railroad, in the hands 
 of the State lost money; but, when a private corporation 
 took it, it paid large dividends. Very likely. The State, 
 during a time of crisis, at the very ebb of the tide, threw 
 awa}r its property ; and then the flood came, and swept that 
 road and every other on to fortune. It is notorious that 
 there is hardly a railroad in Illinois — the great railroad 
 State — which has not passed through bankruptcy in pri¬ 
 vate hands. It is not fair to turn back thirty years, to a 
 time when every thing failed, and the whole system, public 
 and private, broke down, and say that then the state rail¬ 
 roads broke down. So they did; and the states broke 
 down too. Most of the readers of Sydney Smith have 
 heard something of Pennsylvania bonds. Those who argue 
 in this way should go on and prove to us, that, while the 
 government system broke down, the private system stood 
 up. Unfortunately it failed to do it. 
 
 But, leaving these general arguments, upon which I 
 have felt constrained to dwell so long, let me now press 
 upon you certain special considerations in favor of the 
 State now trying this experiment. The Commonwealth 
 already owns a large portion of this line. We do not 
 want to abandon what has cost us millions of money. 
 Neither do the corporations, so ably and numerously rep¬ 
 resented here, seem fully able to agree as to which of 
 
32 
 
 them shall relieve the State of its heavy burden. Mean¬ 
 while the attempt at the regulation of railroads by statute 
 has not proved a success, nor does it meet the approval of 
 railroad-men: they like it no better than state manage¬ 
 ment. Like other eminent gentlemen in our recent history, 
 they “ want to be let alone.” Well, if they cannot agree 
 as to the disposition to be made of the road the State has 
 built, and cannot operate their own roads so as to meet 
 the popular expectation, is it not reasonable that the peo¬ 
 ple should try at their own cost to see if they cannot 
 themselves do better ? A man can at least do what he 
 likes with his own, and buy in open market. Then, if this 
 experiment fails, one more stumbling-block will be 
 taken out of the discussion. It will be proved that the 
 opponents of state ownership were right, and that its ad¬ 
 vocates were wrong. The property can then be disposed 
 of to private parties, and we can address ourselves anew to 
 some other solution of this difficult problem; for, gentle¬ 
 men, rest assured that this problem has got to be solved. 
 Do what you will and say what you will, railroads are not 
 subject to the free action of the laws of political economy, 
 and cannot be abandoned to them. Your patchwork 
 legislation already hangs in tatters about the limbs of this 
 giant; and with it you may cover him up, but you cannot 
 bind him. Some other remedy has yet to be devised. 
 That this which we now advocate is the final remedy is 
 more than we dare assert. It has, however, proved an 
 effective remedy elsewhere , and if you now try it, and it 
 fails, it is but one more piece of rubbish swept out of 
 your path. 
 
 And now, gentlemen, I have come to a point in this dis¬ 
 cussion at which I propose to leave the path in which I 
 have hitherto trod. For I believe I have said nothing to¬ 
 day, — at least, I was so instructed, and have tried to say 
 nothing, which I have not substantiated by our own experi¬ 
 ence or that of other countries, or else by such a return to 
 first principles and citation of authorities as should entitle 
 
33 
 
 what I have said to at leas* a respectful consideration 
 I now propose, however, to indulge in a little theorizing 
 of my own. 
 
 But, before doing this, I must ask you to bear with me 
 while I briefly review the ground over which we have ad¬ 
 vanced, and the conclusions I have sought to establish. I 
 think they are not illogical. In the first place, through 
 argument, universal and long-established usage, and gen¬ 
 eral authority, I endeavored to show that the system of 
 transportation by rail was not subject to those fundamental 
 laws upon which what is known as the science of political 
 economy is based ; that, indeed, it holds a position as re¬ 
 gards the community in no respect the same as that of 
 ordinary industrial pursuits. This position established, 
 and the railroad system put upon the footing of a practical 
 monopoly, it followed that some machinery for its regula¬ 
 tion through the agency of Government must be devised. 
 The question between us and our opponents then ceased to 
 be a radical one, and became merely a choice of means: 
 they would have recourse to regulation by statute, and we 
 to regulation through other agencies. Undoubtedly, the 
 method of regulation by statute, or through the exercise of 
 legislative power, was the most obvious. But this, we have 
 attempted to show, both through careful historical investi¬ 
 gation and by abstract argument, is at once ineffective, 
 and, in its political aspect, peculiarly corrupting and dan¬ 
 gerous. If I did not wholly fail in this attempt, it fol¬ 
 lowed that some new method of regulation must be de¬ 
 vised. Looking abroad, that we might tread in a beaten 
 path, I then had recourse to the experience of foreign 
 countries. Our aim was to get back, if in any way we 
 might, to the firm ground of fundamental principles: we 
 looked to set our feet in the tracks of our fathers, in which 
 we could neither stumble nor fall. If our government 
 must regulate, must meddle, how could it do so with the 
 least degree of danger to itself and to the interests in¬ 
 volved? Under the happiest auspices, we realized that dan¬ 
 gers enough gathered about the path. 
 
34 
 
 The answer was, that the government could with the 
 least degree of danger make itself felt through the artificial 
 establishment of that principle of competition, which, in the 
 matter of transportation by rail, did not naturally exist. 
 This had elsewhere been secured through a mixed owner¬ 
 ship, under which public railroads and private railroads 
 were kept in constant opposition. But this implied the fact 
 of state ownership,— a most dangerous political innovation. 
 If, however, such an innovation was necessary, though it 
 was to be entered upon with doubt and reluctance, yet pre¬ 
 cedents for it were not wanting. They were found in our 
 postal and educational systems, in our hospitals and our 
 water supply. If, then, in this case, the goverment must 
 intervene, could it not most safely and effectively intervene 
 by going into the railroad business as it had already gone 
 into the postal, the medical, the educational, and the water 
 business ? It remained to consider what was the least 
 degree into which it could enter it, and yet secure the end 
 it had in view; for, be it always remembered, we insist 
 that Goverment would not be justified, in entering into any 
 business simply to make money , but only to protect the public 
 against the control of a monopoly. Conceding, therefore, 
 for purposes of argument, the principle of mixed owner¬ 
 ship, those opposed to us have a fair right to ask of us to 
 define what we mean when we thus speak of a “ least pos¬ 
 sible amount.” They may well say, “ You have no right, 
 while discussing such a subject as this, to stand up and talk 
 of 4 least possible amounts.’ Explain yourselves. Give us 
 some idea what is implied in this unknown quantity.” 
 
 That I may do this, gentlemen, it is necessary for me to 
 ask you to form some definite conception as to the proba¬ 
 ble future of the railroad system of Massachusetts. You 
 are sitting here to pass upon a question in regard to which 
 your decision is destined to be productive of very great 
 results for good or evil to the Commonwealth. You have, 
 therefore, no right to report a measure without forecasting 
 the future to the best of your ability. To look far behind 
 
35 
 
 the veil is not given to mortal eyes ; but, so far as we may, 
 we are in duty bound to look before we finally pass upon 
 such a measure as this. For myself, knowing as I do the 
 principles which are controlling the development of rail¬ 
 roads, both in this country and in Europe, — as the result 
 of the best study which with my poor ability I can give to 
 this subject, and which certainly has not lacked the quality 
 of assiduity, I am prepared to see great changes in the im¬ 
 mediate future. As respects the principle of consolidation, 
 I am ready to go very far. It is a necessity, — a natural 
 law of growth. You may not like it: you will have to 
 reconcile yourselves to it. You may try to check it, and 
 by so doing force it into unnatural shapes, but you cannot 
 stop it. Others, stronger than you, have thought to do so, 
 and their attempts have but resulted in failure, as will 
 be the case with yours should you vainly follow in their 
 steps. The railroad system will grow,—it must grow; 
 and its development must take the form of a larger con¬ 
 solidated ownership. The time for small corporations ope¬ 
 rating forty or fifty miles of road is past. They cannot 
 control the capital, they cannot command the business ca - 
 pacity, necessary to meet the vast and increasing require¬ 
 ments of the present day. Whether in some respects they 
 are an evil or no, consolidated railroad lines are no less in¬ 
 evitable than necessary; and the immediate question now 
 before you involves in its correct solution some definite 
 ideas as to what effect the course of consolidation is to 
 have on the railroads of this State. 
 
 I myself look forward with confidence to the time as 
 not remote when some six corporations will in fact con¬ 
 trol the railroad system of Massachusetts. France, with 
 twenty-five times our territorial area, is already districted 
 out among an equal number. Our railroads, under the 
 pressure of natural laws, will thus gravitate into families of 
 somewhat the following description: To the North and 
 East, the Boston & Maine and the Eastern, with their con¬ 
 nections, will form one family. If they had formed it two 
 
36 
 
 years ago, it would have prevented the wanton throwing 
 away and the wicked waste of millions of money. Next to 
 this, and stretching its arms out to Ontario, Canada, and the 
 whole undeveloped North, will be the Boston & Lowell, 
 — the Great Northern consolidation for which your laws 
 already provide, — a field large enough to fill the ambition 
 of any common man. Then should come the Fitchburg 
 railroad and its connections, binding the State by its all¬ 
 rail route to the great lakes and the West, and reaching 
 into the coal-fields of Pennsylvania. Further south will be 
 the Boston & Albany family, operating a powerful line al¬ 
 ready well consolidated and well understood. Beyond that 
 will come the Boston, Providence and New York family, 
 to constitute which the Boston & Providence and the Bos¬ 
 ton, Hartford & Erie lines must ultimately absorb each 
 other, — though the time is not yet; and this connection 
 will take to itself the territory of south-western New Eng¬ 
 land, and will stretch across the Hudson to the coal-fields 
 again, and on over the Erie and the Pennsylvania to the 
 West. And finally to the Southeast, now the most firmly 
 consolidated of all, occupying the remaining sections of the 
 State by a responsible tenure which cannot be shaken, and 
 to the great benefit of the people thereof, — in that direc¬ 
 tion we find the family of the Old Colony. 
 
 Unless my foresight wholly fails me, I have now roughly 
 indicated the general outline of our railroad consolidations ; 
 and so far as I am concerned, representing in some degree 
 the Commonwealth in dealing with its railroads, I would 
 much rather have to do with these six families than with 
 an awkward congeries of disconnected, quarrelling fractions 
 of a system, such as now exists. Take any one of these 
 roads, and you could deal with it in a position of equality. 
 It could be held to some degree of responsibilit} 7 ", and upon 
 any abuse connected with its management we might hope 
 to concentrate and direct the force of public opinion. A 
 group of small corporations, on the contrary, is always irre¬ 
 sponsible ; and to argue with them is like spending one’s 
 
37 
 
 breath in a talk with the north wind They cannot under¬ 
 stand you in the first place ; and in the second, they could 
 not do what you want if they did. They cannot afford to 
 secure the services of those able men who alone can grasp 
 the significance and possibilities of the railroad system ; 
 and they could not carry out their plans if they did. If 
 you want to put brains and money into your railroad sys¬ 
 tem, if you want corporations which you can, hold to some 
 degree of responsibility, then you must let development 
 take its natural course, and you must not seek to keep the 
 man swathed in the swaddling clothes of the babe. 
 
 But if this is to be the form which the railroad system is 
 to assume, if consolidation is thus inevitably reducing the 
 small number of competing points, why is not your system 
 at last a naked, recognized monopoly ? — The phantom of 
 competition haunts it no more. But it is also a peculiarity 
 of these great consolidations — a peculiarity well understood 
 in Europe — to partake more and more of the character of 
 governmental departments. It is a wilful ignoring of self- 
 evident facts to maintain that these organizations can exist, 
 and every action of the life of the community be bound up 
 with them and their management, and yet they have no 
 relations with the state. In some way, and in the progress 
 of time, the two cannot but assume close relations to each 
 other. 
 
 Now, if this is the result to which the railroad-system of 
 Massachusetts is tending, and you would seek to regulate 
 through mixed ownership and competition rather than 
 through legislation and meddling, what is the least possi¬ 
 ble ownership among six such families as I have described 
 which would enable the State, through the management of 
 apart, to regulate the whole? — Clearly, we say, it is to 
 own one of these family groups out of the six; and then 
 mere common sense points out the Tunnel family as the one. 
 Why, gentlemen, see the position which this line occupies, 
 and the controlling power which the possession of it would 
 put into the hands of the State! Through the Cheshire 
 
38 
 
 road it connects with Canada on the North, competing with 
 the Northern line. It runs parallel with the Boston & 
 Albany, and where that goes it can go. Through the chan¬ 
 nels of the Delaware & Hudson Canal Company, it reaches 
 into Pennsylvania, and competes with the Hartford & Erie, 
 and with the very colliers which come to us by sea. The 
 trade of Connecticut and New-York city is the only trade it 
 cannot touch, and that is competed for by water. He who 
 holds the Tunnel line, holds, therefore, the key of the rail¬ 
 road system of Massachusetts: — he holds the key, but 
 there is but one holder who would use it. 
 
 So much for our external traffic ; but this does not cover 
 the case of local traffic. It is, however, impossible that 
 there should be two different systems of local transporta¬ 
 tion in any community, the one being right and the other 
 wrong. A successful innovation will soon force -its way 
 into general use. But to remove an abuse or to explode 
 a false theory, you must demonstrate the existence of jmur 
 abuse or the falsity of the theory. Here the railroad cor¬ 
 porations have us on the hip. We may talk, argue, and 
 discuss; we cannot demonstrate. With the State operat¬ 
 ing the Tunnel line, there would not be a form of trans¬ 
 portation by rail from without or within the Common¬ 
 wealth, no matter how removed from immediate contact 
 with the State road, which would not feel instantly the 
 effect of any reform in management established upon it. 
 I have shown you that in practice this was found to be the 
 case through the long experience of Belgium; and it 
 would have to be the case here. If, on the contrary, no 
 reforms could be introduced successfully on the State road, 
 then the case of the private corporations would be made 
 out. What the people could not accomplish on their own 
 road, they could nob ask or expect to see accomplished on 
 the roads of others. 
 
 Here, then, is where we would limit the experiment of 
 state ownership. To go beyond this, and to talk of assum¬ 
 ing all the railroads in the State, or even the greater part 
 
39 
 
 
 of them, would not only expose our political system to a 
 great and unnecessary danger, but it would destroy the 
 very essence of the experiment, the mainspring of its suc¬ 
 cess. We rely on competition to preserve us from red tape 
 on the one side, and corruption on the other; and so we do 
 not want to destroy competition by state ownership, but 
 we want to get back to it through mixed ownership. 
 When we stand upon competition, we feel the solid ground 
 under our feet. That solid ground, so far as Massachusetts 
 is concerned, we believe could be secured through the pub¬ 
 lic ownership and management of the one railroad line 
 which will owe its existence to the State, and which 
 stretches its sinews and feelers throughout the railroad 
 system of the Commonwealth. 
 
 In respectful compliance with the request of the Com¬ 
 mittee, I have now expressed the views of the gentlemen 
 composing the Railroad Commission on the matter before 
 you. We consider this no case for dogmatism or angry 
 discussion. We are too well acquainted with the magni¬ 
 tude and many-sidedness of this railroad problem to pro¬ 
 fess an implicit faith in any solution of it we may have to 
 propose. Meanwhile I have freely submitted to you, in 
 this public way, my colleagues’ and my own contribution 
 to this debate; and, having done so, I will add that, in 
 accordance with the invariable rule of our . Board, unless 
 officially called upon by you, we shall in no way seek to 
 further influence the course of legislation. 
 

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