Central Debating 
 Circuit 
 
 ' I '/ 
 
 ANNUAL DEBATE 
 
 MINNESOTA 
 
 vs. 
 
 NEBRASKA
 
 CENTRAL DEBATING CIRCUIT 
 
 ANNUAL DEBATE 
 MINNESOTA 
 
 VS. 
 NEBRASKA 
 
 MINNEAPOLIS, UNIVERSITY CHAPEL, 
 DECEMBER 31, 1907.
 
 3^5 
 
 V 
 
 o^^
 
 Annual Debate, University Chapel 
 
 December 13th, 1907. 
 
 "Resolved, that the federal government should have exclusive con- 
 trol over all transportation corporations doinij interstate business; con- 
 stitutionality granted." 
 
 MIXXESOTA vs. NEBRASKA 
 First Affirmative — Mr. Harold C. Deering 
 
 The resolution we are to support this evening reads, "Resolved, that 
 the federal government should have exclusive control over all transporta- 
 tion corporations doing interstate business, constitutionality granted." 
 In other words, we of the affirmative believe that all corporations engaged 
 in carrying persons and commodities from <9ne state to another should be 
 controlled exclusively by the federal government and not be controlled, 
 as they are today, partly by the states and jiartly by the national govern- 
 ment. 
 
 During the past three or four years, scores of books and hundreds of 
 magazine articles have been written deahng with the transportation prob- 
 lem. Such books and articles as these are written for just one purpose: — 
 the peoi)le who read want to know about the problem. For there is a 
 problem. We have heard of rebates and discriminations. We have heard 
 public man after public man talk about the railway problem. We have 
 seen congress and the the several states pass railway legislation, and we 
 have seen that legislation and the officers endeavoring to enforce it en- 
 joined; and. because of this injunction, we have seen states almost in 
 arms against the federal government. In view of these things we have 
 come to know that there is a transjjortation problem. We feel that there 
 is somewhere something radically wrong with the existing system of cori- 
 trol. And as is alwa> s the case, this nation-wide feeling that there is 
 something wrong is well founded. 
 
 Tonight we shall endeavor to bring the i)roblem before you, deter- 
 mine wherein the existing system is wrong and suggest a solution. 
 
 The problem is the very important one of controlling the transporta- 
 tion companies engaged in interstate commerce. In advocating that 
 these interests should be controlled exclusively by the federal govern- 
 ment, we of the affirmative will endeavor to establish three things: first, 
 that the existing svstem of control is inadecjuate; second, that this system 
 never can be rnade adequate; and, third, that exclusive federal control 
 alone means adequate control. 
 
 The first element of control of transportation companies is naturally 
 contrf)! of their incorporation. Let us then examine this first element in 
 detail. 
 
 3
 
 The gentlemen of the opposition will doubtlessly agree with us when 
 we say that incor])oration laws must provide adequate control over capi- 
 talization, additional stock and bond issues, and must insure honest ac- 
 counting, and full publicity. 
 
 Today incorporation is controlled exclusively by the states. And 
 what is the result? Throughout the union, state control of incorporation 
 is inadequate; so inadequate that gross, flagrant, and menacing evils are 
 found on every hand. In the first place, the transportation companies 
 are greatlv overcapitalized. In the case of the railroads, three states 
 have inade careful valuation of the properties situated within their bor- 
 ders. Michigan found lines worth $21,000 per mile'capitahzed for $50,000. 
 Wisconsin found lines worth $25 000 capitalized for as much as $58,000. 
 And Texas found that on the average her lines were all capitalized for 
 two and one half times their actual value. These three states have in- 
 vestigated and found this to be the situation. And La Follette says: 
 "Were other states to investigate they, too, woiild find the same over- 
 capitalization." La Follette says: "Of the thirteen billion dollars for 
 which our railroads are capitalized, only five billions represent actual 
 value, the remaining eight laillions being water." This then is the first 
 great defect in the existing system. State control of capitalization is 
 inadequate. 
 
 In the second place, state control of additional stock and bond issues 
 is equallv inadequate. We have a notorious illustration of state regular* 
 tion on this subject last spring when in the Harriman investigation, Harri- 
 man was forced to tell the Interstate Commerce Commission how his 
 syndicate had bought up the Chicago & Alton, "reorganized" it, added 
 not one cent of actual value, and then issued and sold $32,000,000 worth 
 of new stocks and bonds of water. That case is still fresh in your minds; 
 and is typical of cases too numerous to mention. Such cases as these 
 establish beyond question that state control of stock and bond issue is 
 today inadequate. • 
 
 And finally, state control of the other two phases is equally inade- 
 quate. Under the laws of the states, corporations are permitted to man 
 ipulate and juggle their accounts dishonestly and fraudulently. Investi- 
 gation after investigation by the Interstate Commerce Commission has 
 proved that this evil exists. Again that Alton case is tj^pical. And, 
 moreover, since the states do not enforce publicity, the corporations con- 
 ceal their dishonest methods and practice their iniquity in safety, free 
 from public inspection. W. L. Snyder of the New York bar, says: "In 
 hardly a state in the Union are these things Controlled as they should be 
 for the protection of sound industry and the public." 
 
 I have shown, then, that since transportation corporations are over- 
 capitalized, issue fraudulent stocks and bonds, are dishonest in their ac- 
 ;:ounting. and free from public inspection, state control of incorporation 
 is today inadequate. 
 
 The question naturally arises, why is state control inadequate? The 
 reason for its inadequacy is very plain. All of the states are rivals in their 
 desire to incorporate as many companies as possible for the revenue de- 
 rived from such incorporation. This intense rivalry has caused-a majority 
 of the states to make their incorporation laws lax for the purpose of at- 
 tracting capital. This is a notorious fact. We know that in the so-called 
 "charter granting" states. New Jersey and the dozen or more like her, 
 companies may incorporate to do business anywhere in the nation under 
 laws which provide for no adequate control over these four essential mat- 
 ters that must be controlled in the articles of incorporation. Here is an 
 illustration. Arizfnia, which of late years, in company with Maine, has 
 become one of the chief comjietitors of New Jersey in the charter granting 
 business, has inserted this advertisement in a reputable Law Journal: 
 "Incorporate here, no franchise tax; no limit on capitalization; no amount 
 
 4
 
 of stock required to he subscribed; no state control; no ex.imination of 
 books; stocks non-assessable; keep office anywhere; do business anywhere." 
 Think of it! And H. L. Wilgus says: "Most of the great transportation 
 corporations are incorporated under the laws of those states in which di- 
 rectors may provide for no etTective control over their acts, liabilities, 
 capitalization, and operation; and which allow unbridled effrontery, 
 speculation, peculation, and fraud from which there is no adequate 
 remedy." 
 
 This then is the situation. Laws that foster such evil conditions as 
 these are found on the statute books of the majority of the charter jjrant- 
 ing states. And as Dill ])()ints out. because of the financial success of the' 
 charter granting states, the number of states with such laws is yearly* 
 growing larger. These state laws not only not preventing but actually • 
 fostering these e\ ils, prove that the existing system of state control of • 
 incorporation is utterly inadequate. These evils are grave and menacing.. 
 Thev threaten to undefmine the industry of the country. They must be • 
 eradicated. 
 
 Can thev be eradicated by modifying the existing system ? Can state 
 control ever be made adequate? We of the affirmative believe that it 
 cannot. There is only one way to eliminate these evils; and that is for 
 the states to all enact uniformly excellent incorporation laws. All the 
 states, I sav; not forty-five iorty-sixths of them, but all of ihcm must do 
 this. For just as long as a single state, such as Xew Jersey, for instance, 
 incorporates companies under laws that provide for no adequate control 
 and gives those companies power to do business anywhere in the nation, 
 the good laws of the remaining states are rendered utterly impotent to 
 check these evils. The whole system is vitiated. The crucial question 
 then is will the states take such action? Manifestly they will not. volun- 
 tarily; and there is no power above them to force them to do so. The* 
 policy of the states will never be in harmrmy. Situation, local pride, po- 
 litical bias, party politics, peculiar industries, financial interests, all these 
 produce and augment differences, not harmony. All who have studied 
 the problem agree that it is idle to hope for uniform actifm by the states. 
 From a host of authorities, let me quote Dill: "It needs no argument to 
 convince the student of corporate legislation to come to the conclusion 
 that the drift of state legislation is not toward uniformity, but toward 
 interstate warfare." The existing system then can never be made ade- 
 quate. 
 
 The logic of the situation points inevitably to one conclusion : These 
 evils exist; state control of incorporation is inadequate; state control never 
 can be made adequate. 
 
 There is, then, only one solution : exclusive federal control; and such 
 control can best be obtained by a national incorporation law covering 
 uniformly the whole country. Under this law. all transportation cor- 
 porations desiring to engage in interstate commerce would be forced to 
 incorporate imder the regulation of the federal government, and that reg- 
 ulation would be of such a character as to eliminate the evils of incorpora- 
 tions that exist today. Under this system, no longer could companies 
 incorporate under the laws of states providing for no adequate control. But 
 they would have to do business under the federal law providing for uni- 
 form, honest accounting, and strict ])ublicity. They would ha\e to do 
 business under the federal law re(]uiring all caj)ital stocks and bonds to be 
 backed by actual value paid in. And that federal law would be enforced 
 by such a system of supervision and inspection as the federal law now 
 exercises over national banks. Such a system, covering unifonnly and 
 effectively the whole country would eradicate the evils of incorporation 
 that exist today. 
 
 As I said before, these evils are grave. They menace the industry of 
 the nation. They are one of the primary causes for the ])eoj)le's distrust, 
 the people's feeling that there is something wrong. These evils must be
 
 eradicated. All sound interests thruout the country are unified in the 
 demand. And since it is recognized that these evils can never be eradi- 
 cated as long as the states have conrol of incorporation, these same sound 
 interests are" united in agreeing that there is one best and most practical 
 solution, and that is national incorporation. 
 
 First Negative — Mr. Cvvde C. McWhinxev 
 Honorable Judges, Ladies and Gentlemen : 
 
 While we do not deny that there are many evils which need to be 
 remedied, vet we do not admit the general assumption that these evils are 
 inherent in the present s^^stem. We maintain that these evils are not in- 
 herent; that they can be removed and are being removed under the pres- 
 ent system of partly federal and partly state control. 
 
 In no way do we of the negative wish to reflect upon the work of the 
 Interstate Commerce Commission, for we admit that it has done much 
 excellent work in controlling the 85% of the business which is interstate 
 business. We do complain, however, because the federal government 
 did not sooner give the Interstate Commerce Commission more power; 
 and we favor increasing their power, and giving them still more control 
 over interstate commerce; but we draw the line at giving this commission 
 or anv other commission or any series of commissions exclusive control 
 over all commerce and over all railroads. 
 
 Just what is the burden of proof which rests squarely upon the af- 
 firmative in these five debates this evening? Just what does this word 
 "exclusive" mean? It means that the states would be compelled to sur- 
 render all control they now have over the transportation corporations 
 doing interstate business; that all the recent state legislation, no matter 
 how good, should be thro\\-n overboard. It means that the state should 
 no longer have the right to legislate when rates are exhorbitant, when 
 servicers abominable and when the roads are enonnously overcapitalized. 
 It means that the states should no longer have the right to charter new 
 railroads. In a word, it means that the federal government should en- 
 tirelv supplant the state governments in controlling railroads. This, 
 ladies and gentlemen, is the burden which rests squarely upon the affirm- 
 ative when'it proposes that the federal government should have exclusive 
 control over all transportation corporations doing an interstate business. 
 
 Now just what is this debate about? Simply this: Since the federal 
 government under the constitution already has exclusive control over all 
 interstate business, the issue tonight is simply this: "Who shall control 
 the intrastate business and who shall control these local railroad problems? 
 
 Our opponents have harped upon the present over-capitalization, 
 insisting that the states cannot prevent over-capitaUzation. Upon this 
 one point they have based their whole first speech. For the sake of argu- 
 ment, we adrnit that there should be national incorporation, but this does 
 not necessarily mean exclusive federal control. This is advocated by 
 many of our foremost thinkers who still favor dual control. The presi- 
 dent' favors a national incorporation law. yet in his recent message to 
 congress he says: "There will still be enough left for each of the state 
 commissions to do." Will our opponents demand that we abolish these 
 state ligislatures in order to get capitalization regulated, when we admit 
 that there should be a uniform incorporation law, and that it should be 
 in the form of a national incorporation law? 
 
 Now, before considering the evils of the existing svstem, it is neces- 
 sarv to corisider the principles. We maintain that exclusive federal con- 
 trol should not be extended over local business. For several reasons it 
 should not. And the first and fvindamental reason is this: That such an 
 extension^of federal'power is contrary to the fundamental principle of our
 
 gavemment. our democracy, dual jjovemment. Our democracy is based 
 upon the principle of developing; the local unit. It is a yiovemment where 
 the power emanates from the peo])le; where each locality controls its local 
 problems and empowers the federal <rovernment to regulate only those 
 things which are not local. The distinctive merit of our federal form of 
 dual control is that we delegate to the federal government such problems 
 as long haul, discrimination, rebates, etc.. and reserve to the states the 
 right to control the problem of local rates and service. But the aHimi- 
 ative pro]'Oses to centralize this control, take it away from the states and 
 place it in the hands of the national government. Al! of our great states- 
 men ha\'e declared that the strength of our country is due to this dual 
 form of government, but our opponents would have us abandon the whole 
 past and ride rough shod over the fundamental principles of democracy. 
 Therefore we maintain that the state and not the federal government 
 should control local rates and service for the sim])le reason that precedent 
 and princijile direct us to have control of k)cal problems local. 
 
 Not only is this affirmative i)lan wrong in princij)le l)ut it is also in- 
 expedient. First, because it destroys state legislati'i" which originates 
 iriost of the re''orms o*" nilroad control. We find that the several states 
 will pass different laws. If the law in practice proves a good one. it is 
 adopted by other states; it expands and finally works it.self into the nation- 
 al legislature while if it is bad it is discardetl. Iiaving worked harm only to 
 the small section of the country. Many of the best reforms have originated 
 with these state legislatures; for instance, the anti-pass law, the anti-re- 
 bate law the two- cent fare, etc. We now have forty-six different legis- 
 latures working out good laws regarding the regulation of railroads while 
 under your svstem vou will have merely one. Wiiich is better, ladies and 
 gentlemen, one experimental center or forty-six? 
 
 In the second place it is inexpedient, because it would take control 
 awav from the people. The smaller the area, the more influence the peo- 
 ple have over the commission. Where there is merely one commission 
 for the whole countrv the people will have very little influence. Possibly 
 the affirmative proposes to have s'lb-commissions scattered thruout the 
 countrv to attend to these local ])roblems. But these commissions would 
 have to be merelv advisory. They are responsible to the central commis- 
 sion at Washington, and it responsible to congress. Hence the people 
 have no direct voice. The only inflnence the people could have would be 
 thru congress. This is very indirect. And in case the sub-commission 
 is appointed to a certain locality, what influence can the peojjle have over 
 it? How can the people have it dismissed if it happens to be a corrupt 
 commission which responds to the wishes of the railroads rather than to 
 the wishes of the people i* But the affirmative believes in government at 
 long-range rather than government close at home. It believes that the 
 people should be subject to the commission, not masters. Take their 
 radical step and vou mark the beginning of the end of our dual system of 
 government. Is government by the people a failure? Thcre'"ore the 
 affirmative plan is inexpedient, since history and experience demonstrate 
 bevond debate that a democratic government if it be democratic must 
 leave local problems under local control, and keey) the government close 
 to the people. 
 
 Therefore, in conclusion, ladies and gentlemen, this radical lean in 
 the dark is not to be thought of unless the affirmative can show that there 
 is enough good to be derived from their centralization to justify violating 
 the fundamental principles of our government by overthrowing our fed- 
 eral fonn of dual control; to justifv taking the control out of the hands of 
 the people; and to justify depriving the .state legislatures of all control 
 over intrastate business. " This, so far, thev have utterly failed to do.
 
 Second Affirmative — Mr. Algernon O. Colburn 
 Honorable Jvidges, Ladies and Gentlemen: 
 
 There are two problems before the people today in respect to trans- 
 portation corporations; they are the question of incorporation and the 
 question of rate regulation. The gentlemen have conceded the question 
 of incorporation. This problem and the problem of rate regulation are 
 essentiallv the same; so nearly the same that it may be well first to review 
 the arguments of m}? colleague with respect to the matter of incorpora- 
 tion. My colleague showed you that the present system of control of 
 incorporation is inadequate because the states control incorporation with 
 an eye solely to their own narrow interests. In their eagerness to get fat 
 incorporation fees many states allow the transportation corporations to 
 issue watered stock, juggle their accounts, and keep them hidden from 
 the public. 
 
 Secondly, my colleague showed you that the present system of in- 
 corporation never can be. made adequate. The remedy for the evil is 
 obviously some uniform policy covering the entire country. My col- 
 league showed that the states never have and never will agree voluntarily 
 upon a policy covering the whole country. Under the present system 
 there is no power to force them to an agreement. 
 
 Thirdly, my colleague showed that only by exclusive federal control 
 on incorporation can adequate control be secured. Exclusive federal con- 
 trol is the only means by which harmonious action can be brought about. 
 Let us now see if the evil of rate regulation is not, in its last analysis, 
 the same as that of incorporation. 
 
 That we have a problem of rate regulation in the United States today, 
 everybody will admit. The thirteen or more rate suits now pending be- 
 fore the federal courts in various parts of the country bear evidence that 
 there is a problem. Hundreds of newspaper and magazine articles on the 
 rate question also convince us that there is something wrong. It was 
 thirty-five years ago that the problem Of rate regulation first arose. The 
 problem has grown in seriousness ever since. Formerly, competition be- 
 tween transpiortation corporations and small suits in local courts solved 
 most of the problems. It is not so today. Recently in North Carolina 
 state and federal authorities almost came to a clash of arms over the 
 question of rate regulation. The transportation corporations are today 
 so consolidated that a coterie of seven or eight men control practically all 
 of the transportation systems. This power could crush any single state 
 that seriously opposed it. These facts show how serious the problem has 
 become. Thirty-five years of dual control has left us here. 
 
 The cause of this problem of rate regulation is the same as that of 
 incorporation; the failure of the states in their eagerness to satisfy the 
 demands of local interests to recognize the rights of other states. To 
 solve this problem, we propose exclusive federal control of rates, because 
 (1) the present system of rate control is inadequate. (2) it can never be 
 made adequate. (3) exclusive federal control alone will give adequate con- 
 trol. 
 
 The present system is inadequate because the states base their action 
 upon the assumption that rates solely between points within a state, as 
 between Minneapolis and Duluth, are merely local in effect. They are 
 not local in their effect however, but affect other states. The Report of 
 the National Convention of State Railroad Commissioners says: "It is 
 well known that a change in rates to one central locality often requires 
 changes in rates to hundreds of points, and even to localities far removed 
 from the point originally affected. And so it has come to be almost 
 axiomatic that cutting rates to a central point like Savannah. Georgia, to 
 Atlanta in the same state will ultimately affect a point like Chicago."
 
 From these facts the same Convention of Railroad Commissioners 
 arrived at the following conclusions: "The railroads of the country 
 should not be divided by state lines but should be regarded in their en- 
 tirety and treated as a single system for all ]>uri)oses of rate regulation." 
 Judge Canty of Minnesota on the same point says: "There is no good 
 reason why raflroads should be divided on state lines at all for the purpose 
 of rate regulation." 
 
 The making of rates, therefore, even between points within a state, 
 is not a local matter, but a matter which affects other states as well. 
 
 Secondly, the present system of rate regulation results in useless con- 
 flict between state and federal authority. All who have read the news- 
 papers know that the recent attempts by the states to regulate rates have 
 been suspended by the federal courts. In North Carolina this conflict 
 between state and federal authority almost resulted in civil war. The 
 situation is similar in Minnesota, Missouri. Pennsylvania, Virginia. Missis- 
 sippi, Ohio. Kansas, and other states. Here is what a committee of the 
 National Convention of State Railroad Commissioners says on this point: 
 "Under the present system the le.gislature can fix rates, but in almost^ 
 everv case it remains for the federal courts to enforce them." So that 
 todav in the last analysis state rates are made by federal authority. The 
 present svstem merely delays its action. Again wc see that the regulation 
 of rates within the borders of a state is not local merely in etfect, but ex- 
 tends beyond the borders of the state to such an extent that federal au- 
 thoritv is forced to interfere. 
 
 Thirdlv, the present system of rate regulation is inadequate because 
 the attemy)ts of the states to satisfy the demands of local interests results 
 in conflicts between a state and its neighboring states. State railroad 
 commissioner, as a rule, discriminate in favor of their own shippers and 
 discourage tre shippers of other states. It is but natural for the states to 
 do this. Thev mav see the iniustice of it themselves, but they must obey 
 the commands of their constituents, the ship]x>rs of the state. 
 
 The methods of this discrimination are various. It is accomplished 
 by shifting classification for ditferent kinds of goods, by reciprocal de- 
 niurrage laws, by granting switching rights, by regulating terminal facil- 
 ities, by allowing rebates, by underbilling, by allowing fictitious claims. 
 We have time to mcntifm but a single instance out of the many, illustrat- 
 ing the manner of this discrimination by the states. A Minnesota in- 
 vestigating committee in 1902 found that railways in Minnesota were al- 
 lowing an enormous sum in rebates on state traffic. They dropped the 
 investigation at the demand of the shippers who were getting an advant- 
 age over the shippers of nei,ghborin.g states. 
 
 Mr Dixon in his work on state regulation of railroads shows numerous 
 other instances of state discrimination. He then sums up the whole mat- 
 ter by savin.g: "Many Commissions have been'unwilling to look at the 
 railroad question in a broad minded spirit. They partake of the prejudices 
 of their constituencies and promote the schemes of the shippers of their 
 communities." So we see in another way that local rate re.gulation affects 
 not only the state where the rate is in effect, but affects the shippers of 
 neighboring states as well. This narrow ])olicy of each state for itself and 
 the devil take the weakest, naturally results in discord and retaliatory 
 legislation. It is just this narrow policy, inseparable from state action 
 that will always prevent state re.gulation of rates from being effective. 
 
 The present system of rate regulation is inadequate, therefore, for the 
 same reason that the present system of control fif incor|)orati<)n is inade- 
 quate, namely, the failure by the states to recognize the ri.ghts and in- 
 terests of neighboring states. Now the question naturally arises, can the 
 present system ever be made adequate? Obviously the states should 
 come to some agreement on the question of rate regulation. .\ uniform 
 policy should be adojjted as in the case of incorporation. The states 
 never have agreed upon a uniform policy. They have had thirty-five 
 
 9
 
 vears to come to an asfreement, but have failed to do so. They show no 
 disposition at the i)resent time to a.t^ree. Under the present arrangement 
 there is no power that can force them to an agreement. 
 
 Exckisive federal control of rate regulation is the only means of ade- 
 quately regulating rates and solving the problem. Exclusive federal con- 
 trol is the only means by which interstate warfare over incorporation can 
 be stopped. It is the same with respect to the interstate warfare over 
 rate regulation. 
 
 Under exclusive federal control there would be but one master over 
 the transportation corporations. These companies could not as now play 
 one master against the other and postpone control. According to the 
 State Railway Commissioners themselves exclusive federal control of rates 
 alone means adequate control. 
 
 The Convention of Railway Commissioners have made the following 
 recommendations: (1) That the federal government assume exclusive 
 control of classification of freight and put into effect a single system which 
 would applv alike to both state and interstate traffic. (2) That a uni- 
 fonn svstem of accounting covering both state and interstate business 
 should be put into effect by the federal government. (8) That the state 
 commissions be made the agents of the federal commission. (4) And 
 A. K. Tiesberg of the Minnesota Railway Commission, after studying the 
 problem for twenty years, reported to the convention: "If the Railway 
 Commissions of the various states undertook a thorough investigation of 
 making rate schedules, they would come to the conclusion that some 
 uniform method covering both state and interstate traffic was necessary." 
 
 Now, if these recommendations of the State Commissioners the men 
 who know best the merits and demerits of the negative's sj'stem. should 
 be put into force what effective means of rate regulation would be left to 
 the states? Can the negative point to an effective nieans of regulation 
 that would be left? Can thev name a reason why the recommendations 
 of these officials should not be adopted? 
 
 But the question is would the federal government regulate more 
 effectivelv than the states? The federal government now regulates inter- 
 state rates over eightv-five per cent of the business better than the states 
 do with respect to the remaining fifteen per cent. Congress has passed a 
 law making rebates unlawful. It has punished Standard Oil the Grain 
 Trust the railroads, the big packers, and large shippers of all kinds for 
 violating this law. Fifteen states according to Judson, have no anti- 
 rebate laws, As manv niore, like Minnesota, make no attempt to enforce 
 theirs. 
 
 Now let us sum up the case for the affirmative so far in this debate. 
 We have shown vou that the federal government should have exclusive 
 power to regulate rates and incorporation. (1) Because the present 
 system is inadev[uate. It has resulted in interstate warfare, as Dill savs. 
 (2) Because the present svstem never can be made adequate. The 
 states regulate with a view solelv to their own selfish interests; disregard- 
 ing the facts that anv action which they take will have the effect of hurt- 
 ing other states. No regulation is merely local in its effect. (3) Be- 
 cause federal control alone means adequate control. All unbiased opinion 
 favors it is the only means of bringing the states together. 
 
 Second Neg.ative — Mr, L.\wrexce J. We.aver 
 
 Mr. Chairman, Ladies and Gentlemen: 
 
 Thus far the opposition have based their whole case upon the as- 
 sumption that this is a question of who should control the whole railroad 
 business, but. as mv colleague has shown vou, the control of interstate 
 comtnerce is settled for once and all time. The United States constitution 
 made y)rovision at the time of its adoption that the federal government 
 
 10
 
 should control all commerce that passes between states. Therefore, the 
 question th's e\'enint; is not who shall ctmtrol interstate commerce, but it 
 is solelv a question of who shall control the intrastate commerce and 
 hence our whole case rests upon the sound ])rinci|)le of our whole j^ovem- 
 ment that national ])roblems sliould be settled by the national go\'em- 
 ment and state problems should always be settled by the state govern- 
 ments. 
 
 The gentleman who has just preceded me repeated the argument in 
 favor of a national incorporation law. while my worthy colleague showed 
 you that we ])lainly favor a national incorporation law and we believe that 
 it is the onlv wav in which to solve tliat problem. Again the gentleman 
 savs that we cannot etViciently Kviilcite rates unless we have a uniform 
 law, but. ladies and gentlemen, do we want a uniform law? Are the con- 
 ditions in all forty-six states of this Union sucJi that we can have a uni- 
 form law, the same law applicable to the Rocky Mountains of Colorado 
 as to the prairies of Minnesota or Nebraska? Ladies and gentlemen, the 
 affirmative argument is inconsistent. We do not believe that you can 
 regulate rates in this way and furthermore that tlu-y can ])ut their jilan 
 in operation. 
 
 Two speakers this evening have shown you the merits of exclusive 
 federal control. So far thev have not. and they must in order to win this 
 debate give us a plan which is definite and they must show that congress 
 will favor the plans which they advocate. 
 
 Now. ladies and gentlemen, not only is exclusive federal control of 
 intrastate commerce directly contrary to the fundamental j)rinciples of 
 a democratic government and also inexpedient because it will kill local 
 experimentations and means long range government by commission, but 
 we shall further show that exclusive federal c(jntrol is inexpedient l)ecause 
 it woul 1 increase corruj)ti<m in our national government. It would in- 
 crease corruption because the railroads would have but one body of legis- 
 lators to corrupt and one president to elect instead f)f forty-six governors. 
 Their corrupt influence would be increased just in proportion as they 
 centralize their strength. 
 
 Whv, we ask the opposition, do the railroads want exclusive federal 
 control? At a meeting of the national ('i\ic I'ederation at Chicago. ])resi- 
 dents of five of the largest railroads strongly urged the change from state 
 and federal control to federal control alone. Have they always been such 
 ardent supporters of federal control? Xo. Less than two vears ago, 
 when an attempt was made to increase the powers of the commission, the 
 crv of the railroads was for state control but when the states begin to turn 
 the screws of legislation upon them thev cry even louder for federal con- 
 trol. 
 
 Exclusive federal control will increase corruy)tion. Secondly, be- 
 cause it would create a great political machine. Tlie new j>lan would 
 necessitate the aj)pointment of an army of officials. To control the ap- 
 pointment of those men, and weaken the commission bv securing the ap- 
 pointment of men servile to railroad interests would mean wholesale 
 corruption. 
 
 Again, their plan would increase corruption because government by 
 commission will kill the people's interest in the problem, which is our sole 
 assurance of clean government, state and national. But how are you 
 going to discover corruy^tion when it is out of your sight.' .And if your 
 railroad commissioner is corrupt how can you remove him from olhce? 
 when instead of being responsible to vou for his re-election he is responsi- 
 ble to the national government? Oti the other hand, under the dual sys- 
 tem of government, if your railroad commissiijner is corrujit you soon find 
 it out. and vou can put him out of office. 
 
 Recall the historv of the enactment of the interstate comrrterce law. 
 The records of congress show how. year after year, bef'ore its passage, there 
 was a wholesale distribution of annual passes. When the law finally 
 
 11
 
 passed, the railroad lobbyists fixed it so that its provisions were almost 
 harmless. Soon they resumed the practices which the act was supposed 
 to prohibit. The railroads again gave x>asses and discriminated. But 
 the commission soon found out and in 1897 asked congress for more power. 
 Year after year it called on congress for more power, and year after year 
 congress ignored them. Nine years the railroad lobby blocked it. There- 
 fore, because exclusive federal control will kill local experimentation, be- 
 cause it means long range government by commission instead of honie 
 made goveminent, and for the additional reason that it would increase 
 political corruption by centralizing the point of attack, by creating a 
 political machine and killing the interests of the people, the affirmative 
 plan is inexpedient. 
 
 Furthermore, exclusive federal control is economically inexpedient. 
 Authorities place the value of our railroads at thirteen billions dollars. 
 They represent practically one-third of the wealth of our country. They 
 have contributed more to the upbuilding of the great west than any 
 other industry, and today nearly all industry of this countrv depends 
 upon them. Remember these facts when you consider the expediency 
 of transferring the control of intrastate business to the federal govern- 
 ment. 
 
 To upset the operations of the railroads means a possible upheaval 
 in industrial conditions. What control will the affirmative have over 
 transportation corporations between the time when the right to regulate 
 is taken from the states and the time when congress adopts a plan such 
 as the affirmative favors. Will they let the railroads operate free from 
 the restricting hand of the law, or do they propose to put their plans 
 into operation at once? 
 
 Whatever action taken against the railroads disturbs the equilibri- 
 um of transportation and is going to be a terrible blow to every individ- 
 ual. The prices of all commodities are based upon rates to a great ex- 
 tent and therefore to make a uniform rate will be to change the price of 
 everything you eat and wear. 
 
 The affirinative has harped a great deal upon the evil of discrimina- 
 tion in favor of certain cities, saying that the railroads now "favor large 
 centers to the detriment of the smaller towns. They have urged their 
 system saying that it can alone stop this evil. But how? They say 
 state regulation of intrastate rates won't prevent it and the interstate 
 commerce commission now regulates interstate rates yet the affirmative 
 argues that this is not enough. If these powers combined under dual 
 control won't stop place discrimination then there is only one way which 
 the affimiative can favor as their remedy. Federal rate making. In 
 urging federal rate making the affirmative stands alone. We ask them 
 to produce a single authority who has ever for one moment considered 
 federal rate making anything but folly. 
 
 And furthermore if you choose exclusive federal control of the great- 
 est industry of this country, where are you going to draw the line? The 
 railroad corporation is by no means the only one that needs to be con- 
 trolled. They are not the only corporations which are violating the 
 laws of the American people. You can see how unfair it would be to 
 take over the exclusive control of all transportation corporations, and 
 allow these others to continue uncontrolled. In short, adopt your plan 
 and you will establish a dangerous precedent that tends toward national 
 control of every industry until we as states will be but geographical 
 divisions only distinguished by imaginary boundaries. 
 
 In conclusion, ladies and gentlemen, jvist what have the negative 
 proved this evening? First, exclusive federal control of intrastate com- 
 merce is directlv contrary to the fundamental principles of a democratic 
 government. Secondlv, exclusive federal control is inexpedient because 
 it absolutely kills local experimentation; because it means the substitu- 
 tion of long range government bv commission for home made government 
 
 12
 
 by the people: and further because its adoption will increase political 
 corruption in our national government by centralizing the point of at- 
 tack, by creating a great political machine and killing the peoj)le's in- 
 terest in this problem. And finally it is economically inexpedient. 
 
 Third Affirmative — Mr. Siam.ky R. Houck 
 Honorable Judges, Ladies and Gentlemen: 
 
 My colleagues have shown that the present svsteni of control of 
 transportation corporations isn't and can't be made adequate and ex- 
 clusive federal control alone will be adequate. My first colleague showed 
 that control of incorporation, which includes the question of capitaliza- 
 tion, future stock and bond issties, accounting, and publicitv. isn't todav 
 adequate and can't be made adequate under the existing system. Ivx- 
 clusive federal control alone will be adequate. Mv second colleague 
 showed that the existing dual svstem of rate control isn't and can't be 
 made adequate. He showed that all rates whether state or interstate 
 are interdependent and are interstate, not local in effect; that the states 
 discriminate in favor of their own shipjiors at the expense of the shii)y)ers 
 of other states, and that as a result there is conflict, warfare between 
 state and state and state, and nation. 
 
 Before I go into the argument of the gentlemen in detail let me 
 clear away some misapprehensions of the gentlemen of the negative. 
 The gentleman preceding me declared that the atlirmative were talking 
 solely about interstate commerce. The gentleman is mistaken: the 
 second speaker on the affirmative spent his whole time showing that the 
 existing system of controlling intrastate rates was inadequate. He 
 showed that even state rates were interstate and not local in their effect, 
 and that this situation resulted in discriminations in favor of the ship- 
 pers of one state against tlie shippers of neighboring states, and that 
 as a result there was conflict between state and state and between state 
 and nation. He showed that for these- reasons even state commerce 
 should be controlled by the federal government. Moreover, a thing the 
 gentleman entirely ignored, my colleague quoted as his authority for 
 practically every point he made the State Railroad Commissioners, the 
 men who are trying to make the present system a success. 
 
 The gentlemen also declared tliat when the affirmative stands for 
 uniform control it stands for the same rate in every locality of the coun- 
 try. The same in Maine, California, Mississippi, and Minnesota. The 
 affirmative no more means that than the present federal rate law, an ab- 
 solutely uniform rate law means such a thing. The present federal rate 
 law as would the plan of the affirmative will secure a uniformly reason- 
 able and just law all over the country: and as to what is just and reason- 
 able can be determined only as the gentlemen declare, by local conditions. 
 
 The first speaker of the negative at the very outset conceded three 
 very vital things: He conceded that we must have exclusive federal 
 control of incorporation in order to remove the evils of incorjioration: 
 they conceded the truth of our statement that 859^ of the total trans- 
 portation business is interstate business and exclusively controlled by 
 congress, finally thev conceded that the control by congress over this 
 85%, six-sevenths of the entire business, was adequate today when they 
 declared that they thought the interstate commerce crnnmission was an 
 excellent body, and that they had no fault to find with it except that in 
 accord with our views it should have its jjowers increased. 
 
 What is the effect of these concessions by the gentlemen upon their 
 own argument? First take the concession that, agreeing with us they 
 want exclusive federal incorporation. This concession means three 
 things: The gentlemen first admit every evil charged against the exist- 
 
 13
 
 ing state system of incorporation. Second, they admit that the states 
 can't remove those evils. Third, that the federal government alone can 
 adequately control incorporation. But that isn't all the gentlemen have 
 done by this concession. The instant they conceded these things with 
 respect to incorporation they shouldered the burden of showing that the 
 state is not equally inefficient and the federal government equalh" effi- 
 cient in reinoving every other of the evils which we charged to exist in 
 the present system, particularly the evils of the existing system of rates. 
 For if the gentlemen admit that the states are a failure today in the 
 matter of incorporation and the federal government, in the gentlemen's 
 opinion, a success, is not that concession the very strongest evidence 
 that the same thing is true of every other existing evil under the dual 
 system of today? At least this is true luitil the gentlemen show that it 
 isn't. 
 
 The gentlemen of Nebraska made a serious mistake when they con- 
 ceded incorporation and attacked exclusive federal control of rates as 
 laid down by my colleague. For the question of incorporation and the 
 question of rates go hand in hand, are interdependent and cannot be sep- 
 arated. When they conceded the first they conceded the second. To 
 show^ this let me show yoii what my collea,gue did and what the gentle- 
 men of the negative conceded when they conceded incorporation. When 
 my colleague showed and the negative conceded that the present state 
 system of incorporation was inadequate and that federal control alone 
 would give adequate control he showed and the gentlemen conceded 
 that control of capitalization future stock and bond issues, accounting 
 and publicity wasn't and couldn't he made adequate today and that ex- 
 clusive federal control alone would be adequate. 
 
 In other words they conceded to the federal government the four 
 vitally essential and absolutely necessary things for the adequate control 
 of rates. We ask the gentlemen how anyone can adequately control 
 rates unless he know's the value of the property upon which it is just 
 that rates be paid? How can he know that tmless he knows that there 
 is no overcapitalization, and no future fradulent stock and bond issues 
 as in the Alton case my colleague mentioned? How can rates be con- 
 trolled adequately unless one knows what the receipts and expenditures 
 of the transportation corporation actually are? How can you know this 
 unless you have compelled the transportation corporations to keep honest 
 uni'"orm accounts? How^ can you guarantee that you have honest cap- 
 italization honest uni^'orm accounts unless you have full publicity? The 
 negative conceded that all these things, capitalization, accounting and 
 publicity should be controlled not by the states but by the federal gov- 
 ernment alone. Thev therefore conceded that the federal government 
 alone could control rates because they placed in the hands of the federal 
 government the control of everything necessary for the adequate control 
 of rates. They should then never have attacked my colleagues argument 
 on rates. 
 
 What then is the total efl'ect of the gentlemen's concessions? They 
 conceded incorporation; hence they conceded rates, and therefore they 
 conceded every point advanced by the affirmative so far in this de- 
 bate, and everything necessary for the affirmative to advance in order 
 to prove its case. We contend and the gentlemen agree that we niust 
 have exclusive federal control of rate regulation and incorporation, or 
 in other words of all transportation corporations doing interstate busi- 
 ness. 
 
 Let me now show the effect upon the negative argument of the other 
 two concessions of the gentlemen: first they agreed with us that eighty- 
 five per cent, six-sevenths of the total business was interstate business 
 exclusively controlled by the federal government, and that the gentle- 
 men had no fault to find with the way that eighty-five per cent was be- 
 ing controlled and that they thought that the interstate commerce com- 
 
 14
 
 mission is a very efficient body. Then with utter disregard for consist- 
 ency the gentlemen told you that exclusive federal control would result 
 in excessive centralization of power in th? hands of the federal govern- 
 ment, would greatly increase corruption would overwhelm the commission 
 with work, and result in the establishment of a gigantic political ma- 
 chine ana the appointment of an army of officials. 
 
 Ladies and gentlemen just consider the absi;rdity of these charges 
 in the face of the gentlemen's own admissions. When the gentlemen 
 conceded that the interstate commerce commission which controls six- 
 sevenths of the business today was very efficient and that the change to 
 exclusive federal control meant merely the addition of the remaining 
 one-seventh of state Vjusiness they admittejt that none of these things 
 existed today; and let nie here call your attention to the fact that no- 
 where in their argument have they even lireathed the ob\iously alisurd 
 charge that these tilings were so. But now they contend that the addi- 
 tion of one-seventh more business is going to cause these great and over- 
 whelming evils. Ladies and gentlemen, how can the addition of a mere 
 one-seventh to the existing power of the federal government result in 
 excessive centralization, overwork the interstate commerce commis- 
 sion cause wholesale corruption, and cau.se the aj)]iointmeni of an army 
 of ofiicials? All of which, as I said before the gentlemen conceded does 
 not exist today. Their entire contention is evidently unfounded either 
 in fact or theory. 
 
 The final contention of the gentlemen was equally un^'oimdrd. They 
 declare that taking this one-seventh from the states would take govern- 
 ment from the states and place it in the hands of the federal government, 
 take the government out of the hands of the people and cause them to 
 lose interest in the problem. By this the gentlemen seem to insinuate 
 that we have a state government by the yieojjle and a federal governmi-nt 
 not by the people. Ladies and gentlemen, was Abraham Lincoln alto- 
 gether wrong w^hen he spoke of a federal government, by. of and for the 
 people? You all know^ that he was not. You all know that the federal 
 government is as much by and for the people as the state governments 
 and that the change we propose is merely taking the power <>ut of one 
 of the people's hands and putting it into the other. 
 
 Let me summarize the affirmative case. Existing transportation 
 control isn't and can't be made adecjuate. Exclusive federal control 
 alone will be adequate. Controlling trans])ortation servants by forty- 
 seven masters doesn't and can't succeed. Adequate control demands a 
 single master, the federal government. 
 
 First incorporation must be adequately controlled 'ilicre must be 
 honest capitalization; honest uniform accounting, and full jniblicity. 
 Todav transportation corporations incorporate under the ])oorest of 
 forty-six state systems competing to permit corporations to prey upon 
 other states. Xor is there any relief. If every state except Arizona, 
 for instance, had uniform, perfect, incorporation laws. Arizona could 
 continue creating corpor^itions doing anything anywhere, solemnlv guar- 
 anteeing uncontrolled directors, capitalization, accounting and ])ublicity. 
 For less than a suit of clothes costs. Arizona sells its honor and the Na- 
 tional weKare, and no power but federal corporation can prevent her. 
 
 Aroused public opinion demands that federal incorporation remove 
 these abuses. Federal incorporation means incorporation, not in char- 
 ter granting states, but under the federal government alone. Corpora- 
 tions could choose not the poorest state law but the best federal law 
 possible. Capitalization will be based not upon the cupidity of dis- 
 honest promoting charter granting states permit, but upon actual 
 proved value. Arizona corporation accounts encoura.ge public fraud, 
 deception and extortion. Federal corporations must keej) honest uni- 
 form accounts examined like national banks. Lastly, a Connecticut 
 
 15
 
 charter cruarantees absolute secrecy, a federal charter absolute publicity. 
 Adequate control, therefore, demands federal incorporation. 
 
 Next existing rate control isn't and can't be made adequate. Ade- 
 quate control demands federal control. Forty-seven inharmonious con- 
 flicting masters attempting rate control don't and can't succeed. Ade- 
 quate control demands a single master, the federal government. 
 
 State rate control is inadequate becavise state and interstate traffic 
 can't be separated, because rates are interstate not local in effect, and 
 because conflict between state and nation and between state and state 
 results. Judicial authorities declare that the separation of local from 
 interstate traffic is impossible and undesirable. State railroad commis- 
 sions admit that changing purely local rates, as Minneapolis to Mankato, 
 directlv affects hundreds of interstate points. Today conflict exists be- 
 tween state and nation and between state and state. Minnesota's and 
 a dozen other purely local rate laws are enjoined and ineffective because 
 interstate, not local, in their effect hence violating the constitution and 
 interfering with the rights of other states. California typifies state con- 
 flict by refusing to prevent local rebate discriminations helpiiig her but 
 hurting other states. 
 
 State rate regulation can't give relief. It isn't and can't be made 
 adequate. The states can't and don't desire to treat rates as interstate 
 and not local. There is no power to force them. Federal rate control 
 alone will be adequate. The federal government alone treats rates as 
 interstate, not local, in effect; alone disregards state lines and looks to 
 the welfare of the nation; alone can protect every shipper everywhere 
 and adequately control every transportation corporation everywhere. 
 While today scarcely half of the states make any effort to prevent ex- 
 tortionate rates personal and local discrimination and undue preference, 
 the federal government has laws enforced thruout the union which do 
 prevent these things. In conclusion, ladies and gentleinen, let me again 
 call- your attention to the fact that the negative have conceded every 
 one of these things, so that at the present time the affirmative case 
 stands untouched, just as the affirmative made it. 
 
 Third Negative — Mr. William R. King 
 
 At the very outset my colleagues defined our position as one en- 
 tirely agreeable to extensive powers for the Interstate Commerce Com- 
 mission in its own sphere, that is, interstate commerce. But we main- 
 tain that there are certain local matters inseparable from the business 
 as a whole which should be left according to the dual theory of govern- 
 ment to the states and we therefore drew the line on exclusive federal 
 control of all railways as covered by the term interstate carriers. 
 
 My colleagues then proceeded to show: 1. That exclusive federal 
 control is wrong in principle and contrary to precedent in that it deprives 
 the state governments of their just powers over local business. 2. That 
 federal control is inexpedient, for (a) it would remove government from 
 the hands. of the people to a commission appointed at Washington, thus 
 reversing the method of original legislation Ijy the people, (b) It would 
 increase corrvtption (1) by killing the interest of the people in their prob- 
 lems, the interest which supports honesty in both state and national 
 governments. (2) By centralizing the point of attack for the railroads, 
 thus giving them power to control the government instead of the govern- 
 ment controling them, fc) It would disturb the "equilibrium of our 
 vast industrial system, paralyze industry and seriously imperil the eco- 
 nomic conditions of the country. 
 
 And now in addition to being contrary to principle and inexpedient 
 we maintain that exclusive federal control of all railways is impractica- 
 
 16
 
 ble. First, because it would not be put into effective operation? Why. 
 Great opposing interests and the magnitude of national legislation makes 
 our government at Washington unduly conservative. DeToqueville. 
 Hamilton and Bryce. the three recognized authorities on our svstem of 
 government all agree that this is its main fault, The historv of railroad 
 legislation is concrete evidence of the same class. The records of con- 
 gress for twenty years are of attempts to create an interstate commerce 
 commission of adequate power and even then they only partially suc- 
 ceeded. 
 
 Compare the law that was finally passed with some of the state laws 
 at the same time. The state laws of Minnesota, Iowa, and Nebraska 
 contain provisions for the handling of injunction cases in a s])ecitied 
 local court. Has the national law any such provision ? Xo. A restrain- 
 ing order on a ruling of your Minnesota commission can and has been 
 repeatedly issued by judges in Rhode Island and New Jersey. The state 
 laws of Nebraska. Iowa. Minnesota and a number of other states provide 
 for action on the part of the commission without complaint, the same as 
 tho formal complaint has been filed. This is the reform begun as are 
 all other reforms, with the states. . The national law plainlv specified 
 that all action must be upon formally filed petition. And who are the 
 petitioners? The reports of the commission show that 7F>'", of the com- 
 plaints are by associations. It is out of the question for the individual 
 to reach the national commission. 
 
 Such are the relative merits of our state laws on railroads and the 
 notoriously inadequate and conservative legislation of the federal gov- 
 ernment. If congress can under present conditions pass such an inade- 
 quate law. what would it do if the control of local interests were added 
 to its powers (for this is a local question, remember — interstate business 
 under either system remaining under the contnjl of the Interstate Com- 
 merce Commission). Imagine the log rolling, the wire j)ulling and sec- 
 tional strife that would go on in congress when legislating on local mat- 
 ters. And yet if you will separate the country north of Iowa and east 
 of the Mississi])pi you have a territory that can control both houses of 
 congress and under exclusive control of the railroads, the east would be 
 able to control the interests and solve to their satisfaction the problems 
 that are located out here in the west. If it took eighteen years to get a 
 conimission with powers only partially adequate to control interstate 
 commerce, how long would it take to get a law for the control of all 
 railroads that would satisfy all sections of the country? 
 
 And do you imagine you. can reverse the system of controlling in- 
 ternal commerce all in an instant? There is a wide difference between 
 giving the federal government a power to control the railroads and the 
 legislation of that power into real active life. Therefore the theoretical 
 scheme proposed by the affirmative for controlling the railways at the 
 hands of the national government would not be effectively enforced. 
 Their plan is iinpracticable. 
 
 We have now shown (1) that exclusive federal control is contrary 
 to principle; (2) inexpedient; (3) impr'Clicnble Now wc nsi teJ from 
 the very outset that in order to win this debate, the aflirmative must 
 prove that the evils in the present system are inherent. Have thev done 
 so? They point out four main evils: first, conflicts of authority, includ- 
 ing car congestion and time schedules. Second, excessive and vmefjual 
 rates. Third, service. Fourth, overcapitalization. Let us examine 
 these in turn and see whether it is not within the bounds of possibility 
 at least for the state and national government working together to solve 
 these probleins. 
 
 First, conflict of authoritv. The affirmative suggests that one state 
 cannot secure cars enough in times of freight congestion. But this 
 matter is already under the control of the interstate commerce commis- 
 sion; all that is needed is increased powers for that commission. But 
 
 17
 
 the addition of the control of intrastate commerce would not in the least 
 be necessary to cure the evil. vSuch difficulties are hut incidental. They 
 can be remedied by coo])cration anions^ the states. What means the 
 state commissioner's national organization, organized expressly to co- 
 operate on uniform legislation ? What means the national meeting of 
 Attorneys General that met a few months ago for the purpose of getting 
 together on these problems? A dozen state commissions already have 
 power of conferring with each other in the making of joint rates. So 
 much for evil number one. 
 
 livil number two, high rates. The federal commission now has a 
 fair amount of power over matters of discrimination. We admit that 
 this should be increased, but we do not admit that the additional control 
 of intrastate commerce will in any way be necessary to solve the probletn. 
 And as to the lowering of fares, which has shown the most ability, the 
 national government or the state government? Fifteen states have re- 
 duced their rates. Not a single rate has been reduced by the national 
 government in the entire twenty years of its existence. You contend 
 that the states will be successful and with the history of your national 
 commission before you still argue that exclusive federal control will solve 
 the problem to the. satisfaction of all local interests. 
 
 Evil number three service. The affirmative contends that unified 
 control is necessary to secure adequate service, and vet the railroads 
 divide the administration of their own business into distinct and inde- 
 pendent districts of much less extent than most of our states. And who 
 is more familiar with the service needed for Minnesota, vour railroad 
 and warehouse commission or some official down at Washington, neither 
 directly appointed by you nor subject to your expulsion? 
 
 Evil number four, overcapitalization. And here the affirmative 
 makes their final stand asserting that because a few railroads are over- 
 capitalized, that therefore we must have federal control. That the na- 
 tional government must control because the railroads refuse to give the 
 states the figures. . We of the negative submit in all fairness to this audi- 
 ence that it is reasonable to presume that the states can secure sufficient 
 evidence to make a just estiinate of the true value of these properties 
 Iving within their boundaries if they so desire. The railroads can furnish 
 the facts if the people will only assert their rights and demand the truth. 
 And that is just what they are doing. 
 
 But what if the railroads are overcapitalized, is that a major evil? 
 ■The state commissions make their rates practically independent of the 
 fictitious capitalization, depending largely upon their own valuation of 
 the property and their estimate of their earning capacity. And if the 
 national government undertook to handle this problem, see what that 
 would mean? A national incorporation law, that sooner or later, would 
 result in depriving the states of the control of every corporation. This 
 would mean the entire revision of our corporation law, would deprive 
 the state of their own creatures, would wipe out state lines and leave us 
 with onlv the central government, a government by commission. 
 
 Ladies and gentlemen, we insist once more as we have all thru this 
 debate that the affimiative has failed to prove that the evils in the present 
 system are inherent and that the step which they propose is necessary. 
 Not one of the evils in our present system cannot as well be cured by the 
 states, the national government cooperating, as by exclusive 
 federal control. And they are being taken up by the states to 
 the great dismay of the railroads. New York, Michigan, Wisconsin, 
 Illinois, Minnesota, Iowa, Nebraska, Texas, and last and most active of 
 all is the new state of Oklahoma. 
 
 When we stop to consider the treinendous impetus that has been 
 received along every line of industrial activity thru the developinent of 
 the railroad, the ease and rapidity of communication between different 
 parts of the covmtry, before changing the theory of control of such a 
 
 18
 
 vast industrv, we should give some \vei;j;ht at least to the principles of 
 government and the precedent for such a move. Take a vote of the 
 citizens of your state of Minnesota or any other state, ask them whether 
 they would remove government now residing close home to a commis- 
 sion onlv indirectly their agent. You know what they would say. Their 
 whole interests in the problem would be destroyed. And just at the 
 time when the people were making Uicir interest in the problem felt as 
 thev can thru their state legislatures — just at the time when the advan- 
 tages of home made government are being plainly recognized. You 
 would let the railroads bv their cry of unified control inlluence you to 
 plunge into a reform that means the entire destruction on the rights of 
 your state. Xo. The exclusive federal control of railroads is unm-ces- 
 sary, is contrary to principle, is inexpedient, it is impracticable. 
 
 First Negative Rebutt.^l — Mu. (.'i.vdk (". Mi \Viii\.\ i:v 
 Mr. Chairman, Ladies and Gentlemen: 
 
 The affirmative savs S.'iT^ of the business is interstate business, 
 while onlv liiO^ is intrastate business, and they ask us why we are afraid 
 to give up this lo'vj of the business and transfer it to the federal gov- 
 ernment. Mv colleague has shown you that the federal government 
 has not been able to take care of the So^y Why trans^'er the other In',' ? 
 We admit that 85Ti of the business is interstate business yet we main- 
 tain that if the states control their 15% of the business as they should 
 control it. they will influence not only the 15*^; but half and more than 
 half of the business. For instance, just carefully consider what it means 
 when we say that 15% of the business is purely state business. That 
 means that the business starts and ends within the state. Yet you know 
 that there is much business which starts ujxm the border of one state 
 and goes across into another state, and yet this is known as interstate 
 busiriess while it is purely local short haul business and controlled by 
 the local rates passed by the states. Hence you have '.'AV, . i>robably 
 40%., possibly 50% of the business indirectly if not directly under the 
 control of the state legislature. \'ow. as you know the state lowers the 
 local rates. For instance Nebraska has lowered its rate from three cents 
 to two; Iowa has lowered its rate from three cents to two and Minnesota 
 has lowered its rate from three to two cents. What does this mean' It 
 means that by each state asserting its rights the interstate rate will 
 necessarily be lowered to two cents. Now if a two cent fare from Lin- 
 coln to Chicago is reasonable, why has not the Interstate Commerce 
 Commission put it into force instead of relying upon the state govern- 
 ments to do it? If the states have been doing as they should in lower- 
 ing these local rates, why should we transfer this 15'^"; from the state to 
 the national government? The National government cannot even con- 
 trol the 85 <^/; , but relies upon the state commission. This influence 
 which the states have over interstate commerce is merelv a moral influ- 
 ence. Suppose your state has the right to lower its local rates by add- 
 ing these local rates j'ou will get not more than a reasonable interstate 
 rate. 
 
 Our opponents say that by lowering one rate we necessarily influence 
 the rates all over the country. But. gentlemen, there can't be drastic 
 legislation. Are the aflirmative afraid that the states are going wild, 
 that thev will pass drastic laws, robbing the railroads of their pro])erty 
 by passing confiscatory laws? This would be denving that the railroads 
 can get jiistice in any of the courts of the land. It would be .saying that 
 the railroads were wronged and could not get justice in any of the state 
 courts, nor in our federal nor our supreme courts. To say this would 
 be to fly in the face of our whole judiciary system. Therefore since it 
 
 19
 
 cannot be the railroads that are afraid that their rates will be lowered 
 below a reasonable rate, it must necessarily be that they are afraid that 
 the rate will be lowered to a reasonable rate. This is why the railroads- 
 are so opposed to state regulation. 
 
 The affirmative say that this is a national problem. But is the ques- 
 tion of local rates a national problem ? Are your people in Minnesota 
 directly interested in ascertaining the local rate in the Southern states? 
 Are we interested in learning the local rate on flour from San Francisco 
 to Los Angeles? No. These are purely local problems hut yoti people 
 in Minnesota and the people in every other state in this country are 
 deeply interested in their own local rates and service. Hence, in con- 
 clusion we wish to retain control of intrastate business because local 
 rates are directly affected by it. But our opponents say that intrastate 
 and interstate business are inseparable. But are they inseparable? 
 
 First Affirmative Rebutt.\l — Mr. Harold C. Deering 
 
 Honorable Judges, Ladies and Gentlemen: 
 
 My colleagues pointed out that the interstate commerce commis- 
 sion, that reputable authority of authorities, which has investigated the 
 problem can see that local rates and interstate rates are interdependent 
 and cannot be separated. The gentlemen ask us why do the railroads 
 favor exclusive federal control? The railroads favor it because they 
 .appreciate the fact that dual control is not giving them a control which 
 is just. They appreciate — whether the gentlemen appreciate it or not — 
 that there are evils, that there is a problem and that it is only thru ex- 
 clusive federal control that a solution can be reached. Let me read an 
 interview with President Mellen : "It is better that regulation should 
 be by one authority than by many; that it be uniform and efficient, 
 rather than neglected or ineffective as at the present time." 
 
 Now let us take up again our constructive argument where the nega- 
 tive say we said there are four inherent evils. We said nothing of high 
 and discriminatory rates or poor service. I trust that you will remember 
 that we said nothing of either of these two. The gentlemen ha^■e been 
 setting up and shooting at wooden Indians and missing them. 
 
 The other two points are conflicts and overcapitalization. We 
 pointed out that inherent conflicts will exist between the states, and be- 
 tween the states and federal government. We pointed out that over- 
 capitalization dtjes exist, because the states today do not endeavor to 
 control the capitalization of corporations. They are overcapitalized 
 today, and capitalization is the basis of valuation upon which rates are 
 made. This problem of overcapitalization goes right to the heart of the 
 problem, and as long as the gentletnen can see that the federal govern- 
 ment should have control over this matter of incorporation, thru which 
 this matter of capitalization and these other matters are being controlled, 
 and as the matters go hand in hand and cannot be separated, they have 
 conceded that the federal government should have exclusive control of 
 rates. Let me read what the senate committee investigating the inatter 
 said: "The stock and bonded indebtedness of the roads largely exceeds 
 the actual value and cost of their construction or their present value and 
 that unreasonable rates are charged in the effort to pay dividends on 
 watered stock and interest on bonds improperly issued." 
 
 Therefore as incorporation and rate regulation go together, and 
 cannot be separated. In- conceding incorporation thev concede this other 
 matter of rate legislation. The gentlemen ask us where we are to draw 
 the line. We don't have to tell the gentlemen where, why or how. We 
 maintain that there is a transportation problem, and that it can be solved 
 only thru exclusive federal control. This has not been denied. 
 
 20
 
 The gentlemen make a statement as to the impracticability of fed- 
 eral control. The constitutionality in this debate is granted. This be- 
 ing the case we may believe that the subject is a practicable one, and 
 that a constitutional law may be enacted. And furthermore as to its 
 being impracticable, we would ask the gentlemen if the federal govern- 
 ment has not been perfectly capable of controlling the post office, the 
 national banks, the revenue system, and other matters of like nature; 
 and, if so. why can it not control eflliciently local commerce? The reve- 
 nue office goes into every locality, as does the post office, and exercises 
 its duties as efficiently and expeditiously as is necessary for the welfare 
 of the locality. 
 
 Xow the whole argument of the gentlemen has been outlined this 
 evening on the principle that it is contrary to the fundamental idea of 
 our government to centralize. We ]iointed out, and the gentlemen admit 
 that today the federal go\ernment controls eighty-fi\'e jier cent of the 
 transportation business. How then, is the additional fifteen per cent 
 going to centralize matters greatly? Further, the gentlemen ]iointed out 
 that there would be a great increase of corruption in the federal govern- 
 ment for the same reason. How, if today the federal government con- 
 trols eighty-five per cent, is the addition of the additional fifteen per cent 
 going to increase corruption greatly? 
 
 Second Negative Rebuttal — Mr. Lawrence J. Weaver 
 
 Ladies and Gentlemen. Honorable Judges: 
 
 The gentlemen of Minnesota have based their whole case on the 
 idea that the states are conflicting; that there is an antagonism between 
 the states, and it is impossible for us to get any uniform law. What are 
 the railroads afraid of? Are they afraid of having their rates lowered 
 below a reasonable basis? If so, they are saying that they can't get 
 justice from the courts. If a rate is lowered below what it should be 
 the railroads have a right to appeal to the courts. In short, ladies and 
 gentlemen, you are taking one of two things for granted: Either the 
 authority of the affirmative that the states cannot get just rates, or that 
 the railroads cannot get justice from the courts, which is ridiculous. 
 Therefore it comes down to this: The railroads must be afraid that 
 their rates are going to be reduced to a reasonable basis, and that, ladies 
 and gentlemen, is exactly and precisely the reason why we favor state 
 legislation combined with federal control. 
 
 As to the history of state regulation, it does not reveal particularly 
 drastic laws; is the recent law of passenger rates too drastic? Are the 
 recent rate bills adopted bv manv states of the United States too drastic? 
 Plainlv no. Is it conflicting with other states? Xo. And. furthermore, 
 if the'people of Minnesota wish to regulate their local service, and ask 
 the state legislature to pass a law requiring all trains coming to the Union 
 Depot, of Minneapolis, to arrive on schedule time, is that too drastic? 
 Plainlv not. Therefore, ladies and gentlemen, the state laws are not too 
 drastic, and the states are not conflicting with each other when they sim- 
 ply regulate their railroads as they should be regulated. 
 
 Xow, the opposition says that we will not have to increase the num- 
 ber of government oflicials bv adding the other one-seventh of the intra- 
 state business. He says that it doesn't mean that there will be increased 
 political corruption. I pointed out before why we would have more cor- 
 ruption. For the first reason, the railroads would have their point of 
 attack centralized, directly centralized to a small body of national com- 
 missioners; and. it will create a great political machine; and, thirdly, it 
 will kill your interest in this problem. The people of Minnesota <>r any 
 other state are not going to acknowledge that their laws in respect to the 
 
 21
 
 regulation of the railroads are fruitless, and that they will have to trans- 
 fer the control to Washington where it is out of sight and reach. The 
 gentlemen have said that the business is not separable. I shall only at- 
 tempt to cite to you the decision in the famous case of Smythe vs. Ames. 
 
 The affirmative says that local rates will atifect the whole business, 
 that the state of Minnesota can affect the whole railway system. But, 
 ladies and gentlemen, 1 wish you to consider this question. Why should 
 your local shipper who ships from one point in Minnesota to another 
 point in Minnesota support the thru shipj)er? Why should he, for in- 
 stance, pay $1.50 to ship some article one hundred fifty or two hundred 
 miles, and allow the thru shipper to ship the same distance at half that 
 amount. In short, you are killing competition. You are supporting 
 these thru shippers, giving them a lower rate. Do you want to do this? 
 If the rates are not fair, why cannot all the states combine to make them 
 fair? We do not see any danger of friction between national and state 
 govemnient. There has been none in the past. 
 
 Now we have shown that exclusive federal control is contrary to 
 the fundainental principles of our democratic government; that it is in- 
 expedient and furthermore that it is impractical. We have shown that 
 the evils of high rates, poor service, overcapitalization and discrimination 
 are not inherent in the dual system. Is the gain worth the cost? We 
 think it polic}^ to retain the good features the present system possesses- 
 and to make only those changes which will allow the dual sovereignty of 
 the state and nation to remain. 
 
 Second Affirmative Rebuttal — Mr. Algernon O. Colburn 
 
 Honorable Judges, Ladies and Gentlemen: 
 
 The gentlemen ask us who will give the best service, the interstate 
 commerce commission or your own commission? The body which is 
 owned b}^ the railroads or the body which rules the railroads? Jame- 
 Manahan, attorney for the Minnesota Shippers and Receivers associa. 
 tion, said our local commission is owned body and soul by James J. Hills 
 
 Let us go over again the several points under discussion. The gen- 
 tlemen have admitted the point of incorporation. This being disposed 
 of, there only remains the matter of rate regulation. We said that the 
 present system of making rates is based on the assuinption that local 
 rates were local in effect merely, but they are not only local in their ef- 
 fect but interstate in effect; the state cominissioners themselves in Na- 
 tional Convention assembled, admitted this. Then we said that the 
 present system was inadequate, and caused a conflict between state and 
 federal authorities. Judson in his work cites a hundred cases going to 
 the Supreme Court to decide questions relating to conflicts between state 
 and federal authority. If we had exclusive federal control these cases 
 would never have arisen. The problem would be solved for all tiine, 
 whereas now these cases of conflicts constantly come up. For that 
 reason alone, if for no other, we ought to have exclusive federal control. 
 
 Then we showed you that the present system resulted in conflict 
 between a state and its neighboring states with respect to rate regulation. 
 We showed you that a state discriminates in favor of its own shippers 
 and interests to the detriment of the shippers and interests of neighbor- 
 ing states. 
 
 The gentlemen of the negative have said that courts of justice will 
 prevent rates being too high or too low. We said nothing about rates 
 being too high or too low. Discriminations are efl^ected by other ineans 
 than bv making of rates. They are effected by the granting of rebates, 
 by underbilling, by overbilling, by allowing fictitious claims and scores 
 of other ways. Tlie gentlemen have not attempted to dispute us on 
 
 22
 
 these points. It is by these means that the shi]ipers of one state get an 
 unfair advantage over the shippers of another state. 
 
 The state "railroad commissioners themselves, the gentlemen who 
 are attempting to make the present system of railroad control work, 
 have made' recommendations which amount to exclusive federal con- 
 trol. Here are their recommendations in and out of their natifnial con- 
 ventions: (1) That the United States government should pass a law 
 making classification of freight uniform thruout the United States. (2) 
 That there should be a uniform system of accounting. {',i) That there 
 should be a uniform method of making rate schedules. (4) That the 
 state commissions be made the agents of the Interstate t'omnierce Com- 
 mission. If these recommendations were made the law we would have 
 exclusive federal control of transportation corporations doing interstate 
 business. 
 
 We should have exclusive federal rale regulation, then, because the 
 present system is inadequate, never can be made adequate, and because 
 exclusive federal control, alone, means adequate control. 
 
 Third Negative Rebuttal — Mr. William R. King 
 Honorable Judges, Ladies and Gentlemen: 
 
 The negative deny that their case will rest upon argument from au- 
 thority. There are authorities upon authorities in a cjuestion of this 
 kind, and the mere fact that it is selected for debate shows that we can 
 find sufficient evidence by authorities just as good, just as important, 
 on the other side of the question. But this is not a debate upon authori- 
 ties. The arguments delivered from this platfoqn are the arguments to 
 count in this debate and not the arguments of the men who jirobably 
 do not know as much about the question as we do. Our opponents quote 
 some authoritv as saying that your Minnesota Commission is owned by 
 James J. Hill,' but ladies and gentlemen, I wish to assure you that the 
 Nebraska Commission is owned by no one. And if your Minnesota 
 commission is owned by railroads, it is to your shame. 
 
 The affirmative long before they can win their case, must sliow that 
 the evils are inherent. We have shown that not a single evil is inlierent 
 and that every one can. and is being solved by the people of the various 
 states. Is the change, then, necessary? The affinnative say that they 
 want the exclusive federal control in order to have unity. We have 
 shown that this unity will result in dangerous centralization and that it 
 is inexpedient; it means the substitution of long-range government fcjr 
 home-made government, the fundamental ])rinciple upon which this 
 democratic government was founded. 
 
 But come gentlemen, debate with us a practical question. We do 
 not want. to theorize on a solution for this grave railroad prf)blem. This 
 debate is upon the question of whether we can get a plan in operation. 
 We. of the negative, argue upon a conservative plan; the gentlemen of 
 the affirmative argue for radicalism, for a theory. We have shown their 
 plan is impracticable. 
 
 We have shown then in the first place that it is contrary to princi- 
 ple; we have shown in the second place that it is inexpedient for it sub- 
 stitutes long-range government for home-made government that it is 
 inexpedient because it increases corruption bv centralizing the point of 
 attack, and that it is inexpedient because it kills the interest of the 
 people at home. In the third {)lace we have shown that exclusive federal 
 control is impracticable because it never could be enforced. And final- 
 ly we maintain that the affirmative fails to show that the evils arc in- 
 herent and that the change is necessary. 
 
 23
 
 Third Affirmative Rebuttal — Mr. Stanley B. Hotck 
 
 Honorable Judges, Ladies and Gentlemen: 
 
 The negative deny that their case will rest upon argument from 
 authority. They declare that they know as much about this question 
 as the authorities do. We of the affimiative have let our case thruout 
 the entire debate rest on argument backed in every case by good sound 
 authority. We do not believe that we know as much about this ques- 
 tion as the authorities. This gives me the opportunity to emphasize 
 the fact that the negative have not backed up a single one of their or- 
 guments in this debate either with fact or authority. The affirmative 
 has never failed to do so, and moreover the affirmative in a large number 
 of cases have quoted the men who should have supported the negative, 
 I mean the state railroad commissioners, the men who are trying to 
 make the dual system succeed. 
 
 The gentlemen of the negative have told you that it would be im- 
 possible to get congress to pass the laws necessary to secure federal 
 control. They believe that it would take a large aniount of legislation 
 and the fear for the welfare of the countrv during the period between 
 the ending of dual control and the beginning of exclusive federal control. 
 This objection of the gentlemen is a purely theoretical objection, not a 
 practical one. The change which the affirmative proposes this evening 
 is not a radical or sweeping change at all. As we pointed out again 
 and again and as the gentlemen have agreed the change will merelv in- 
 crease the power of the federal government one-seventh. To make, this 
 change there need be no great amount of legislation as the gentlemen 
 insist. Congress need not enact a single new law, it need merely extend 
 the laws which now serve to adequately control six-sevenths of the busi- 
 ness to include the remaining one-seventh. That law could go into force 
 instantly and there wovild then be no occasion for the fears of the gentlemen. 
 
 The other objections of our opponents have been taken up and an- 
 swered by my colleagues. 1 wish now to briefly summarize the arguments 
 in this debate. My first colleague showed you that the existing svstem 
 of state control of incorporation wasn't and couldn't be made adequate. 
 He showed that exclusive federal control alone would be adequate. The 
 question of incorporation he showed covered all questions of control of 
 capitalization, future stock issues, accounting and publicity. The nega- 
 tive conceded the necessity of the federal government controlling these 
 things. My second colleague showed that e\'en intrastate rates were in- 
 terstate, not local in effect. He showed the interdependence of all rates, 
 the impossibility and undesirability of separating state from interstate 
 traffic. He showed that the existing system resulted in conflict between 
 state and state and between state a'nd'nation. He quoted the National 
 Convention of State Railroad Commissioners in proof of these points. 
 The affirmative then showed how the negative when they conceded 
 the control of incorporation to the federal government also conceded the 
 control of rates to the federal government because the\^ conceded with 
 incorporation the control of all those things necessary for the adequate 
 control of rates. T'.e gentlemen have rever ^;1 tempted to denv this. 
 
 The affirmative then showed how the negative's admission that the 
 change only affected one-seventh of the business and that the addition 
 of one-seventh to the existing power of the federal government could not 
 result in excessive centralization; could not increase corruption; could 
 not result in the appointment of an army of officials or the creation of a 
 ^eat political machine as the negati\ e insisted. Neither could it greatly 
 overburden the Interstate Commerce Commission. The gentlemen's 
 charges were evidently absurd upon their face. Here again'the gentle- 
 men said not one word in denial of these things. Neither did they pro- 
 duce any evidence in proof of their charges. 
 
 We therefore have shown and the gentlemen have admitted that the 
 existing system of controlling transportation corporations isn't and 
 can't be made adequate, and that exclusive federal control alone will 
 give adequate control.
 
 ■£ES&k II II 
 
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