PREFACE 
 
 For some years the stock growers and shippers of the United States have 
 complained of the steadily increasing and excessive cost of transportation. 
 They have suffered great losses because of faulty service, lack of shipping 
 facilities and general negligence on the part of the transportation companies 
 upon which they are compelled to rely. 
 
 These conditions led to a general movement to unite in seeking relief, and 
 the outcome has been the organization of the Cattle Growers’ Interstate 
 Executive Committee, having headquarters ^t Denver, Colorado, composed 
 of representatives of organized cattle growers in the various states and 
 territories, principally of the West. 
 
 The primary object of this association is to serve the interests of the 
 cattle growers in transportation matters and to secure for them protection 
 from the wrongs encountered. Its efforts have thus far met with highly 
 satisfactory results, and many evils have been corrected through confer¬ 
 ences that have been held with the carriers. 
 
 This committee feels that while much may be accomplished by means 
 of arbitration and conference between shippers and carriers, it is an impera¬ 
 tive necessity for the proper and permanent protection of the shipping public 
 that strong and effective governmental regulation of interstate transportation 
 shall be established. The reasons for this conviction, and facts relating to 
 the very important subject, have been collated and are presented in the 
 following pages for the information of members of this, organization and the 
 public in general. 
 

 LIBRARY 
 
 3UREAU OF RA:LWAY ECONOMICS. 
 
 WASHINGTON, D. C. 
 
 APR 19 1911 
 
8 *kf# 
 
 Index 
 
 CONDITIONS OF TRANSPORTATION. 
 
 WRONGS SUFFERED— 
 
 to Rates... 
 
 Steady Advance in Rates. 
 
 Large Increase in Revenues. 
 
 Revenue as Basis of Value. 
 
 Railway Earnings . 
 
 Enormous Profits General. 
 
 Why Rates Should Be Lower. 
 
 Joint Rates Not Compulsory.. 
 
 Proposed Uniform Bill of Lading. 
 
 to Discrimination. 
 
 In Live Stock Shipments. 
 
 Cost to Cattlemen. 
 
 The Railroads’ Profit. 
 
 Effected by Combination. 
 
 to Service. 
 
 Railroads Not Ignorant. 
 
 to Combinations. 
 
 Capnot Stop Combinations. 
 
 How Combines Work. 
 
 How Combines are made.. 
 
 Railroads as Monopolies. 
 
 How Combine Is Maintained . . 
 
 Proof of Conspiracy. 
 
 THE REMEDY— 
 
 Present Law Inadequate. 
 
 Right to Reasonable Rates. 
 
 The Right to Fix Rates. 
 
 The Commission's Original Powers.. 
 
 Intent of the Framers... 
 
 Commission’s Power- Curtailed : h . 
 
 Courts Are Too Slow 7 . 
 
 After One More Provision. 
 
 Public Is Waking Up. 
 
 The Power to Make Rates. 
 
 Power of Congress Over Interstate Gommerce 
 
 Congress Alone Has Power. 
 
 Attempts to Amend the Law. 
 
 Futile Attempts Made. 
 
 Public Takes a Hand. 
 
 Adverse Railroad Influences. 
 
 Elkins Bill a Substitute. 
 
 Principal Benefit to Railroads. 
 
 Provided No Real Remedy.. 
 
 As 
 
 As 
 
 CV 
 
 As 
 
 As 
 
 
 Page. 
 ... 5 
 
 G 
 
 S 
 
 9 
 
 9 
 
 10 
 
 11 
 
 12 
 
 13 
 
 14 
 
 14 
 
 15 
 15 
 18 
 18 
 18 
 
 19 
 
 20 
 20 
 21 
 21 
 23 
 23 
 
 24 
 
 24 
 
 25 
 25 
 2G 
 2G 
 27 
 
 27 
 
 28 
 
 29 
 
 30 
 
 31 
 
 31 
 
 32 
 
 33 
 
 33 
 
 34 
 34 
 34 
 
4 
 
 THE TRANSPORTATION TAX 
 
 Page. 
 
 Pending Legislation . 35 
 
 What the Bill Will Do.. 36 
 
 Is Fair to the Railroads. 37 
 
 Railroad Arguments Against Legislation. 37 
 
 Objections Answered . 37 
 
 Conditions vs. Theories . 38 
 
 Put Shipper and Carrier on Equal Ground. 38 
 
 A Restraint Upon Advances.'. 39 
 
 State Regulation Has been Successful. 39 
 
 Status of the Measure. 40 
 
 Chairman of House Committee Antagonistic. 40 
 
 Bill Held Up M . 41 
 
 Situation in the Senate. 41 
 
 Demanded by the Public. 42 
 
 Sentiment Gaining Ground. 42 
 
 Strong Endorsement . 43 
 
 Appeal of State Legislatures. 43 
 
 Endorsed by Both Political Parties. 45 
 
 Obstacles to Be Met. 45 
 
THE TRANSPORTATION TAX. 
 
 Conditions of Transportation 
 
 That conditions governing the transportation of live stock are, becoming 
 intolerable is generally conceded by all who are engaged in that business. 
 All branches of commerce and trade are similarly affected. The question 
 of a remedy is one of paramount importance and constantly growing interest. 
 
 There is an apparent lack of information in regard to the facts and causes 
 producing these conditions which is unfortunate and which has delayed the 
 accomplishment of relief. 
 
 It is generally agreed by the shipping public that the existing law is 
 futile to remedy transportation abuses, and that prompt remedial legisla¬ 
 tion by Congress to strengthen the powers of the Interstate Commerce Com¬ 
 mission is imperatively necessary. The strong desire and broad demand for 
 such legislation does not arise from any desire to injure or do injustice to 
 the transportation interests of the country, which have done so much toward 
 building up our commerce and manufactures, opening up vast tracts of terri¬ 
 tory to settlement and production arid contributing so materially to the great¬ 
 ness of our nation. 
 
 The prosperity and growth of our railroads are essential to the country’s 
 welfare. The interests of shipper and carrier are too intimately related for 
 one to seek the injury of the other. The shipper, however, has rights that 
 he must protect, and, suffering encroachment upon those rights, he must 
 invoke uae restraining power of the federal government. 
 
 Our laws have always drawn marked distinction between the rights, 
 privileges and duties of the railroad or common carrier and those of the 
 business man or concern. 
 
 The transportation business is related to all others; its service is 
 employed by all, and upon it all must depend. Its property has been con¬ 
 structed and extended under public franchises, which have empowered it to 
 take possession of private property, even homesteads, for the public benefit 
 and use upon the theory that it will thereby be enabled to render public 
 service. The railroad becomes, of necessity, a monopoly in many localities. 
 
 From the commencement of railroad building in this country our laws 
 applying to the business have been based upon the principle that it is a 
 public service, subject to distinct obligations as such. It has always been 
 deemed right and necessary to regulate the conduct of the common carrier 
 so as to protect the interests of commerce and the people. In the words 
 of Justice Bradley: “The superintending power over highways, and the 
 charges imposed upon the public for their use, always remains in the gov¬ 
 ernment.” 
 
 The common law, as applying to transportation, was originally founded 
 
 5 
 
THE TRANSPORTATION TAX 
 
 upon questions which arose when the stage coach was the. principal means 
 of carrying in England, and has been modified and broadened as experience 
 and the development of the country and its transportation facilities required 
 it. For a time the common law proved sufficient to our needs, but as the 
 number of railroads increased, their wealth, power and influence grew, and 
 the demands of commerce became more exacting, it became apparent that 
 our laws governing interstate transportation were inadequate and that a 
 more effective method of governmental regulation was necessary. This led 
 to the enactment of the act to regulate commerce, February 4, 1887, which 
 created a special commission, or administrative body, having quasi-judicial 
 functions, composed of men whose time shall be devoted to a study of trans¬ 
 portation questions, and who shall stand between the carrier and shipper 
 as an arbitrator of disputed questions. 
 
 In framing this statute. Congress endeavored to . provide a remedy for 
 evils which had developed and which could not be effectually reached by the 
 common law. It having become apparent that the railroads operating in 
 competitive territory had, through traffic organizations, or “pools,” been able 
 to stifle competition and thus restrain trade, such associations were declared 
 unlawful. The provision was made that all charges for transportation must 
 be reasonable and just. Undue or unreasonable preferences or advantages 
 were forbidden and unjust discrimination between individuals, localities or 
 different descriptions of traffic prohibited. 
 
 For a period the most beneficial effect resulted, fime and the courts, 
 however, have modified the operation of the interstate commerce law, and 
 we are again confronted with the necessity of federal legislation to further 
 protect the people from encroachments upon their rights. 
 
 History proves that when power is attained by an individual, or associa¬ 
 tion of individuals, over the property and liberty of others, and no restraint 
 or control of that power’ exists, it will be abused. If the railroads of the 
 country have the power, without control, to say what tribute the property 
 of others shall pay, they will continue to abuse that power as they have 
 in the past. 
 
 The government of the United States collects from the people in cus¬ 
 toms duties, from internal revenue and miscellaneous sources, less than 
 one-third the amount of money that the railroads charge the people for their 
 service. Shall we permit such enormous taxing power to continue without 
 restraint? 
 
 Wrongs Suffered 
 
 AS TO RATES. 
 
 It has been the constant object of practically all, if not all, of the rail¬ 
 roads of the country to fix their rates and charges at a point to produce the 
 greatest revenue; to fix their rates as high as the traffic will bear and yet 
 move. Keeping this end constantly in view, they have striven to remove 
 every impediment to its attainment, until to-day we find ourselves con¬ 
 fronted with a condition of affairs in railroad transportation which demands 
 the most serious attention of all persons who pay the freight. 
 
THE TRANSPORTATION TAX 
 
 7 
 
 Wo may safely say that the limit of high rates has not been reached. 
 Just as soon as circumstances will permit of it, and, in the wisdom of rail- 
 load management their interest will be thereby subserved, their rates will be 
 increased. This assertion is based upon the statements of general traffic agents 
 of these great systems, which conclusively show it. Mr. A. C. Bird, formerly 
 of the Chicago, Milwaukee & St. Paul Railway Company, now Traffic Director 
 of all the Gould lines, testified before the Interstate Commerce Commission 
 at Chicago that all rates except on first-class freight, and perhaps a few 
 other items, were too low. He, on a subsequent day, corrected that state¬ 
 ment so as to make it show that in his opinion all live stock rates were too 
 low. Several other general traffic managers of other lines testified that it 
 was their opinion that live stock rates were too low. This is the constant 
 burden of their song, and is repeated again and again. Some of them have, 
 likewise, testified to the same opinion with respect to class rates and rates 
 on commodities. They all admit that they hav.e increased rates wherever 
 the opportunity has existed. 
 
 Notwithstanding their denial, it is susceptible of proof that enormous 
 net profits are obtained by the railroads from transporting live stock. When 
 rates were lower than they now are, they eagerly offered and willingly paid 
 large rebates in order to secure this traffic. There was no complaint then 
 as to the revenue derived. Since competition declined, rebates ceased, and 
 the cost of service materially reduced, they have discovered that this busi¬ 
 ness is not adequately remunerative. 
 
 Steady Advance in Rates. 
 
 With respect to advances in rates the Interstate Commerce Commission, 
 in its annual report of 1903, makes the following statement: 
 
 “One of the most significant things in recent railway operations is the 
 steady advance in the cost of the transportation of freight by rail. A few years 
 ago the impression was general that freight rates could not and would not be 
 advanced. Railway traffic officials frequently affirmed this in testimony. When 
 the commission had under consideration certain consolidations of railway prop¬ 
 erty the eminent gentlemen who had brought them about stated under oath that 
 the purpose was not to advance, but rather to reduce rates. Recent history 
 belies these predictions. This increase in the transportation charge has been 
 accomplished in various ways.” 
 
 After further reviewing the manner of these advances and stating that 
 the same have been made by concerted action of the carriers, the Commission 
 concludes: 
 
 “We desire to repeat in this connection that there i£ to-day no way in 
 which these advances can be prevented. If they are just and reasonable they 
 -ought not to be prevented; but it cannot be assumed that they are in all cases, 
 and it is impossible to contemplate with equanimity the fact that the result of 
 all recent improvement in transportation facilities, that the consequence of 
 financial prosperity and financial adversity alike, is an increase in the transpor¬ 
 tation charge, or to remember with indifference that this species of property is 
 now in position to tax unjustly every other species of property. If these 
 charges are unreasonable they afford a most insidious means of taking unjustly 
 from the general body of the public for the benefit of a few. At present this 
 commission can investigate and report. It has no power to determine what 
 rate is reasonable, and such orders as it can make have no binding effect.” 
 
 These advances are shown to have been brought about by increasing the 
 rates themselves; by changing from lower to a higher class; by changing 
 from commodity to class rate, and by maintaining published rates. 
 
8 
 
 THE TRANSPORTATION TAX 
 
 The rates have been increased on class goods and commodities, with 
 few reductions. Almost everything the stockraiser or farmer ships or buys 
 pays a higher rate than ten or twelve years ago. 
 
 Live stock rates have been increased; grain rates have been increased 
 up to the recent rate war on Missouri river grain rates to the Gulf, Atlantic 
 and lake ports. Without discussing the reasonableness of these rates, it is 
 generally believed, except among those having interest on the side of the 
 railroads, that with the vast increase in the volume and density of traffic ot 
 both freight and passengers, and the known economics of handling it as 
 compared with ten years ago, the rates are too high. But whether this be 
 so or not, the public is entitled to a speedy and adequate remedy in the 
 premises. 
 
 On March 11, 1904, the Senate of the United States, by a resolution 
 directed the commission to furnish a report showing the changes in tariff 
 rates and an estimate of the result for the years ending June 30, 1900, 1901, 
 1902, 1903, as compared with revenues which would have been derived under 
 rates in force during the year 1899. The commission complied with this 
 direction, and, while it was found impossible to make any reliable estimate 
 of the total increase in gross or net revenue, it was shown that changes 
 in rates were made as follows: 
 
 January 1, 1900.—Changes in rating in official classification territory, 
 north of Ohio and Potomac and east of Mississippi, from class to class, the 
 advances were 572, reductions 6. 
 
 During 1900 changes in ratings in southern classification territory, south 
 of Ohio and Potomac rivers, from class to class, advances 551, reductions 
 105. 
 
 January 1, 1900.—Changes in western classification territory, west of 
 Mississippi river and between Chicago and Peoria, and a few other points, 
 from class to class, advances 240, reductions 17. 
 
 These classifications’ have remained substantially in force, but with some 
 few changes. 
 
 In addition to advances in rates by changes in classification, other and 
 decided advances in the rates of the classes were subsequently made, with 
 very few reductions as compared to the advances. 
 
 As an example, it is stated by the report of the commission to the Sen¬ 
 ate that in June, 1903, the rates on lumber from the South to the North 
 were advanced 2 cents per 100 pounds, and it estimates the increase of 
 freight on lumber at about $7,860,000 per annum. 
 
 The increase of rates on coal, in early part of 1902, in territory north 
 of Ohio and Potomac rivers and east of Mississippi, is estimated at over 
 $10,000,000 per annum. 
 
 The increase in freight on hay alone, in territory north of Ohio and 
 Potomac and east of Mississippi, by changing the classification, is estimated 
 to have amounted to $10,000,000 from January, 1900, to April, 1904. 
 
 Large Increase in Revenues. 
 
 And it is shown that the average rate per ton was, in April, 1904, when 
 this statement was made, nearly 12% cents per ton greater than the ave¬ 
 rage for the year ending June 30, 1899, and that this effected an estimated 
 increase in revenue of $155,475,502. The net earnings of the railroads of 
 
THE TRANSPORTATION TAX 
 
 9 
 
 the United States for the year ending June 30, 1903, amounted to $641,- 
 630,196, so that this estimated increase of freight revenue from increase in 
 rates alone was nearly one-fourth the total net earnings. 
 
 In 1897 gross earnings per mile of line averaged $6,122, operating ex¬ 
 penses $4,106, net earnings $2,016. For 1903 the showing is: Gross earn¬ 
 ings, $1,890,150,679, or $9,382 per mile; operating expenses, $6,197, net per 
 mile $3,185, equivalent to an increase in net earnings of nearly 58 per cent. 
 These are the averages given in the commission’s report for all the rail¬ 
 roads of the United States. 
 
 When the railroads have become so great and important a part of the 
 very life of every industry that they collect in gross earnings, as was done 
 for the year ending June 30, 1903, the enormous sum of $1,890,150,679, and 
 that the rates *of freight and passenger fares levied upon the country’s 
 commerce are so levied at the will of those who reap the harvest without 
 restriction by law, it should challenge the attention of the thoughtful citi¬ 
 zens. No patriotic man who looks to the welfare of the nation can seriously 
 contend that this vast and constantly increasing power should longer go 
 unrestrained. 
 
 Revenue as Basis of Value. 
 
 If, as has been intimated, indeed, practically decided, the basis of what a 
 railroad may earn is to be in some measure made to depend upon the value 
 of a railroad, based upon the value of its stocks and bonds, then, since those 
 values in turn depend on the earning power of the railroads, it is clear that 
 the very fact of increased earnings from rates, which may be exorbitant, can 
 be made the basis of still further increases in the rates; each increase of 
 rates which increases earnings adds to the value of the properties of the 
 railroads when that value is based on earning power. So that if this method 
 be applied each increase of rates entitles the railroads to place additional 
 valuation on their property and such new valuation in turn used as the 
 basis to again advance rates, and so ad infinitum. Prompt action is there¬ 
 fore imperative. 
 
 Railway Earnings. 
 
 The actual cost of transporting freight of all kinds is constantly de¬ 
 creasing. Grades and curves are reduced, power and the facilities of carry¬ 
 ing are improved, and the volume of traffic greatly increased. Fifteen years 
 ago the average weight of a carload of grain was 30,000 pounds. One engine 
 would draw a train of fifty such cars. To-day the average weight has risen 
 to 60,000 pounds, and an engine readily hauls a train of from fifty to sixty 
 cars. Thus the revenue derived from practically the same service is more 
 than doubled. 
 
 It is difficult for the “plain people” to understand why, when the cost 
 of moving traffic has been so greatly diminished, the charge therefor should 
 have increased, or why should they be compelled to pay the dividends on 
 watered stock and for extensive improvements or extension of lines. 
 
 As a fair example of railway earnings, take the Santa Fe system, which 
 extends from Chicago to the Gulf and the Pacific, spreading its network of 
 branch lines over the grain and live stock territory of the Southwest. 
 Average mileage for 1902 was 7,876 miles, now 8,000. For the year ending 
 
10 THE TRANSPORTATION TAX 
 
 June 30, 1901, its gross earnings amounted to $54,807,330. After paying 
 operating expenses, taxes, fixed charges and all interest charges the net 
 surplus from income was $12,474,529.08. For the year ending July 30, 1902, 
 the gross income was $60,275,944.33. After paying expenses, taxes, fixed 
 charges and interest the net surplus income was $15,564,526.28. This was 
 equivalent to 5 per cent, on the preferred stock outstanding of $114,199,530, 
 or approximately $14,000 per mile, and 9.66 per cent, on the common stock 
 of $102,000,000, equivalent to approximately $13,000 per mile; this after pay¬ 
 ing interest on the funded debt of $28,882 per mile of line, which doubtless 
 equals the cost of the property and additions. 
 
 For the year ending June 30, 1903, the gross income was $63,668,390.99. 
 The net surplus after paying expenses, taxes, fixed charges and interest 
 amounted to $13,898,329.27. There was included in operating expenses 
 $1,325,931.73, charged to rail renewal fund, carried over to the succeeding 
 year, which would be properly added to the surplus income, bringing it up to 
 $15,225,161. 
 
 In addition to the net results thus stated, there was embraced in the 
 amount of operating expenses the costs of extensive permanent improve¬ 
 ments and additions to the company’s property. 
 
 Enormous Profits General. 
 
 As another example of railway earnings, take the Chicago & North¬ 
 western railway. For the year ending June 30, 1902, the net earnings were 
 sufficient to pay the interest on the funded debt of $26,240 per mile of line 
 and leave a net surplus of $2,030 per mile, equivalent to over sixteen per 
 cent, on the total common and preferred stock. 
 
 Other large systems of railway, serving to a great extent the same terri¬ 
 tory, make equally good showings. 
 
 In the group 6, as used by the statistical department of the Interstate 
 Commerce Commission, taking the territory between the eastern line of 
 Illinois, the Great Lakes on the east and the Missouri river on the west, 
 including Illinois, Wisconsin, Iowa, Minnesota, parts of Missouri, South Da¬ 
 kota and North Dakota, with 45,651 miles of road, the surplus income of 
 the railways within that territory, after deducting all expenses, fixed charges, 
 interest, taxes and dividends and cost of permanent improvements, amounted 
 to $19,489,475. 
 
 For the year ending June 30, 1903, in group 3, Indiana, Ohio and Mich¬ 
 igan, with 23,963 miles of road, the net surplus was $14,915,460. 
 
 In group 2, Pennsylvania, New York, New Jersey, Delaware and Mary¬ 
 land, with 22,421 miles of road, the net surplus was $19,227,265. 
 
 In group 4, West Virginia, Virginia, North Carolina and South Carolina, 
 with 11,013 miles of road, the net surplus was $7,912,179. 
 
 In group 5, Kentucky, Tennessee, Georgia, Florida, Alabama and Missis¬ 
 sippi, with 22,521 miles of road, the net surplus was $8,448,954. 
 
 In group 8, Arkansas, Missouri, Indian Territory, Oklahoma, Kansas and 
 Colorado, with 26,660 miles, the net surplus was $6,099,680. 
 
 In group 7, Nebraska, parts of North and South Dakota, Montana and 
 Wyoming, with 11,344 miles of road, the net surplus was $3,721,016. 
 
THE TRANSPORTATION TAX 
 
 11 
 
 In group 10, California, Arizona, Nevada, Utah, Idaho, Washington and 
 Oregon, with 15,636 miles of road, the net surplus was $15,245,516. 
 
 In group 1, Maine, New Hampshire, Vermont, Massachusetts, Connecti¬ 
 cut and Rhode Island, and in group 9, Texas and Louisiana and part of 
 New Mexico, there was no surplus. 
 
 The total surplus was $91,102,712. This, after deducting from gross 
 earnings all operating expenses, fixed charges, taxes, interest and dividends, 
 and the cost of extensive betterments and additions. 
 
 It is too well known to need proof that there exists in many cases ex¬ 
 cessive bonded indebtedness and issues of stock upon which the interest 
 is paid and dividends allowed. Whatever there is of such items were de¬ 
 ducted from the earnings to leave the surplus named, and in cases of groups 
 1 and 9, this amount, together with cost of improvements, was so great that 
 no surplus remained. That does not mean, however, that the railway earn¬ 
 ings in those groups were less than they should be. 
 
 Whether the railroads are entitled to earn more or less than they do, 
 these figures make it clear that the public welfare demands some definite 
 supervision over railway rates in order that the rates and earnings may be 
 Hept within reasonable bounds. Manifestly, the repeated recommendations 
 of the commission should find response at the hands of Congress. 
 
 Why Rates Should Be Lower. 
 
 When the increased volume of traffic or economies in handling traffic has 
 so increased railway earnings that a railway is enabled to make more than 
 a reasonable profit upon the money invested in the facilities which it 
 uses to perform its functions as a public carrier, under all of the circum¬ 
 stances, then the public is entitled to a reduction of rates so that the tax 
 laid upon the other industries by such railway will not be unjust or unrea¬ 
 sonable. 
 
 Based upon the increasing net earnings of most of our railway systems 
 for the past years, it is quite evident that the public is too heavily burdened. 
 
 To illustrate the increase in the volume of traffic and earnings and to 
 some extent the economies in handling the traffic the following statements 
 are made, based upon statistical data shown by railway accounts and reports 
 as compiled by the Interstate Commerce Commission and from printed annual 
 reports of railways themselves. 
 
 It appears from statistical data of the Interstate Commerce Commission 
 that in 1897, on an average, each freight locomotive carried 36,362 tons, repre* 
 senting 4,664,135 ton miles, while for 1902 each locomotive carried 50,874 
 tons, representing 6,666,499 ton miles. In 1897 an average of 1,647 cars were 
 used to carry 1,000,000 tons of freight, while in 1902, 1,288 cars were used for 
 the same service. When the fact is considered that by changes in classifica¬ 
 tion, by increasing the rates on classes and commodities, the average ton and 
 ton mile yielded for 1902 a greater revenue than for 1897, it becomes apparent 
 that the service of transporting freight can be performed cheaper than it 
 was in 1897, for the same tonnage, unless the cost of these better facilities 
 and the cost of labor, supplies and materials had so advanced as to offset 
 these economies in handling the traffic. The great increase in the volume of 
 
12 
 
 THE TRANSPORTATION TAX 
 
 traffic, both freight and passenger, more than offsets any increase in operat¬ 
 ing expenses occasioned by advances in wages and cost of supplies. 
 
 The increase in tons of freight carried one mile for 1902 over 1897 was 
 62,150,347,828, equivalent to 63 per cent. Estimated upon the basis of tons 
 carried one mile per mile of line, the increase amounts to 52 per cent. That 
 is to say, the average tonnage carried one mile per mile of line for the whole 
 United States increased 52 per cent, from June 30, 1897, to June 30, 1902. The 
 passenger traffic increased in about the same ratio. While the gross amount 
 of operating expenses greatly increased during the same period, the per cent, 
 of operating expenses to the gross earnings did not increase. 
 
 The average for the fiscal year 1897 was 67.06 per cent, of gross earnings 
 charged to operating expenses, and for 1902 it was 64.66 per cent. This would 
 leave a net of $35.34 out of every $100 of gross earnings, so that had the 
 percentage of operating expenses been even greater for the latter year, still 
 the net income would be vastly enhanced because of the great increase in 
 gross earnings. For example, the average gross earnings per mile of line for 
 all railways in the United States for fiscal year 1903 was $9,382, operating 
 expenses $6,197 per mile, leaving net earnings $3,185. The ratio of operating 
 expenses to gross earnings for 1903 was 66.05 per cent., an increase of 1.39 
 per cent. 
 
 Estimated on the basis of earnings per mile of line, the gross earnings 
 per mile for 1902 was $8,625, while for 1897 the same was $6,122, increase 
 of $2,503, equivalent to 40.89 per cent. 
 
 The operating expenses as charged for 1902 are shown to be $5,577 per 
 mile of line, leaving net earnings $3,048 per mile. Operating expenses for 
 1897 were $4,106 per mile, leaving a net of $2,016 per mile; so that the in¬ 
 crease in net earnings from operation for 1902 over 1897 was 46 per cent. 
 This was due to the increased volume of traffic, the economies in operation 
 and advances in rates. 
 
 This may be best illustrated by the following table, prepared from official 
 figures: 
 
 Earnings and Expenses Per Mile of Line on Railroads. 
 
 
 1903 
 
 1902 
 
 1897 
 
 Gross earnings per mile of line. 
 
 . . .$9,382 
 
 $8,625 
 
 $6,122 
 
 Operating expenses per mile. 
 
 ... 6,197 
 
 5,577 
 
 4,106 
 
 Net earnings per mile. 
 
 ... 3,185 
 
 3,048 
 
 2,016 
 
 Per cent, gross earnings charged to operating 
 penses . 
 
 ex- 
 
 ... 66.05 
 
 64.66 
 
 67.06 
 
 Joint Rates Not Compulsory. 
 
 Very much of the live stock must move over two or more lines of rail¬ 
 road, and under the law as it exists to-day, railroads are not bound to pub¬ 
 lish joint rates or through rates, and cannot be compelled to do so, or 
 deliver loaded cars to a connecting carrier. They have generally done so, 
 and generally published and applied through rates, but not always. 
 
 For example, the Texas & Pacific railway, by recent arbitrary action, 
 has cancelled all of its interstate rates on live stock, and refuses to deliver 
 any loaded cars of live stock to any connecting line. The result is, the 
 live stock originating or passing over its line must be delivered at the point 
 where it goes to a .connecting line and pay the local freight before such 
 
THE TRANSPORTATION TAX 
 
 13 
 
 delivery, no matter if it has not been on the cars but a short time. This 
 results in much damage to the stock and entails a loss which ho one may 
 be compensated for—an absolute destruction of so much value. It is under¬ 
 stood that other lines have threatened the same thing. Whether it will be 
 done or not, it is entirely possible. Also it frequently happens that a rail¬ 
 road will not deliver live stock to a connecting line at junctions, so as to 
 divert the shipments over the shortest route at the through rate, but com¬ 
 pels a longer haul and a longer time in reaching markets than it would to 
 go over the short line from the junction point. This entails a loss and fre¬ 
 quently the missing of a day’s market. That these matters should be regu¬ 
 lated must be admitted by all fair-minded, disinterested men. They are 
 regulated by commissions in some states, and therefore the practical solution 
 has been made and can as well be applied to interstate shipments. Of course, 
 the railroads will seriously object and search the recesses of the fertile 
 brain of many a shrewd railroad operative, traffic man and attorney for rea¬ 
 sons and methods with which to conjure the ever-receptive politician, and 
 sometimes receptive congressman, and “convince” them that such regulation 
 is not “feasible,” is “impracticable,” that it interferes with the railroads in 
 the management of their own property 
 
 Proposed Uniform Bill of Lading. 
 
 The public was recently notified that on October 1, 1904, a new “uni¬ 
 form bill of lading” would be adopted by carriers, which would require the 
 signature of the shipper and become a binding contract upon both parties. 
 
 This is, in fact, but another . method of increasing the transportation 
 charge, in that the new form contains several conditions which limit the 
 common law liability of the carrier. These conditions have been enforced 
 in states where the decisions of the courts have held the conditions of such 
 a contract binding upon the shipper, if the bill of lading shall be accepted 
 without protest. It is true that heretofore there has been, upon the face of 
 bills of lading and in classification, a common law service rate and a limited 
 service rate stated, but it has never been the custom to enforce the limited 
 liability, except where courts have compelled the carrier, or the carrier ha.s 
 seen fit to do so. 
 
 For the past ten years there has been a rate on certain fifth class pro¬ 
 ducts of 30 cents per 100 pounds from Chicago to New York. The "service, 
 while perhaps limited on paper, has in fact been according to common law 
 liability. Now it is proposed to enforce the conditions of the bill of lading, 
 by requiring the shipper to sign the contract, at limited liability, or pay 2C 
 per cent, advance over the rate he has heretofore been charged. 
 
 Why should the carrier seek to limit its common law liability? The 
 shipper does not, nor has he an opportunity so to do. He must accept the 
 form of receipt tendered, or stand an increase of 20 per cent, in cost of 
 carrying. Ofttimes a shipper has no right to release the goods, and no 
 opportunity to insure them. This is true with regard to high-class articles. 
 
 This new bill of lading has printed upon it: “Not negotiable.” Banks 
 state that they will not accept such documents as security, notwithstanding 
 that they may read “to order,” Thus the railroads propose to overturn and 
 
14 
 
 THE TRANSPORTATION TAX 
 
 revolutionize long-established business practice and impose serious loss and 
 inconvenience upon the shipping public. 
 
 Chairman W. P. Hepburn of the House committee on interstate and for¬ 
 eign commerce, on March 4, 1904, introduced a bill known as H. R. 13468, by 
 which it is proposed that when property consigned to the order of any party 
 is to be moved in interstate commerce, for which a receipt or bill of lading 
 has been issued, it shall be unlawful to deliver said property without sur¬ 
 render of the receipt or bill of lading to the delivering carrier. 
 
 This proposed statute is entirely outside of the jurisdiction of the inter¬ 
 state commerce law and its operation, in connection with a form such as the 
 proposed new uniform bill of lading, would prove oppressive. 
 
 AS TO DISCRIMINATION. 
 
 Discriminations against persons, .localities and all classes of articles have 
 been so universal that it would require a library to enumerate or discuss a 
 part of them. All shippers, in every branch of commerce and industry, have 
 experienced injustice arising from this source. 
 
 In Live Stock Shipments. 
 
 If railways would consider live stock traffic in its true light, namely, 
 that it is a highly perishable raw material, productive of and resulting in 
 great tonnage, from which large revenue is derived, the shippers and the 
 carriers might come to a mutual and satisfactory understanding. No figures 
 are available nor means of estimating the volume of tonnage shipped from 
 such centers as the Union stock yards, Chicago, or Kansas City, where the 
 live stock trade is the basis of activity; nor can any figures be stated as to 
 the tonnage of grain and hay moved to fatten live stock. An example of this 
 grain movement is afforded by the fact that in eastern Colorado every year 
 from 600,000 to 1,000,000 lambs are fed. These lambs are shipped in from 
 New Mexico, Arizona, Wyoming and Utah on through billing. To fatten them 
 it requires, in addition to the hay and roughness produced in this state, 
 an average of 180 pounds of grain, of which 150 pounds must be imported 
 from Nebraska or Kansas. This corn is brought in at a rate of from 20 to 
 25 cents per 100 pounds. The lowest amount, as the average, at the lowest 
 rate, gives the railways 30 cents per head revenue on all lambs fed (or 150 
 pounds at 20 cents) for freight on the corn alone before the lambs start for 
 market. Then these lambs, when they are finished, require three cars for 
 every two cars into the feed yards, on account of gain in weight, which sim¬ 
 ply means that the corn is being hauled over again. 
 
 There is hardly any commodity in the official classification with which 
 one can fairly compare live stock traffic. We might compare it with citrus 
 fruits that move from California to Chicago, but that is unfair for many 
 reasons, the principal one being that fruit produces no other tonnage. A 
 box of oranges, when delivered to a Chicago hotel, then and there ends its 
 career as a revenue producer for common carriers. 
 
 The rate on citrus fruits, Los Angeles to Chicago, is $1.25. Estimate the 
 average distance by three routes. First, the Southern Pacific, Union Pacific 
 and Chicago & Northwestern; second, the Santa Fe, the only line with its 
 own rails all the way; third, the Southern Pacific to Ogden, Rio Grande to 
 
THE TRANSPORTATION TAX 
 
 15 
 
 Denver and Burlington to Chicago. This gives an average haul of 2,760 miles. 
 In considering this fruit movement, which occurs largely in winter, it should 
 be borne in mind that the cars required are much heavier than ordinary 
 equipment and the maximum load is about thirteen tons. The dead weight 
 haul is fully 150 per cent, of the revenue weight. The average earning of 
 this traffic between Los Angeles and Chicago, when the proportion that moves 
 east of Chicago is taken into account, is about $1 per 100 pounds, or seven 
 and one-fourth mills per ton mile. In spite of this small revenue the lines 
 are all anxious to carry the fruit, and when the percentages are considered, 
 or the division of the rate, it may be seen that the lines^carry the fruit east 
 of Ogden for less than they do cattle. And then, too, the heavy refrigerator 
 cars have to be hauled west-bound over the mountains empty, while the stock 
 cars go West loaded with coal for the Southern Pacific. This case is cited 
 simply to show that carriers sometimes make better rates for traffic that 
 ceases to produce further revenue when delivered at destination, than they 
 do for another class, which is productive of further tonnage in considerable 
 volume. 
 
 Cost to Cattlemen 
 
 It may be of interest to traffic men to know what the average young 
 southwestern steer that is moved to the Northwest to be matured, as beef, 
 on the grasses there, returns in revenue. Experience demonstrates 
 that $11 per head is a fair estimate; this does not include interest on the 
 freight money paid nor loss. Another dollar could be safely added for these 
 items. In considering this matter it is well to go a little further and say 
 that an average range beef animal at Chicago, four years old, will weigh 1,100 
 pounds and $4 (or $44 per head) is about an average price. Deducting the 
 $11 per head, freight charges, or one-fourth of the gross returns, the re¬ 
 mainder is what is left to cover first cost, expenses maturing (twenty-eight 
 months’ work), loss and interest on plant. It> needs no argument to show 
 that the transportation companies have had the greatest profit from this 
 transaction. There is no question about their part of it, for it comes out 
 first, always in cash, and the charge (or rate) for handling the steer in ship¬ 
 ment is always a sum nominated by the carrier, the shipper had nothing to 
 say about it. There has been no bargain, such as the steer buyer must make 
 in Texas when he secures his two-year-old, nor such as he must make at 
 market when he sells. 
 
 All that railways have to sell is transportation. Shippers are not supposed 
 to know or be interested in what bonded debt or amount of capital stock the 
 common carrier pays interest upon. That is not a feature of the case, and 
 if there is overcapitalization, that is no valid excuse to a shipper for ex¬ 
 cessive rates. Ordinary operating expenses in their simplest form should be 
 ..shown to the public and explained. We might take an example of operating 
 expenses from one of the great live stock carrying roads of the West, the 
 Union Pacific Railway Company, and from some simple figures find out what 
 profit, if any, comes from an average rate. 
 
 The Railroads’ Profit. 
 
 It is state’d that the average cost per train mile on that railway for a 
 recent.period of four years was $1.17, including all expenses. Taking Chey- 
 
16 THE TRANSPORTATION TAX 
 
 ienne to Omaha as an example: The rate on cattle from Cheyenne to Omaha 
 is 33 cents per 100 pounds, and on an average load of 24,242 pounds the 
 revenue per car is $80. The Union Pacific railway hauls large trains, and, 
 for example, it is fair to say, makes up a full train of cattle, namely, forty 
 cars. If there were not that many cars of cattle at hand, the company would 
 complete the tonnage with coal, etc., so the result is practically the same. 
 Forty cars of cattle at $80 pays the Union Pacific railway $3,200 and costs 
 that company 519 loaded train miles at $1.17, $607.23. Suppose that all these 
 cars have to be brought back empty to Cheyenne, at a similar cost of $607.23, 
 giving a total of $1,214.46 expense, or $1,985.54 net on the transaction. There 
 is certainly enough in that sum to leave good profit to the company, even 
 after paying interest on bonds, etc. 
 
 There is a large movement of cattle to Omaha and Kansas City from 
 the West. This business moves on through rates, from which the earnings 
 for the lines east of Pueblo and Denver are from $30 to $40 per car. Stock- 
 men know this and cannot accept with good grace the charge of $82.50 per 
 car, based on 33 cents, 25,000 pounds (actual weight). The fact that the 
 lines fight for this traffic looks as if it must be profitable, and their actions 
 establish the fact that the earnings (their proportion of the through rates) 
 are desirable. The 33 cents per 100 pounds looks large to the shipper who 
 lives in the local territory. 
 
 Take the rate Winnemucca, Nevada, to Omaha, of $160 per standard car, 
 from which the Southern Pacific deducts $62.85 to Ogden; the Denver & Rio 
 Grande $60.72 Ogden to Denver, 779 miles, and the line east of Denver, $36.43 
 to Omaha or Kansas City. That makes the local rate from intermediate 
 points, west of Denver, such as Grand Junctknuto Pueblo, of $70 per standard 
 car, seem exorbitant; for the shipper thinks—and he has a good right to do 
 so—that some one is being “held up,” for the Denver & Rio Grande hauls the 
 Nevada shipment, Ogden to Denver, at the rate of 7 8-10 cents per car mile, 
 whiie the Grand Junction to Pueblo shipment is at the rate of 23.3 cents per 
 car mile. The fact is indisputable that rebates have been paid by the lines 
 east of Ogden, from their proportion of such rates, as the Winnemucca to 
 Omaha rate, and some of those who have received such favors are not yet 
 old men. With this in mind, how does a traffic official explain the change in 
 the local Denver-Omaha rate from $65 per car to 33 cents per 100, which 
 means from $15 to $20 increase? 
 
 .The railways should make rates based on some element that the ordi¬ 
 nary mind can understand. For example, here is a published interstate rate 
 from Childress, Texas, to Denver, a distance of 591 miles, of $62.50 per 
 thirty-six-foot car. The same rate applies to Pueblo, 123 miles less haul; 
 also to Trinidad, 220 miles less, and the same rate applies from Texline to 
 Trinidad, a total distance of 123 miles. That is, the lines charge that sum 
 for hauling the business 591 miles or 123 miles. 
 
 The statement is made that the average earnings per ton per mile for 
 all lines in the United States for the year 1903 was 7.63 mills. As a matter 
 of information take for comparison four cattle rates, on five different rail¬ 
 ways in the cattle country. These rates are selected at random, without 
 reference to each other or any particular feature or condition. Rates might 
 be selected on the same roads that would show much greater revenue or even 
 
THE TRANSPORTATION TAX 
 
 17 
 
 less return. These four rates on the five railways show an average earnings 
 of 15.8 mills per ton per mile on the cattle traffic, or 8.17 mills per ton per 
 mile more than the average earnings per ton mile for the country last year. 
 
 Example of Cattle Rates—12 Tons, 24,000 Pounds Per Car. 
 
 Rates apply either direction. 
 
 
 d 
 
 W 
 
 
 d 
 
 
 
 OT* 
 
 o p 
 
 top 
 
 0 p 
 pv* 
 
 'I M 
 
 £P 
 
 
 P 
 
 W o 
 
 
 3k 
 
 From To 
 
 3 
 
 O 
 
 a 
 
 3 
 
 •d 
 
 a> to 
 ’■* 
 
 u o 
 o ® 
 
 rt- 
 
 Q* 
 
 O O 
 p Si 
 
 3 
 
 a> ® 
 
 3 
 
 “•0 
 ct> ® 
 
 
 
 ©° 
 
 . 
 
 . w 
 
 tn 
 
 w 
 
 
 w 
 
 M £ 
 
 • *3 
 
 • 
 
 '. V 
 
 
 
 • 5® 
 
 * 2* 
 
 * ® 
 
 * % 
 
 Union Pacific Ry.— 
 
 
 
 
 
 
 From Julesburg, Colo., to Omaha, Neb. 
 
 372 
 
 25 
 
 
 16 
 
 1.34 
 
 From Grand Island, Neb., to Omaha, Neb. 
 
 . 156 
 
 14y 2 
 
 
 22.3 
 
 1.85 
 
 From Cheyenne, Wyo., to Omaha, Neb. 
 
 519 
 
 33 
 
 
 15.3 
 
 1.27 
 
 From Rock River, Wyo., to Omaha, Neb. 
 
 615 
 
 
 85.80 
 
 14 
 
 1.17 
 
 Average . 
 
 A., T. & S. F. Ry.— 
 
 
 
 
 16.9 
 
 1.40 
 
 From Coolidge, Kan., to Pueblo, Colo.... 
 
 . 150 
 
 141/2 
 
 
 23.2 
 
 1.93 
 
 From Rocky Ford, Colo., to Kansas City. 
 
 . 581 
 
 31 
 
 
 12.8 
 
 1.07 
 
 From Dodge City, Kan., to Chicago. 
 
 . 827 
 
 44 
 
 
 12.8 
 
 1.07 
 
 From El Paso, Texas, to Trinidad, Colo . 
 
 . 520 
 
 
 77.00 
 
 14.8 
 
 1.23 
 
 Average . 
 
 
 
 
 15.9 
 
 1.32 
 
 Oregon Short Line Ry. Co. — 
 
 
 
 
 
 
 From Opal, Wyo., to Denver, Colo .. 
 
 . 470 
 
 
 104.50 
 
 22.2 
 
 1.85 
 
 From Provo, Utah, to Denver, Colo. 
 
 . 673 
 
 
 99.00 
 
 14.8 
 
 1.23 
 
 From Salt Lake City to Omaha, Neb. 
 
 .1,038 
 
 
 138.60 
 
 13.4 
 
 1.12 
 
 From Salt Lake City to Denver, Colo . 
 
 . 628 
 
 
 99.00 
 
 15.8 
 
 1.32 
 
 Average . 
 
 
 
 
 16.5 
 
 1.38 
 
 Denver & Rio Grande Ry. (mountain line) — 
 
 
 
 
 
 
 From Trinidad, Colo., to Denver, Colo . 
 
 . 210 
 
 
 38.50 
 
 18.3 
 
 1.52 
 
 From Grand Junction, Colo., to Pueblo, Colo.. .. 
 
 . 331 
 
 
 77.00 
 
 23.3 
 
 1.94 
 
 From Wolcott, Colo., to Denver, Colo . 
 
 . 319 
 
 
 66.00 
 
 20.7 
 
 1.72 
 
 From Rifle, Colo., to Leadville, Colo . 
 
 . Ill 
 
 
 50.60 
 
 45.6 
 
 3.80 
 
 Average . 
 
 Burlington & Mo. River Ry. — 
 
 
 
 
 26.9 
 
 2.24 
 
 From Denver, Colo., to Alliance, Neb . 
 
 . 238 
 
 18 
 
 
 18.1 
 
 1.51 
 
 From Denver, Colo., to Sheridan, Wyo...*. 
 
 . 568 
 
 34 
 
 
 14.3 
 
 1.20 
 
 From Denver, Colo., to Akron, Colo. 
 
 . 123 
 
 131/2 
 
 
 26.3 
 
 2.20 
 
 From Denver, Colo., to Crete, Neb. 
 
 . 463 
 
 33 
 
 
 17.1 
 
 1.42 
 
 Average . 
 
 Recapitulation— 
 
 
 
 
 18.9 
 
 1.58 
 
 Union Pacific Ry. 
 
 
 
 
 16.9 
 
 1.40 
 
 A., T. & S. F. Ry. 
 
 
 
 
 15.9 
 
 1.32 
 
 Oregon Short Line Ry. Co... 
 
 
 
 
 16.5 
 
 1.38 
 
 Denver & Rio Grande Ry. 
 
 
 
 
 26.9 
 
 2.24 
 
 Burlington & Mo. River. 
 
 
 
 
 18.9 
 
 1.58 
 
 Average five lines, twenty rates. 
 
 
 
 
 19.0 
 
 1.58 
 
18 
 
 THE TRANSPORTATION TAX 
 
 Effected by Combination. 
 
 The combination of railways to eliminate competition is something that 
 the cattlemen feel unkindly over. For example, in the Panhandle of Texas 
 a few years ago the two principal lines, the Santa Fe and the Ft. Worth & 
 Denver City Railway, made individual efforts to secure business independent 
 of each other. Men who had cattle twenty-five or forty miles from the dif¬ 
 ferent lines would be asked to drive to competing shipping points. As a con¬ 
 crete example, 2,500 two-year-old steers were bought at a point fifteen miles 
 from Panhandle City, Texas, on the Santa Fe and twenty-five miles from 
 Amarillo, on the Ft. Worth & Denver City. The rate from both points to 
 the Dakota destination was the same; the routing might be via either Denver 
 or Superior, Nebraska. It was desired that these steers should go via Den¬ 
 ver. The shipper saw the Ft. Worth & Denver City general agent, men¬ 
 tioned the purchase and asked him: “Shall I have these steers driven over 
 to Amarillo?”—his station for shipping. The reply was: “I am under bond 
 not to ask for any business that might be considered as belonging to the other 
 line.” So. the shipment was loaded at Panhandle, on the Santa Fe, and that 
 line received from the $100 rate $22 per car for hauling the business sixteen 
 miles to Washburn, the junction point, while the other line might have had 
 the entire revenue with less haul. It is plain that these two lines have formed 
 a pool or agreement governing the Panhandle, Texas, business, and the result 
 has been that the rate has been raised from $65 per thirty-six-foot car, just 
 a few years ago, to $100 per car this year—on the Amarillo group northwest¬ 
 ern cattle shipments. The conditions are rapidly reaching a point in Texas, 
 as well as in other territory, where these agreements can not stand, for the 
 business is falling off very fast, and will continue to do so. 
 
 — 
 
 AS TO SERVICE. 
 
 Among the wrongs which the shipper suffers at the hands of the trans¬ 
 portation companies, may be mentioned delays in furnishing cars, and often 
 denial of cars needed for forwarding shipments, unreasonable delay in 
 transshipment, and oppressive, unfair car service rules, embracing demur¬ 
 rage charges for delay on the receiver’s part in unloading freight. 
 
 Live stock shippers have suffered enormous losses as a result of inabil¬ 
 ity to secure adequate shipping facilities. Often, when, after repeated im¬ 
 portunities, the number of cars desired have been obtained, the character 
 and quality of cars furnished have been unsatisfactory and unfit to properly 
 carry the business. 
 
 Instances of unreasonable and inexplicable delays in transporting ship¬ 
 ments are so universally experienced that it is unnecessary to cite specific 
 cases at this time. 
 
 Railroads Not Ignorant. 
 
 Temporary improvement in service is often obtained as a result of force¬ 
 ful revolt on' the part of shippers, which clearly indicates a knowledge on 
 the carrier’s part of its negligence, and proves its ability to remedy faulty 
 service. 
 
 The National Association of Grain Dealers has made a demand on the 
 railroads for radical changes in the rules governing demurrage charges. The 
 association insists that the arrangement shall be reciprocal, the railroads 
 
THeJ transportation tax 
 
 ly 
 
 paying the shipper for the detention of freight on the basis that the shippers 
 are compelled to pay the railroads for the detention of cars. 
 
 For example, it is proposed that when a shipper makes verbal or written 
 application to a railroad company for cars to be loaded with any kind of 
 freight the cars shall be furnished within four to seven days following the 
 ; receipt of the application. On failure to do so the offending company shall 
 pay the shipper at the rate of $1 a car a day on a written demand for the 
 sum made within thirty days. 
 
 It is further demanded that when a railroad shall be offered freight in 
 less than carload lots it shall immediately be received and be carried forward 
 at the rate of not less than fifty miles a day, beginning with the day follow¬ 
 ing the receipt of the shipment. Failure to do this will subject the railroad 
 to a fine of $1 a car a day unless the delay is caused by accident. 
 
 Under the proposed rules the railroads are bound to give written notice 
 ;to the consignee of the arrival of his goods within twenty-four hours, and 
 failure to do so subjects the railroad to a fine of $1 a day for each car. 
 Railroads failing to deliver the cars for unloading within twenty-four hours 
 of arrival will have to pay a similar demurrage, while the consignee has 
 forty-eight hours after delivery in which to unload. The rules are similar 
 to those which have become a law in Virginia. 
 
 The railroads will, of course, pay no attention to a “demand” of this 
 nature. Why should they? 
 
 Permanent relief from wrongs suffered may be obtained only through 
 effective governmental regulation of, not only rates, but practices affecting 
 the cost of transportation. 
 
 AS TO COMBINATIONS. 
 
 Competition, the sole regulator of interstate commerce, that obstacle 
 against unreasonable rates of freight, that arch enemy of monopoly which 
 for years was so potent, is dead. If rates of freight on live stock formerly 
 '•fluctuated,” they “fluctuate” no more. They are and have been increased 
 from time to time until to-day they are in nearly all instances as high, and 
 in most cases higher than ever. Stealing upon you year by year, little by 
 little, the tax gatherer is constantly levying upon you additional and increased 
 tribute beyond the highest rate which competition fixed as reasonable. And 
 while doing it has cut off one privilege after another which were valuable, 
 so that to-day it is perhaps within the mark to say that it costs one dollar per 
 tiead more for transportation charges by rail.on grown cattle than it did in 
 the year 1898, and that amount more than the average for ten years next 
 preceding. Certainly this is true as applied to most of the cattle; and un¬ 
 questionably the producer pays the freight. 
 
 It requires no argument to show that it is entirely incorrect to say that 
 :he rates have increased—the railroads have increased them. Has the shipper 
 :iad any voice in it? Has anyone but the railroads had any voice in it? Has 
 :he shipper been consulted? Has anyone as representing the public in¬ 
 terests been consulted? Has competition, that erstwhile potent and subtle 
 power, been heard to utter a cry in behalf of the man who pays the freight? 
 
 These increased rates have been imposed at the will of the combined 
 ‘ailroad interests with no restriction except the danger of arousing so strong 
 
20 
 
 The transportation tax 
 
 a public sentiment as to lead to regulation by law. And the public has peiS 
 mitted it, has paid every demand of the railroad and is still paying it because 
 there is no relief; it cannot escape it. 
 
 During prosperous times the public can pay exorbitant freight charges 
 out of its business profits. During such periods the railroads invariably find 
 sufficient argument for advancing the rates a little more, because the country 
 is prosperous and can stand it. But how about the time when the business 
 men are making no profits? Must the shipper still pay the higher rates 
 because the increased revenues by reason of these rates has enhanced the 
 value of the railroad property? 
 
 So the stock shipper, for instance, who to-day is suffering from a de¬ 
 pression in his business, is confronted by the proposition that he must have 
 relief from these constantly increasing railroad rates, or suffer. 
 
 Cannot Stop Combinations. 
 
 It may be that when real competition existed some guaranty existed 
 against exorbitant charges, and that the remedy, therefore, was not so much 
 needed, but with competition eliminated the necessity for an adequate rem¬ 
 edy to take its place, is as much a necessity as was the competition. You 
 can not make competition by law. Every attempt of that sort will prove 
 futile, and the most that government can do against unlawful combinations 
 called trusts, is to provide the public a speedy and adequate remedy against 
 the evils of them, and to make the remedy as broad as the wrong, and to 
 put it in easy reach of the persons injured to invoke the remedy. The results 
 of railroad consolidation are not wholly evil. They are able to perform more j 
 perfect service at less cost than otherwise would be the case, but they do 
 not do it for less cost. They have thereby deprived the public of the very 
 benefit which it ought to have. 
 
 But when they combine together to fix and maintain rates which the 
 public must ultimately pay, and fix rates at too high a figure or so as to work 
 discrimination, the evil of the combination reaches the public, and it is this 
 evil against which a remedy is sought. 
 
 That freight rates are fixed and maintained by combinations of the rail¬ 
 roads through conference of traffic officials, can not be disputed. No sort - 
 of combination in this or any other country equals it in its far-reaching effect, j 
 Here is a trust which can be regulated by giving the people a remedy. 
 
 How Combines Work. 
 
 Through cut rates the packers were enabled for years to ship fresh 
 meat and packing house products from Missouri river points to Chicago 
 at about ISY 2 cents per 100, while the published 'rate from the same 
 point to Chicago was 23 V 2 cents. Later on, in 1901, one railroad made a con¬ 
 tract with the packers covering a period of seven years to haul their pro¬ 
 ducts at those rates, and other roads followed suit. By this means the 
 packers got a lower rate on the finished and more valuable product than the 
 shipper of live stock in the states of Iowa and Missouri for a zone 125 miles 
 east of the Missouri river (except on the Santa Fe line) and in addition 1 
 cent per mile on refrigerator cars, both ways, generally returned on fast 
 schedules and always returned empty. 
 
THE TRANSPORTATION TA^ 
 
 21 
 
 Traffic officials of several lines extending from Chicago west of the 
 Missouri river have tesetified that it is more profitable to the railroads to 
 carry live stock than dressed meat and packing house products at the same 
 rate. Instances might be multiplied. An examination of the circumstances 
 surrounding the live stock traffic will show innumerable discriminations and 
 preferences in addition to excessive rates. It was proven that J. J. Hill had 
 said that a railroad which .would charge an unreasonable and excessive rate 
 is a pirate. If so, this were indeed a land of pirates. Many of these evils 
 are sought to be adjusted by the railroads on the ground of so-called “com¬ 
 petition.” For example, that higher rates are justified on shipments over 
 shorter distances than longer distances, because of the competition at the 
 longer distance points; and the law permits this contention. What an out¬ 
 rage, when every intelligent man can see that it is a mere ruse through which 
 to hide an extortion by the iron grasp of monopoly in the name of competi¬ 
 tion! If a railroad can exact a much larger sum for hauling freight from 
 New York to Denver than it does for hauling from New York, through Den¬ 
 ver, to San Francisco, as they do in fact, and can justify it because of com¬ 
 petition at San Francisco, as they in fact seek to do, then where is there 
 competition at Denver? It simply proves the statement that where the 
 railroads are depended upon to create competition it results in monopoly 
 instead. 
 
 How Combines Are Made. 
 
 To the charge of unlawful combination, both the railroads and the 
 packers plead not guilty. This is but natural and affords no proof. 
 
 You know a tree by its fruits, and you discover a cause, often, by the 
 effect. Combinations and conspiracies are seldom proven by evidence that 
 the parties agreed in terms to do an unlawful thing, though if put to the 
 proof that the railroads have combined to increase and maintain these in¬ 
 creased rates, that character of evidence can be produced. The history of 
 the past fully proves it. The railroads in 1890, under the name of the Trans- 
 Missouri Freight Association, made a specific agreement to fix rates in a cer¬ 
 tain western territory and to eliminate competition under certain penalties 
 for disobedience by any member of the association. On March 22, 1897, the 
 Supreme Court of the United States decided that it was an unlawful agree¬ 
 ment. It was contended by the railroads that the agreement was not unlaw¬ 
 ful, because its object w r as but to maintain reasonable rates. This contention 
 the Supreme Court overruled, and it was held that its effect was to destroy 
 competition and was, therefore, unlawful. In the opinion it is said: 
 
 Railroads as Monopolies. 
 
 “It is true that, as to a majority of those living along its line, each railroad 
 is a monopoly. Upon the subject now under consideration, it is well said by 
 Judge Oliver P. Shiras, United States District Court judge, northern district of 
 Iowa, in his very able dissenting opinion in this case in the United States Cir¬ 
 cuit Court of Appeals as follows: 
 
 ‘As to the majority of the community living along its lines, each railway 
 company has a monopoly of the business demanding transportation as one of 
 its elements. By reason of this fact the action of the corporation in establish¬ 
 ing the rates to be charged largely influences the net profit coming to the 
 farmer, the manufacturer and the merchant, from the sale of the products of 
 the farm, tne work shop and manufactory, and of the merchandise purchased 
 
22 
 
 THE TRANSPORTATION TAX 
 
 and resold largely influences the price to be paid by everyone who consumes 
 any of the property transported over the line of railway. There is no other 
 line of business carried on in our midst which is so intimately connected with 
 the public as that conducted by the railways of the country. ... A railway 
 corporation engaged in the transportation of the persons and property of the 
 community is always carrying on a public business which at all times directly 
 affects the public welfare. All contracts or combinations entered into between 
 railway corporations intended to regulate the rates to be charged the public for 
 the service rendered must of necessity affect the pflblic interests. By reason 
 of this marked distinction existing between enterprises inherently public in 
 their character and those of a private nature, and further by reason of the 
 difference between private persons and corporations engaged in private pursuits, 
 who owe no direct or primary duty to the public and public corporations created 
 for the express purpose of carrying on public enterprises, and which in con¬ 
 sideration of the public powers exercised in their behalf, are under obligations 
 to carry on the work entrusted to their management primarily in the interest 
 and for the benefit of the community, it seems clear to me that the same test 
 is not applicable to both classes of business and corporations in determining the 
 validity of contracts and combinations entered into by those engaged 
 therein. ... In the opinion of the court are found citations from the reports 
 of the Interstate Commerce Commission, in which are depicted the evils that 
 are occasioned to the railway companies and the public by warfares over rate 
 charges, and the advantages that are gained in many directions by proper 
 conference and concert of action among the competing lines. It may be en¬ 
 tirely true that as we proceed in the development of public control over railway 
 traffic, methods will be devised and put in operation by legislative enactments 
 whereby railway companies and the public may be protected against the evils 
 arising from unrestricted competition and from rate wars which unsettle the 
 business of the community, but I fail to conceive the force of the argument 
 that because railway companies through their own action cause evils to them¬ 
 selves and the public by sudden changes or reductions in tariff rates they must 
 be permitted to deprive the community of the benefit of competition in securing 
 reasonable rates for the transportation of the products of the country. Com¬ 
 petition, free and unrestricted, is the general rule which governs all the ordinary 
 business pursuits and transactions of life. Evils as well "as benefits result 
 therefrom. In the fierce heat of competition the stronger competitor may crush 
 out the weaker; fluctuations in prices may be caused that result in wreck and 
 disaster; yet, balancing the benefits as against the evils, the law of competition 
 remains as a controlling element in the business world. That free and unre¬ 
 stricted competition in the matter of railroad charges may be productive of 
 evils does not militate against the fact that such is the law now governing 
 the subject. No law can be enacted nor system be devised for the control of 
 human affairs that in its enforcement does not produce some evil results, no 
 matter how beneficial its general purpose may be. There are benefits and there 
 are evils which result from the operation of the law of free competition be¬ 
 tween railway companies. The time may come when the companies will be 
 relieved from the operatiton of this law, but they can not, by combination and 
 agreement among themselves, bring about this change. The fact that the pro¬ 
 visions of the interstate commerce act may have changed in many respects the 
 conduct of the companies in the carrying out of the public business they are 
 engaged in does not show that it was the intent of Congress, in the enactment 
 of that statute, to clothe railway companies with the right to combine together 
 for the purpose of avoiding the effects of the competition on the subject of 
 rates.' 
 
 After quoting the foregoing with approval, the Supreme Court further: 
 says: 
 
 “The claim that the company has the right to charge reasonable rates, 
 and that, therefore, it has the right to enter into a combination with compet¬ 
 ing roads to maintain such rates, can not be admitted. The conclusion does 
 not follow from an admission of the premise. What one company may do in 
 the way of charging reasonable rates is radically different from entering into 
 
THE TRANSPORTATION TAX 
 
 23 
 
 an agreement with other and competing roads to keep up the rates to that 
 point. If there be any competition the extent of the charge for the service will 
 be seriously affected by that fact. Competition will itself bring charges down 
 to what may be reasonable, while in the case of an agreement to keep prices up, 
 competition is allowed no play; it is shut out, and the rate is practically fixed 
 by the companies themselves by virtue of the agreement so long as they abide 
 by it.” 
 
 How Combine Is Maintained. 
 
 These principles have been recently reaffirmed in the merger case. 
 
 Now, what followed? These same railroads shortly after this decision 
 organized a bureau of some sort, with a chairman, secretary and clerks, with 
 an office at St. Louis, which was composed of representatives of the several 
 railroads who had been parties to the aforesaid unlawful agreement, for the 
 ostensible purpose of PUBLISHING joint rates. This was carried on under 
 one name and another, and to-day is carried on under the name of the 
 Southwestern Traffic Committee, George W. Gale, chairman. Similar organ¬ 
 izations of the railroads serving other sections of the country exist. 
 
 The method of transacting the business is by meetings of the representa¬ 
 tives of the railroads, discussing of rates, rules and regulations, resulting 
 in the publication of rates in which all concur. The difference in the present 
 and former results to the public is in name only. They say there is no agree¬ 
 ment to be bound by such rates, and that the action of these committees 
 does not bind any one of the railroads. Admit that it is true, what of it? 
 They do see fit to carry out the common purpose, and this is what consti¬ 
 tutes the conspiracy. The public is interested in what happens to it—the 
 result, and not so much the particular method by which it is brought about. 
 The result is the unlawful act. Competition is destroyed. Speaking as to 
 Texas and adjacent territory, the result was that in February, 1898, these 
 railroads, by their joint purpose, published an increase of 2V 2 cents per 100 
 pounds in the freight rates on cattle. In December of the same year an in¬ 
 crease of 3 cents per 100 pounds, and again in March, 1903, another increase 
 of 3 cents per 100 pounds. Each of these rates were practically agreed to 
 by all the lines, and by their combination have since been maintained, so 
 that to-day we pay $18.70 more per car to the markets than we did previous 
 to the increase. Thus, these rates are higher than at any time for fifteen 
 years. It would have been impossible, under normal conditions of competi¬ 
 tion, for it to have occurred. 
 
 Proof of Conspiracy. 
 
 With respect to proof of conspiracy it was said in a well-considered case 
 many years ago: 
 
 “A combination of conspiracy may be proved by evincing a concurrent 
 knowledge and approbation, in the persons conspiring, of each other’s acts; and 
 it is most usually done by proof of the separate acts of several persons concen¬ 
 trating in the same purpose or particular object. The greater the secrecy that 
 is observed relative to the object of such conference, and the more apparent the 
 similarity of the means employed to effect it, the stronger is the evidence of 
 conspiracy.” 
 
 Certainly, then, the unlawful combination is proven. 
 
 That rate increases have been unreasonable and exorbitant is fully 
 shown by the opinion of the railroad commissions of states like Texas and 
 Iowa, which have refused to increase rates within those states, as a rule, 
 
24 
 
 THE TRANSPORTATION TAX 
 
 To-day the rates on beef cattle within the state of Texas for 500-mile haul is 
 26*4 cents, while the interstate rate for 506 miles from Fort Worth to Kan¬ 
 sas City is 36V 2 cents. Thus the combination of railroads has increased the 
 interstate rates, while the commissions, presumably acting fairly for both 
 the railroads and the people, have kept the rates within the states down to a 
 reasonable basis. 
 
 Since competition, as affecting interstate rates, is eliminated it would 
 seem reasonable to say that the public must either submit to unreasonable 
 exactions—to whatever the combination of railroads are pleased to exact, 
 or the people must rise up and demand of their representatives appropriate 
 relief. 
 
 The Remedy 
 
 PRESENT LAW INADEQUATE. 
 
 The question is, How to obtain relief from these evils? To enumerate: 
 
 First—Rates of freight are unreasonably high. 
 
 Second—Service has been most imperfect and inefficient. 
 
 Third—The shipper has no right to compel through rates over two or 
 more lines. 
 
 Fourth—The shipper cannot compel delivery of loaded cars to connect¬ 
 ing lines or the carrying through of his freight in such cars. 
 
 Fifth—There is no adequate remedy for these evils before the railroads, 
 by complaint to the management. What is obtained there is by grace. 
 
 Sixth—There is no remedy in law except to recover damages for delays 
 or injury to shipments, and to apply to the Interstate Commerce Commis¬ 
 sion for an order against unjust and unreasonable rates, which is not speedy 
 or adequate. 
 
 Seventh—There is no remedy, through the state law or state author¬ 
 ities, because Congress has exclusive power over interstate commerce. 
 
 Right to Reasonable Rates. 
 
 The right of the public to have no greater tax laid upon the products 
 of the ranch, the farm, the mines and the factories, as well as upon other 
 products and freight of the country than is just, is so firinly established 
 that no railroad owner or representative can be found who will question it. 
 They all admit the proposition, but, while doing so, insist upon naming the 
 amount themselves. 
 
 The proposition that the public is entitled to reasonable rates, coupled 
 with the proposition that the railroads shall fix the amount, is a rank ab¬ 
 surdity upon its face. The railroads contend that their rates are reason¬ 
 able—generally that they are too low. They affect to believ.e that the public 
 has no right to complain, or, at all events, that these complaints must be 
 passed on by the railroads themselves, which is equally absurd. 
 
 Getting down to the practical side of it. What can be, done about it? 
 Can the railroads be expected to lower the rates at the request of the ship¬ 
 per? Can the shipper better his condition by patronizing some other line? 
 Can he obtain redress in the courts? It has been shown that none of these 
 things will avail. He may file complaint before the Interstate Commerce 
 
THE TRANSPORTATION TAX 
 
 25 
 
 Commission, and may procure an order from that body that the rate is too 
 high. The order may finally be enforced by the court, but in the meantime, 
 he must continue to pay the same old rate, even after the Interstate Com¬ 
 merce Commission and the courts have decided that it is unreasonable. 
 
 There is no doubt but that the act to regulate commerce should be so 
 amended as to require the carriers to obey the orders of the commission, 
 until such orders are set aside by the courts; that is, make the commission's 
 orders in fact, what they are in theory: prima facie correct. When the 
 shipper obtains such order it is far more consistent with fairness that the 
 railroads should observe it, than that the shipper should continue paying a 
 rate fixed by the carrier that is prima facie unjust. In many states rates 
 are fixed by commissions, and in such cases they are enforced as prima facie 
 correct until set aside by order of the court. There is nothing new in the 
 proposition. 
 
 The Right to Fix Rates. 
 
 Assuming that the public has the right to reasonable rates, it stands 
 to reason that railroads which have so effectually effaced competition should 
 not have the right to fix the rates. To grant them that right is to deny the 
 light of reasonable rates to the public. Will it be contended that railroads 
 which have entered into unlawful combinations to drown competition, and 
 have succeeded in doing so, will, out of generosity, after the only controlling 
 element against unreasonable rates has been removed, fix reasonable rates? 
 The very question contains its answer. 
 
 In many hearings before the Interstate Commerce Commission, and fre¬ 
 quently in the press, railroad traffic men and general officers have given as 
 one reason for increasing rates that business conditions were prosperous, 
 values high, etc., and that the railroads were entitled to “share in the gen¬ 
 eral prosperity.” This has-been a pet phrase. To-day we have the lowest 
 value upon cattle, considering the improvement in their breeding, that has 
 prevailed in twenty years. Yet some of the traffic officers only recently 
 testified before the Interstate Commerce Commission that the rates on cattle 
 were entirely too low, and it was their intention to advance them whenever 
 they could agree among themselves upon the amount of the advance. If 
 there were anything in the contention that rates were increased in order to 
 enable the roads to participate in the general prosperity, then the con¬ 
 verse should be true. In days of adversity they should come to the shippers’ 
 relief, with lower rates. But it has been the experience of the shipper that 
 during periods of depression the railroads find it necessary to continue the 
 high rates in order to pay the dividends upon their increased valuation, due 
 to these same high rates, and thus keep their road from the hands of a 
 receiver. It will thus be seen that, from the railroad standpoint, the argu¬ 
 ments all work one way, and that is to advance rates. 
 
 Commission’s Original Powers. 
 
 It was generally understood at the time the Interstate Commerce Com¬ 
 mission was created, and many of the ablest legal authorities of the country 
 are on record in written opinions, affirming that it was vested with power 
 
26 
 
 THE TRANSPORTATION TAX 
 
 to correct rates, which it might determine, after investigation and hearing, 
 to be unlawful or unjust. The commission itself believed it possessed—and 
 it exercised without question—this power during the first ten years of its 
 existence. 
 
 In the eleventh annual report (1897) of the Interstate Commerce Com¬ 
 mission appears the following: 
 
 “But it (the Commission) further understood that when, as in this case, the 
 rates had been established by the carriers and afterwards challenged or com¬ 
 plained of as unreasonable and the question of unreasonableness had been tried, 
 the Commission could declare not only what rate was wrong, but what would 
 be right. That is to say, when a rate had been established by the carriers, chal¬ 
 lenged by or on behalf of the shippers, and tried by the Commission in a pro¬ 
 ceeding ordered and regulated as near as it may be in conformity with United 
 States court proceedings, the Commission had a right, and it became its duty, 
 when justified by the facts, to declare the rate wrong, decide what rate would 
 be right, and through the judgment of the court compel the carrier to perform 
 its legal duty to receive and carry property at rates which are reasonable and 
 just. 
 
 “The Commission exercised this power in a case commenced in the second 
 month after its organization and continued to exercise it for a period of more 
 than ten years, during which time no member of the Commission ever officially 
 questioned the existence of such authority or failed to join in its exercise. As 
 already stated, the authority of the Commission to modify and reduce an estab¬ 
 lished rate and to enforce a reasonable rate for the future was not questioned in 
 the answer of the defendant in the Atlanta rate case, decided March 30, 1896, nor 
 had it ever been denied in any of the answers made to more than four hundred 
 cases previously commenced, many of them alleging unreasonable and unjust 
 charges and praying the Commission to enforce a reduction and lower rates in 
 the future.” 
 
 Intent of the Framers. 
 
 Hon. J. D. Kernan, an eminent lawyer of New York, who was chairman 
 of the New York commission, from 1883 to 1887, was prominent in promot¬ 
 ing the enactment of the act to regulate commerce, and was, indeed, the 
 man who drew the original bill which passed. In his testimony before the 
 House committee in advocacy of the pending measures to amend the law, 
 on April 16, 1902, he said: 
 
 “I have had a good many experiences before the commission. In all cases, 
 up to the time that the Supreme Court made the decision in 1897, ten years 
 after the act was passed, neither the commission nor the railroads nor anybody 
 else took the position that they did not have the power to fix rates to the 
 extent that we now ask that it be given to them.” 
 
 Commission’s Power Curtailed. 
 
 Then came the contest in the courts as to construction of the statute, 
 and the decision of the Supreme Court, in 1897, that while Congress had the 
 constitutional right to confer power upon the commission to fix rates, which 
 is a strictly legislative function, yet it had not done so by the act to regulate 
 commerce, and that, while the commission had the power to decide that a 
 rate charged is unlawful and unjust and to order the carriers to cease and 
 desist from collecting such charge, it had no authority to order what rate 
 should be made for the future. Thus the law became emasculated. 
 
 It is not the past which materially affects the transportation of com¬ 
 merce, but the future. The shipping public is more interested in the prompt 
 discontinuance of unjust or unreasonable charges than it is in recovering ex¬ 
 cessive charges that have been paid. 
 
THE TRANSPORTATION TAX 
 
 27 
 
 For example: Suppose that complaint is made of a rate which is one 
 dollar, and the complaint is served upon the carrier and heard. The com¬ 
 mission reaches the conclusion that one dollar is unreasonably high, and 
 therefore violates the first section of the law, which requires that rates 
 shall be just and reasonable. It makes an order that the carrier shall cease 
 and desist from charging one dollar. If the carrier is disposed to make some 
 concession, or to adopt the recommendation, it does that. If it is disposed 
 to adhere to its position, and defend this rate, it does not. The carrier will 
 wait until a bill is filed to enforce the order, which is simply an order to 
 cease and desist, and the carrier will then try the case in the Circuit Court 
 and then in the Supreme Court. If the court of final resort sustains the 
 decision of the commission, which is simply to “cease and desist” from 
 charging one dollar, then the carrier may reduce its rate to 99% cents, and 
 thereby comply with the order of the commission and also the order of the 
 Supreme Court. 
 
 Courts Are Too Slow. 
 
 Under the present law the operation of the commission’s order is sus¬ 
 pended until it has passed through the various stages of litigation, which it 
 has been shown, have averaged in the various cases that have been taken 
 before the commission, a period of four years. In one instance (The United 
 States vs. Missouri Pacific Railway) in the Supreme Court, the case was 
 pending for more than nine years. Such delay of justice makes the operation 
 of the law of little practical value. 
 
 After proceeding in an effort to obtain justice, as cited above, and after 
 years of delay in the courts, long after the conditions have changed with 
 regard to the rate at issue, suppose that a complainant finally wins his con¬ 
 tention and gets the one-half cent reduction toward a fair and reasonable 
 rate of, say, 90 cents. What shall he do then? Proceed anew? So that after 
 he has gone to his final rest the next generation may acquire another fraction 
 of a cent in the direction of a lawful charge? What a farce! 
 
 The Supreme Court decision of 1897 curtailing the power of the commis¬ 
 sion, did not complete the demolition of the statute. The construction sub¬ 
 sequently placed by the Supreme Court upon the so-called “long and short 
 haul” provision of the act has deprived that section of all vitality. No vio¬ 
 lation of the long and short haul rule ever occurred because of competition, 
 
 | and the Supreme Court holds that competition, whether the competition 
 I of carriers or of markets, or what not, may constitute a dissimilarity of cir¬ 
 cumstances and conditions which may justify the carrier in charging more 
 for a short than for a long distance. It was supposed, when the act was 
 passed, that a carrier was thereby prohibited from making greater charge 
 for a shorter than a longer haul over the same line, and that flagrant dis- 
 ' criminations of that character would be stopped; but the law now does not 
 ■; reach this injustice. 
 
 After One More Provision. 
 
 The railroads have attacked the vital provisions of the law with such 
 success that it seems hardly worth their while to go further with their work 
 of destruction. There remains but one provision which thus far has with¬ 
 stood their onslaughts, and it is said that they will again seek to amend this. 
 
2§ 
 
 THE TRANSPORTATION TAX 
 
 the fifth section, in the next session of Congress. This provision prohibits 
 contracts, agreements or combinations, for pooling of freights or division of 
 earnings. Having experienced the great advantages of such combinations, 
 and realizing the benefits of concerted action, through the magnificent or¬ 
 ganizations which have been perfected at the cost of many thousands of 
 dollars, they have never been content to obey its mandate, but have con¬ 
 tinuously ignored and violated the spirit of the act, cunningly covering their 
 lawlessness so that prosecution has been frustrated. 
 
 Where “gentlemen’s agreements” and “traffic associations,” employed 
 for the “publication of uniform rates,” have not been sufficient to accom¬ 
 plish desired results, “mergers” or consolidation of lines have been resorted 
 to, until, at the present time, it is within the power of probably less than a 
 dozen men to absolutely dictate the transportation charges of the entire 
 country. 
 
 Such enormous and dangerous power, carrying with it the ability to 
 create or destroy a man, an industry or a community, and even regulate the 
 movement of population, cannot safely be lodged in private hands. The 
 time has come when the government must interpose the protection to which 
 the public is entitled. 
 
 Public Is Waking Up. 
 
 It is said that “the people will have what they want, when they know 
 what they want.” They are rapidly coming to the conclusion that they need 
 effective federal regulation of interstate commerce to replace existing license. 
 The people are commencing to realize that the freight rate is, in fact, a tax 
 on everything which enters into the life and commerce of the country; that 
 everything we eat, wear or use bears this tax. Some may escape, or evade, 
 other taxation, but everyone must “pay the freight.” This tax is levied, not 
 by the government, our only recognized taxing authority, but at the will of 
 a gradually decreasing number of individuals who control the railroads of 
 the country, who are to-day free from interference of federal regulation, 
 and are at liberty to levy tribute from the people to whatever extent they may 
 desire. After naming Morgan, Rockafeller, Harriman, Hill, Gould, Vander¬ 
 bilt, Cassett and two or.three others, the list of magnates who control the 
 transportation of this country and dictate the charges is complete. Sixty 
 per cent, of the railroad mileage of the country is controlled by five men. 
 
 The Industrial Commission of the United States, a special commission 
 composed of four members of the Senate, four members of the House of Rep¬ 
 resentatives and ten prominent citizens, charged with the duty of investi¬ 
 gating and reporting upon the industrial conditions of the country, after be¬ 
 tween three and four years of exhaustive investigation, in its report to Con¬ 
 gress, in February, 1902, signed by sixteen of the eighteen members, said: 
 
 “No denial whatever of the arbitrary and enormous power which the right 
 to make freight rates imposes can be entertained for a moment. A pertinent 
 question, however, is as to whether the exercise of such power by irresponsible 
 railroad managers, as at present, is reasonable. If, according to the statement 
 of the railroad interests themselves, the power to make freight rates involves 
 the right to make or break men, industries, and even the prosperity of the en¬ 
 tire States, how great is the necessity for adequate supervision, subject to 
 appeal to the courts. This is apparently recognized by the more conservative 
 representatives of the carriers themselves, as evidenced by testimony before the 
 Industrial Commission. 
 
THE TRANSPORTATION TAX 
 
 29 
 
 “tinder the circumstances at present prevalent this arbitrary power is exei*^ 
 cised by one party, namely, the traffic managers of the railroads in interest, 
 without any appeal whatever. . . . As against the claim that the exercise by 
 the commission of the right to prescribe rates involves the transfer of all rate^ 
 making power for the roads of the country to an administrative commission, it 
 may be urged that during the ten years that this power was supposed to exist 
 no such revolutionary effect was discernable. So long as the commission is re¬ 
 stricted to issuing orders only upon complaint and after investigation, it is 
 scarcely to be said that the roads will be deprived of their right to promulgate 
 rates in first instance for themselves. . . . 
 
 “The burden of complaint is at the present time that the railroads are the 
 sole arbiters as to reasonable rates, and- it seems illogical, therefore, however 
 expedient as a matter of policy it may be for them, to allege-the injustice of 
 such a situation as a ground for objection to conferring rate-making supervision 
 upon a government commission.” 
 
 POWER TO MAKE RATES. 
 
 The making of a rate is in the first instance a ministerial act—one be¬ 
 longing to the legislative department of the government—which in such 
 case may act through a commission. It is in no wise a judicial question until 
 called in question in court as being in violation of the constitution or law 
 affecting the matter, or manner of making the rate. The very fact of judicial 
 cognizance implies an existing rate. When a lawful commission has decided 
 in a lawful manner that the rate is unjust, unreasonable or discriminatory, 
 it should be empowered to name a rate which is lawful and not subject to the 
 objections, which should be the rate charged till set aside for sufficient 
 reasons. Any less regulation is of but little practical value to afford speedy 
 relief to the shipper as experience has shown under the present act to reg¬ 
 ulate commerce. Several bills have been introduced in Congress having these 
 purposes in view; commercial and industrial organizations have been in¬ 
 sisting upon ySuch bills for the last three sessions of Congress, but to no 
 avail. The arguments and contentions of senators and congressmen in op¬ 
 position to them have been various; sometimes ingenious; frequently as en- 
 marked onesidedness and sometimes rank ignorance of fundamental principles 
 thusiastic as if made by paid counsel for the railroads, generally exhibiting 
 of the government’s right, and, indeed, duty to regulate common carriers for 
 the public good. They have urged as an- objection to these bills that their 
 effect would be to allow the commission to make rates in such cases as were 
 tried before them, and then directed their arguments against that power being 
 given. 
 
 This is the only civilized country in the world having considerable rail¬ 
 road interests where interstate rates of freight, fares and charges are not 
 regulated and limited by law. Yet, paradoxical as it may seem, in nearly all 
 of the states rates of freight are either limited by statute or under the 
 control of a commission which may and does fix the rates on traffic within 
 such states locally. In other words, the people have spoken upon the sub¬ 
 ject, but not loud enough for Congress to hear. 
 
 Numerous cases have been decided by the Supreme Court in relation 
 to the right of Congress to supervise and regulate the charges of railroads. 
 The following citations are conclusive: 
 
30 
 
 THE TRANSPORTATION TAX 
 
 Power of Congress Over Interstate Commerce. 
 
 Congress has power to constitute tribunals inferior to the Supreme Court. 
 (Cons. U. S., section 8, clause 9.) 
 
 To regulate commerce with foreign nations and among the several states 
 and with the Indian tribes. (Cons. U. S., section 8, clause 3, article I.) 
 
 The making and fixing of rates is a legislative, and not a judicial func¬ 
 tion; and the decisions are uniform in declaring that statutes creating rail¬ 
 road commissions, and giving them the power to make and fix rates, are not 
 unconstitutional as delegating a legislative power which belongs only to the 
 legislature itself. (8 Am. and Eng. Ency. of Law, 911, etc.) 
 
 When the law has confided to a special tribunal the authority to hear and 
 determine certain matters arising in the course of its duties, the decision of 
 that tribunal, within the scope of its authority, is conclusive upon all others. 
 (Johnson vs. Towsley, 13 Wall, 72; 20 L. ed., 485.) 
 
 The legislature’s determination, either directly or indirectly, of what is 
 reasonable, is conclusive, subject only to charter rights and to the fact that 
 the rates established will give some compensation to the carrier. (Atty. 
 Gen. vs. Old Colony R. Co., 160 Mass., 62; 22 L. R. A., 112. Chicago & N. W. 
 R. Co. vs. Dey, 35 Fed. Rep., 866; 2 Inters. Com. Rep., 325; 1 L. R. A., 744.) 
 
 The uses of railroad corporations are public, and therefore they are sub¬ 
 ject to legislative control in all respects necessary to protect the public against 
 danger, injustice and oppression. (New York & N. E. R. Co. vs. Bristol, 151 
 U. S., 556; 38 L. ed., 269.) 
 
 The making and fixing of rates by either a legislature directly or by a 
 commission do not work a deprivation of property without due process of law. 
 (Munn vs. Illinois, 94 U. S., 113; 24 L. ed., 77. Davidson vs. New Orleans, 96 
 U. S., 97; 24 L. ed., 616, etc.) 
 
 Several of the state statutes, under state constitutions, containing nearly 
 identical provisions on the subject as the federal constitution, allowing state 
 railroad commissions to make and fix railway rates for such states, which said 
 rates were to be operative until set aside by the courts, have been upheld 
 as valid and constitutional by the United States Supreme Court. (See Pen¬ 
 sacola & A. R. Co. vs. State (Fla.), 3 L. R. A., 661, with extensive notes to 
 that case and notes to Winchester & L. Turnp. Road Co. vs. Croxton (Ky.), 33 
 L. R. A., 177.) 
 
 In the case of Munn vs. Illinois (94 U. S., 113, 24 L. ed., 77), the Supreme 
 Court of the United States, after a thorough review of the American and 
 English authorities, has laid down the following fundamental principles gov¬ 
 erning public carriers and other quasi-public institutions: 
 
 “1. Under the powers inherent in every sovereignty, a government may 
 regulate the conduct of its citizens toward each other, and, when necessary for 
 the public good, the manner in which each shall use his own property. 
 
 ‘2. It has, in the exercise of these powers, been customary in England from 
 time immemorial, and in this country from the first colonization, to regulate fer¬ 
 ries, common carriers, hackmen, bakers, millers, wharfingers, auctioneers, inn¬ 
 keepers, and many other matters of like quality, and in so doing to fix a max¬ 
 imum charge to be made for services rendered, accommodations furnished, and 
 articles sold. 
 
 “3. The fourteenth amendment to the United States constitution does not in 
 any wise amend the law in this particular. 
 
THE TRANSPORTATION TAX 
 
 31 
 
 “4. When the owner of property devotes it to a use in which the public has 
 * an interest, he-in effect grants to the public an interest in such use, and must 
 to the extent of that interest submit to be controlled by the public. 
 
 “5. The limitation by legislative enactment of the rate of charges for ser¬ 
 vices rendered in an employment of a public nature, or for the use of property 
 in which the public has an interest, establishes no new principle in the law, but 
 only gives a new effect to an old one.” 
 
 Thus the highest court has permanently established the broad principle 
 that the public has the right to regulate charges in all enterprises affected 
 with a public use. To this doctrine all the courts have steadfastly adhered. 
 In this leading case it was also held that the courts had no right to inter¬ 
 fere with the rates fixed by the law-making power. This doctrine, however, 
 has been since somewhat qualified in the case of Reagan vs. Farmers’ Loan 
 and Trust Company (154 U. S. 412, 38 L. Ed. 1028; 4 Inters. Com. Rep. 1028), 
 and other cases there cited, where it is held that when rates are confiscatory 
 the courts may so declare and relegate the matter back to the law-making 
 power for new-rates, by which a reasonable profit is left to the carrier. But 
 the principle that the legislative power, either directly or indirectly through 
 a commission, can fix rates of freight and passenger traffic within this con¬ 
 stitutional limitation, has been uniformly upheld in all the decisions of the 
 United States Supreme Court upon this subject. 
 
 Congress Alone Has Power. 
 
 Neither the executive nor the judicial branches of the government may 
 have power to regulate interstate transportation charges. No court can fix 
 a rate for the future; that authority can be given only to a commission by 
 Congress. 
 
 At the time that Congress created the new executive department of 
 Commerce and Labor, an attempt was made—by those who wished to finally 
 bury the Interstate Commerce Commission so deep that even a monument to 
 its memory would be irony—to place it under the jurisdiction and control of 
 the saijj department, subject to the dictation and control of a cabinet officer, 
 and subservient to the changing policies of varying political administrations, 
 and thus rob it of its non-partisan character. The law creating this com¬ 
 mission very carefully guarded this quality. It provided that not more than 
 three of the five commissioners may be of the same political faith, and makes 
 the appointment of the commissioners for terms of six years—two years 
 beyond the presidential term—and that its reports be made to Congress 
 direct, without passing through the hands of the secretary of an executive 
 department having power to suppress or amend the recommendations of the 
 commission. 
 
 When this attempt was made, such a storm of protest came from the 
 people that it was “dropped like a hot cake.” Further like attempts, if made, 
 'as likely they will be, should meet with a similar fate. 
 
 ATTEMPTS TO AMEND THE LAW. 
 
 Primary efforts to obtain legislation to strengthen the powers of the 
 Interstate Commerce Commission met with strong opposition from pra<> 
 
32 
 
 THE TRANSPORTATION TAX 
 
 tically all the railroads of the country. The objection to governmental regu¬ 
 lation was based solely upon a perhaps natural desire on the part of the 
 railroads for absolute freedom from all restraint in the conduct of their 
 business. Gradually, however, the foremost leaders in transportation—men 
 who look ahead and build for the future—have modified their views and have 
 taken a stand squarely on the side of government regulation. As a fair 
 example, the late Judge J. A. Logan, general counsel of the Pennsylvania 
 Railroad, and for many years the legal adviser and confidant of President 
 A. J. Cassatt, with regard to his view of the question, said in a public inter¬ 
 view in the Railway World of March 22, 1902: 
 
 “It (the measure referred to) may generally be stated otherwise as a 
 provision authorizing the Interstate Commerce Commission to put in force a 
 rate found by them to be just, subject only to the supervision of the* courts, 
 whereas now the commission has no power at all to make an order as to a 
 
 rate for the future, and its orders, even as to the past, cannot go into force 
 
 until after full hearing in the courts on new testimony; and the observation 
 has been that such hearings are capable of indefinite prolongation. For my 
 part, I have faith in the integrity of governmental agencies, especially those 
 of the dignity of the Interstate Commerce Commission. I believe not only 
 the shipper but the carrier needs governmental help. In short, it seems to 
 me the time has come when the government should resume the right of a 
 modrate control and supervision over the carriers occupying the government 
 highways and that this, in its operation, should reach forward as well as back¬ 
 ward—the carrier to have a reasonable return for his investment in the 
 agencies of carriers, and the shipper the assurance of a prompt service and a 
 
 reasonable rate, and the public to be protected by stability and uniformity in 
 
 all charges.” 
 
 Similar expressions have come from other prominent railroad men. 
 There are some, however, who refuse to concede that the shipper should 
 have any right of appeal from the carrier’s edict, or that the common carrier 
 is bound by any special obligation to the public. They hold that the rail¬ 
 road should be as free to conduct its affairs as are the butcher, the baker 
 or candle-stick maker to manage theirs. They refuse to discern the distinc- \ 
 tion established by law. Such men have wielded sufficient power with the 
 United States Congress thus far, to frustrate all attempts by the people to 
 secure remedial legislation. 
 
 Futile Attempts Made. 
 
 The record shows that in the Fifty-fifth Congress, commencing December, 
 1897, there were introduced the following bills tQ amend the act to regulate 
 commerce: 
 
 In the Senate—S. 1042, by Mr. Chandler; S. 1470, by Mr. Foraker; S. 
 1932, \>y Mr. Harris; S. 2018, by Mr. Cullom; S. 2342, by Mr. Allen; S. 3354, 
 by Mr. Cullom. 
 
 In the House—H. R. 3594, by Mr. Stark; H. R. 4060, by Mr. Kleberg; 
 
 H. R. 6655, by Mr. Sauerherring. 
 
 All of which were referred to committee, but none of which were reported 
 for action. 
 
 In the first session of the Fifty-sixth Congress, commencing December, 
 1899, bills amendatory of the act to regulate commerce were introduced as 
 follows: 
 
 In the Senate—S. 339, by Mr. Chandler; S. 1192, by Mr. Gear; S, 1882, by 
 Mr. Berry. 
 
THE TRANSPORTATION TAX 
 
 33 
 
 In the House—H. R. 95, by Mr. Terry; H. R. 108, by Mr. Kleberg; H. R. 
 2540/ by Mr. Sherman; H. R. 8359, by Mr. Smith. 
 
 All of which were referred to committee and there permitted to die. 
 
 Public Takes a Hand. 
 
 About this time the popular movement commenced among the leading 
 commercial and industrial organizations of the county to secure some action 
 by Congress to mend the defects in the law which had been found by the 
 Supreme Court. Realizing that the railroads were strongly entrenched in 
 both branches of the national legislature, and, at that time, particularly in 
 the Senate, it was determined to organize a powerful and influential union 
 of shippers to present their case to Congress. 
 
 An association, known as the League of National Associations, was 
 formed, under the auspices of which the Interstate Commerce Law Convention 
 was held, in which about forty of the leading commercial and manufacturing 
 associations of the United States took part, and the membership of which 
 has since grown to more than 300 bodies of organized shippers. A bill to 
 amend the interstate commerce law was framed by this organization and on 
 December 12, 1900, it was introduced in the Senate by Hon. S. M. Cullom, 
 of Illinois, known as “the Cullom bill,” S. 1492. 
 
 Adverse Railroad Influence. 
 
 This measure passed into the hands of the Senate committee on inter¬ 
 state commerce, which was composed of eleven members, eight Republicans 
 and three Democrats. Of the eight majority members six were railroad offi¬ 
 cials, or were known to be intimately connected with the transportation inter¬ 
 ests. The fate of the bill was fixed from its birth. Notwithstanding the most 
 vigorous efforts of the business people, no interest in the subject could be 
 aroused in the committee! Brief hearings were held, but the testimony had 
 no effect. 
 
 In the meantime, railroads were increasing rates in every conceivable 
 way and thus new bases for additional rates were created; the public was 
 more and more oppressed by these exactions. Railroad earnings were rapidly 
 increasing, both from higher rates and increased volume of traffic, and rail¬ 
 road securities enormously increasing in value. The consequence was that 
 bonds and stocks were climbing up and up. Additional capitalization came 
 forth in the form of new bonds and stock on which the public must pay inter¬ 
 est and dividends. Consolidations of different properties and large issues 
 of stocks and bonds came so fast that it was impossible for the ordinary 
 mind to keep up with it. The feeble protests of unfavored shippers scarcely 
 produced a vibration in this maelstrom of speculation and grab. Too many 
 senators and congressmen were affected by railroad blandishments and in 
 easy reach of accommodations for themselves and friends; many had become 
 counselors in “high finance,” -while others were busy making money in specu¬ 
 lations to pay for expenses, present or prospective, of elections, and, on the 
 whole, is it any wonder that the public interest was ignored and the unfa¬ 
 vored shipper sat upon and crushed. 
 
 Undaunted by previous failure, the allied shippers’ organizations, with 
 augmented numbers, proceeded again to promote the desired legislation in the 
 
THE3 TRANSPORTATION TAX 
 
 34 
 
 Fifty-seventh Congress. Believing that the Cullom bill had, perhaps, been 
 too comprehensive and drastic in its provisions, a greatly simplified mea’sure 
 was prepared and introduced simultaneously in both branches of Congress; 
 in the Senate by Hon. K. Nelson of Minnesota, known as S. 3575, and in the 
 House by Hon. J. B. Corliss of Michigan, known as H. R. 8337. 
 
 Elkins Bill a Substitute. 
 
 < 
 
 Exhaustive hearings upon these bills were held by both the Senate and 
 House committees, and testimony in support of the needed legislation proved 
 very forcible and convincing. As a result, a substitute measure was pre¬ 
 pared and introduced by Senator S. B. Elkins of West Virginia, known as 
 S. 3521, containing the vital principles* of the Nelson-Corliss bills, which, 
 after amendment so as to eliminate the provision giving to the commission 
 power to correct rates, passed and became a law. 
 
 Principal Benefit to Railroads. 
 
 The requirements of the law since the passage of the Elkins act' have 
 generally been complied with, the result of which, as stated by the commis¬ 
 sion in its annual report of 1903, has been that “The maintenance of the 
 published schedules has added many millions of dollars to the net income 
 of the railways.” 
 
 Speaking of the Elkins act, the commission in its annual report of 1903, 
 among other things, states that: 
 
 “In its present form the law appears to be about all that can be provided 
 against rate-cutting in the way of prohibitive and punitive legislation. Unless 
 further experience discloses defects not now perceived, we do not anticipate 
 the need of further amendments of the same character and designed to accom¬ 
 plish the same purpose. 
 
 “This does not mean that preferences are not longer secured of the nature 
 which the recent law aims to better prevent. We are only saying that tariffs as 
 published and filed are now generally observed. But in some cases the tariffs 
 themselves are so framed and contain such provisions as to permit preferences 
 without departing from their terms.” 
 
 After remarking further upon the same subject the commission uses this 
 forcible and impressive language with respect to the needed amendments 
 of the act in interest of the public, so as to afford a remedy against unreason¬ 
 able and discriminatory rates and charges, viz.: 
 
 Provided No Real Remedy. 
 
 “While this is distinctly true and quite satisfactory so far as it goes, it 
 must be borne in mind that the other class of offenses which the original act 
 prohibited are not at all restrained by the amendment in question. Valuable 
 as this law is in the direction and for the purposes above outlined, it has added 
 nothing whatever to the power of the commission to correct a tariff rate which 
 is unreasonably high or which operates with discriminating effect. It greatly 
 aids the observance of tariff charges, but it affords no remedy for those who are 
 injured by such charges, either when they are excessive or when they are in¬ 
 equitably adjusted. If the tariffs, published and filed as the law directs, are en¬ 
 forced against all shippers alike, the authority of the commission to require 
 such tariffs to be changed remains just as ineffectual as it was before this legis- 
 ' lation was enacted. This is the point to which 4he attention of the Congress 
 has been repeatedly called; this is the defect in the regulating statute which de¬ 
 mands correction. In previous reports this question has been frequently and 
 fully discussed. We have commented at length upon the weakness and inade¬ 
 quacy of the law as its provisions have been construed by the courts. We have 
 
THE TRANSPORTATION TAX 
 
 35 
 
 carefully pointed out the amendments which we deem essential and explained in 
 detail the reasons for our recommendations. We are unable to add anything 
 of value to the presentation heretofore made. Our duty in this regard has been 
 performed. Adhering to the views so often expressed, we repeat what was said 
 
 a year ago. 
 
 “Were it deemed possible to add weight to previous recommendations or 
 to emphasize the need for their prompt adoption, this portion of our report 
 might be greatly extended. It is not believed, however, that this subject can 
 be more forcibly presented or the situation more clearly explained than has 
 been done in former reports. If the representations already made do not in¬ 
 duce favorable action it is certainly not the fault of the commission. A sense 
 of the wrongs and injustice which can not be prevented in the present state of 
 the law, as well as the duty enjoined by the act itself, impels the commission to 
 reaffirm its recommendations for the reasons so often and so fully set forth in 
 previous reports and before the congressional committees. Moreover, in view 
 of the rapid disappearance of railway competition and the maintenance of rates 
 established by combination, attended as they are by substantial advances in 
 the charges on many articles of household necessity, the commission regards 
 this matter as increasingly grave, and desires to emphasize its conviction that 
 the safeguards required for the protection of the public will not be provided 
 until the regulating statute is thoroughly revised.” 
 
 PENDING LEGISLATION. 
 
 The allied shippers’ organizations, determined to finally accomplish relief, 
 again made concerted attack upon the Fifty-eight Congress. A measure was 
 framed which is confined to the question of restoring to the commission the 
 power to correct rates. It has been introduced in the Senate by Hon. J. V. 
 Quarles of Wisconsin, known «as S. 2439, and in the House by Hon. H. A. 
 Cooper of Wisconsin, known as H. R. 6273. 
 
 These bills read as follows: 
 
 A Bill Further to Define the Duties and Powers of the Interstate Commerce 
 
 Commission. 
 
 Be it enacted by the Senate and House of Representatives of the United 
 States of America in Congress assembled. That any order made by the Inter¬ 
 state Commerce Commission, after hearing and determination had on any peti¬ 
 tion now pending or hereafter presented, pursuant to section thirteen of an Act 
 entitled “An act to regulate commerce,” approved February fourth, eighteen 
 hundred and eighty-seven, declaring any existing rate or rates in said petition 
 complained of for the transportation of persons of property, or any regulation 
 or practice affecting such rates, or facilities afforded in connection therewith, 
 to be unjustly discriminating or unreasonable, and declaring what rate or rates, 
 regulation, or practice affecting such rate or rates, would be just and reason¬ 
 able, and requiring them to be substituted therefor, shall become operative and 
 be observed by the party or parties against whom the same shall be made 
 within thirty days after notice, or, in case of proceedings for review, as here¬ 
 inafter provided, then within sixty days after notice; but such order may at any 
 time be modified, suspended, or revoked by the commission upon full hearing 
 of all parties in interest. * 
 
 Sec. 2. That when the rate substituted by the commission as hereinbefore 
 provided is a joint rate, and the carriers, parties thereto, fail to agree upon the 
 apportionment thereof among themselves within twenty days after notice of 
 such order, the commission may issue a supplemental order declaring the por¬ 
 tion of such joint rate to be received by each carrier party thereto, which order 
 shall be observed by such carriers. When the order of the commission pre¬ 
 scribes the just relation of rates to or from common points on the lines of the 
 several carriers parties to the proceeding, and such carriers fail to notify the 
 commission within twenty days after notice of such order that they have 
 
36 
 
 THE TRANSPORTATION TAX 
 
 agreed among themselves as to the changes to be made to effect compliance 
 therewith, the commission may issue a supplemental order prescribing the rates 
 to be charged to or from such common points by either or all of the parties to 
 the proceeding, which order shall be observed by the carriers concerned. 
 
 Sec. 3. That every order, as to its justness, reasonableness, and lawfulness, 
 shall be reviewable by any Circuit Court of the United States for any district 
 through which any portion of the road of any carrier, named in such order 
 shall run, to which a petition filed on its equity side, within twenty days from 
 the service of such order, shall be first presented by any party interested. It 
 shall be the duty of the commission, within twenty days after notice, to cause 
 to be filed in any court to which such petition shall have been so presented a 
 duly certified copy of its entire record in connection with the order to be re¬ 
 viewed, including petition, answers, testimony, report and opinion of the com¬ 
 mission, its order, and all other papers whatsoever in connection therewith. 
 The court shall thereupon proceed to hear the same upon petition, record, and 
 testimony returned by the commission; or, in its discretion, may, upon the ap¬ 
 plication of either party and in such manner as it shall direct, cause additional 
 testimony to be taken; and thereupon if, after hearing, said court shall be of 
 the opinion that said order was made under some error of law, or is, upon the 
 facts, unjust or unreasonable, it shall modify, set aside, or annul the same by 
 appropriate decree; otherwise the petition shall be dismissed. Pending such 
 review, however, the court may, upon application and 1 hearing, if in its opinion 
 the order is clearly unlawful or erroneous, suspend said order. Any party to 
 the cause may, within thirty days of the rendition of any final decree of said 
 court, appeal to the Supreme Court of the United States, which court shall pro¬ 
 ceed to hear and determine such appeal. But neither the order of the Circuit 
 Court nor the execution of any writ or process thereon shall be stayed or sus¬ 
 pended during the pendency of such appeal. The said several courts of the 
 United States shall be and are vested with full jurisdiction and all necessary 
 powers in the premises. The case in both the Circuit Court and the Supreme 
 Court shall have precedence over all except criminal cases. 
 
 Sec.4. That the defense in all such proceedings for review shall be under¬ 
 taken by the United States district attorney for the district wherein the action 
 is brought, under the direction of the attorney-general of the United States, 
 and the costs and expenses of such defense shall be paid out of the appropria¬ 
 tion for the expenses of the courts of the United States. The commission may, 
 with the consent of the attorney-general, employ special counsel in any pro¬ 
 ceedings under this act, paying the expense of such employment out of. its 
 own appropriation. 
 
 Sec. 5. That if any party bound thereby shall refuse or neglect to obey or 
 perform any order of the commission mentioned in section one of this act at 
 any time while the same is in force, obedience and performance thereof shall be 
 summarily enforced by writ of injunction or other proper process, mandatory, 
 or otherwise, which shall be issued by any Circuit Court of the United States 
 upon petition of said commission or of any party interested, accompanied by a 
 certified copy of the order alleged to be violated and evidence of the violation 
 alleged, and in addition thereto the offending party shall be subject to a penalty 
 of five thousand dollars for each day of the continuance of such violation, 
 which, together with costs of suit, shall be recoverable by said commission by 
 action of debt in any Circuit Court of the United States, and when so recovered 
 shall be for the use of the United States. 
 
 Sec. 6. That all acts or parts of acts in conflict with the provisions of this 
 act are hereby repealed, but such repeal shall ndt affect causes now pending in 
 court nor rights wnich have already accrued, but such causes shall be prose¬ 
 cuted to a conclusion and such rights enforced in a manner heretofore provided 
 by law. All existing laws relative to testimony in cases or proceedings under 
 or connected with the act to regulate commerce shall also apply to any case or 
 proceeding authorized by this act. 
 
 Sec. 7. That this act shall take effect from its passage. 
 
 What the Bill Will Do. 
 
 It will be seen that this bill contemplates the following provisions; 
 
THE TRANSPORTATION TAX 
 
 37 
 
 First—That the commission shall have power to correct a rate which it 
 may find to be unlawful, unjust or discriminative, and that its orders shall 
 become promptly operative. 
 
 Second—That the commission may determine the division of a joint rate 
 when carriers fail to do so. 
 
 Third—That the orders of the commission shall be subject to review by 
 the courts and may be stayed or suspended pending review. 
 
 Fourth—That orders of the commission may be enforced by injunction 
 or other proper process, and violation thereof shall subject the offending 
 party to fine. 
 
 Is Fair to the Railroads. 
 
 Under the present law the carriers exercise, without restraint, the initia¬ 
 tive in rate making. There is no proposition to change the law in this respect. 
 It is proposed that the commission shall be made competent to act effectively 
 as an arbitrator, to decide questions as to the lawfulness of an existing rate 
 S which js complained of. The proposed amendment imposes no hardship upon 
 the carrier and his interests are fully protected by right of appeal to the courts; 
 
 I he has ample protection against enforcement of “confiscatory” or unremuner- 
 ative rates which might be fixed by the commission. 
 
 Railroad Arguments Against Legislation. 
 
 The demands of the shipping public have been met by some members 
 of Congress with the objection of the railroads to such legislation, that they 
 believe no amendment is needed. This is natural and to be expected, but 
 the force of it is not in the objection itself, but in the influence behind it. 
 Any one who admits that railroad regulation is right in principle can not by 
 proof or argument controvert the proposition that the act should be amended 
 as proposed by these bills. His argument must of necessity be based upon 
 the premise that regulation is wrong in principle. This is the effect of the 
 contentions. Not one of them dare go before the people upon such a plat¬ 
 form. The specious arguments, made in justification of not having amended 
 the act, are born of the desire that the railroads shall remain in effect un¬ 
 restricted in the charges they make and service they perform, as applied to 
 interstate traffic. 
 
 Objections Answered. 
 
 One of the objections which has been made to amending the law is the 
 ! contention that the present law is not enforced. As an example of this, A. C. 
 
 | Bird, Director of Traffic of the Gould lines, in an address before the twelfth 
 annual convention of state railway commissioners, held at Milwaukee, May 
 28, 1900, on the subject, chosen by himself, “Enforcement of the Interstate 
 Commerce Law,” stated: 
 
 r "The requirements of the law as it now stands appear so simple, just and 
 complete that it seems useless to attempt additional legislation until the reason 
 why it is not satisfactorily enforced is ascertained and made plain to the peo¬ 
 ple, especially to our lawmakers. . . . The fundamentals of the law are few, 
 apparently simple and just. Reduced to a single sentence: Rates must be fair 
 |per se, and relatively fair as between persons, places and articles. All else was 
 probably intended as mechanism of enforcement. These requirements commend 
 themselves to every fair-minded person. To a superficial observer the wonder 
 is that such simple requirements are not complied with by the railways from 
 purely business motives. My answer is, the law was so drawn as to make }t 
 
38 
 
 THE TRANSPORTATION TAX 
 
 largely inoperative, especially so when considered iti connection with the Sher¬ 
 man anti-trust act.” 
 
 If to this statement it be added that the construction given to the act 
 by the courts leaves the commission without the power to find what a proper 
 rate is, or to enforce its finding, the statement is correct. Therefore the con¬ 
 clusion is irresistible that the law should be amended so as to make it 
 enforcible, or it should be repealed. The command of the law that rates shall 
 be just, fair and reasonable, without the means whereby it may be enforced, 
 is a worthless enactment, as experience has conclusively shown. 
 
 Conditions vs. Theories. 
 
 Another objection to amending the act so that the commission may find, 
 upon due hearing of a complaint what the rate should be, is that this would 
 be to condemn the railroad in the given instance before it is adjudged guilty. 
 This contention is conceived in the brain of an advocate against any regula¬ 
 tion, because if the principle be carried to its logical end, no relief can ever 
 be had. The making of a rate is a legislative and not a judicial act, hence 
 it must, in any event, be determined by some legislative agency and not by 
 a court. The manner of the investigation may, as it does, take the form of 
 judicial investigation, but that does not alter the case; the finding of what 
 a rate for future application should be is a legislative-ministerial act—a full 
 hearing with opportunity to produce all possible evidence without limit is 
 given, and it is only after such hearing that the proper rate to be applied is 
 determined, as provided by the proposed amendments of the act. As has 
 been shown from the reports of the commission to Congress, while the 
 power to hear complaints is given, the power to make an order requiring a 
 particular rate, and to designate the proper rate, does not exist. Without it 
 the shipper has no rights, because he has no remedy to compel the carrier 
 to do what is just, fair and reasonable, but is left to the tender mercies of 
 the carrier, whose demands are only limited by what the traffic will bear and 
 still move. 
 
 Put Shipper and Carrier on Equal Ground. 
 
 Another and favorite argument in opposition to amending the act is that 
 the railroad rates are not, in fact, too high; that the law against discrimina¬ 
 tions and preferences only applies to those which are unjust, and that the 
 railroads must be permitted to regulate their own business and to themselves 
 determine what is just, fair and reasonable. Again this argument reaches 
 back to and supports merely the proposition that there should be no regula¬ 
 tion. The shipper should not have the right to fix the rate; his self-interest 
 would influence him to make it too low; so the carrier’s self-interest may 
 induce it to make the rate too high. The duty of the government is to pro¬ 
 vide a body clothed with the power and charged with the duty to investigate 
 complaints against unreasonable and unlawful rates and to determine the 
 fact of their fairness. This the government has done, and left the matter 
 there, without the commission having the power to find the proper rate or 
 to enforce it. It is plain that the government should make the law complete 
 by empowering the commission on such hearings to find the proper rate and 
 enforce it. It is no answer to say that the rates are already fair. If they 
 
THE TRANSPORTATION TAX 
 
 39 
 
 aie, no finding to the contrary will probably be made, and in cases where they 
 are unfair the shipper is entitled to immediate relief. 
 
 Again, it is contended that if the commission should find a rate too high 
 and reduce it, and its decision turn out to be wrong, the carrier would have 
 been deprived of its just revenue, and this is urged as a reason for with¬ 
 holding the power from the commission to enforce its orders when made. 
 
 There are three sufficient answers to this. 
 
 First—If the commission, an impartial body, finds a rate unfair, such 
 finding is prima facie correct, and it is more in consonance with justice that 
 the carrier obey it than that the shipper shall continue to pay the higher 
 rate found to be unfair. 
 
 Second—The commission is much more apt to be correct in such a case 
 than the court, because of its greater capacity and facilities for proper ascer¬ 
 tainment of the correct rate. 
 
 Third—The proposed amendment gives the carriers the right to present 
 the record of the case made before the commission to a Circuit Court of the 
 United States for review before the commission’s order becomes effective, 
 and empowers the court to suspend the commission’s order in a proper case. 
 
 A Restraint Upon Advances. 
 
 It has been contended by some that if this remedy is made complete the 
 commission will be overwhelmed with a flood of complaints, and that every 
 rate in the country will come under investigation upon complaints filed. If 
 so, then it is because of widespread dissatisfaction with existing rates, which 
 affords only the stronger reason that the public be given a remedy. But it 
 is by no means certain that any extraordinary number of complaints would 
 be filed. If the carriers know that a complete and speedy remedy exists 
 against an unreasonable or discriminatory rate, increases will not be so 
 readily made where not justified. The remedy will prove a preventive one, 
 and traffic men will be slow to make rates which cannot be sustained. “An 
 Dunce of prevention is worth a pound of cure.” 
 
 Other objections are urged to such amendments as are necessary, but 
 -educed to their last analysis they are merely objections to any real regula¬ 
 tion of rates and have little or no merit. No law, however beneficent, can 
 De enforced without some hardship in some cases; the imperfections of 
 luman institutions make it so; it is at last a question of the greatest good 
 o the greatest number, coupled with a preservation of constitutional rights. 
 
 In cases of state regulation of local rates, the manner in which such 
 •egulating statutes work is demonstrated; it is nothing new. The whole 
 iuestion is: Will Congress bow to the command of the railroads or act for 
 ;he public good? The matter at last is in* the hands of the people. Elect 
 lone but sound, impartial men upon every question. 
 
 State Regulation Has Been Successful. 
 
 Comparison of the state and interstate charges for service in states 
 yhich actually do control transportation rates, such as Iowa, Texas, etc., 
 ndicate an enormous increase in the interstate rates during the past few 
 r ears, while the charge for service within the state has not been increased, 
 ind in many instances has been lowered. 
 
 Contention that the building of railroads would be retarded in conse- 
 
THE TRANSPORTATION TAX 
 
 46 
 
 quence of federal regulation of charges for service may be conclusively dis¬ 
 puted by pointing to the experience in states where regulation has been 
 enforced, particularly that of Texas, where under the “Stock and Bond Law,” 
 limiting the issue of stocks and bonds to the money actually invested, and : 
 subject to the law whereby the state railroad commission actually fixes the 
 rates, the building of railroads and extension of lines has been greater than 
 in any other state. From June 30, 1902, to December 31, 1903, there was 
 constructed in Texas 677 miles of road. For the year ending June 30, 1902, 
 500 miles, and for previous year 359 miles. 
 
 Status of the Measure. 
 
 Believing that the Senate will prove receptive toward a measure of this 
 character which may come to it from the House, the efforts to secure action 
 upon the bill were, during the last session, concentrated upon the House, 
 and especially upon its committee on interstate and foreign commerce, in 
 the hands of which it rests. 
 
 The personnel of this committee, in its majority, is hostile • to such 
 
 legislation. 
 
 The committee, as constituted, is 
 —Republicans.— 
 
 *W. P. Hepburn of Iowa, Chairman. 
 *J. S. Sherman of New York. 
 
 *1. P. Wanger of Pennsylvania. 
 
 *J. R. Mann of Illinois. 
 
 W. C. Lovering of Massachusetts. 
 *F. C. Stevens of Minnesota. 
 
 *C. H. Burke of South Dakota. 
 
 J. J. Esch of Wisconsin. 
 
 F. W. Cushman of Washington. 
 
 *T. B. Kyle of Ohio. 
 
 C. E. Townsend of Michigan. 
 
 as follows: 
 
 —Democrats.— 
 
 R. C. Davey of Louisiana. 
 
 W. C. Adamson of Georgia. 
 
 D. W. Shakleford of Missouri. 
 
 W. H. Ryan of New York. 
 William Richardson of Alabama. 
 W. B. Lamar of Florida. 
 
 From evidence which has been placed before us we are led to believe 
 that the representatives whose names are marked with an asterisk (*) are ■; 
 prejudiced against the legislation sought—most of them are unalterably \ 
 
 opposed to it. 
 
 Chairman of House Committee Antagonistic. 
 
 Chairman Hepburn, as the record of hearings before his committee upon \ 
 similar measures clearly proves, is an enemy to the principle of governmental 
 regulation of interstate transportation rates. He persists in viewing the rail¬ 
 road as upon a plane with all corporations or business individuals. 
 
 The record shows that when Mr. T. W. Tomlinson of Chicago, represent¬ 
 ing the national live stock interests, testified on April 14, 1902, Chairman 
 Hepburn asked him: 
 
 “Do you know of any other commission that was ever created to which ^ 
 such an extraordinary and immense power was given as has been proposed 
 here? The railroad interests of the United States represent possibly ten 
 billions of dollars. The value of that railroad property is dependent upon < 
 its earning capacity. Its earning capacity must be dependent upon its 
 charges. Now, where has any like power to this ever been conferred upon 
 three men?” [Note.—The Interstate Commerce Commission consists of five 
 members.] 
 
THE TRANSPORTATION TAX 
 
 41 
 
 Again, when Mr. C. N. Chadwick of New York was testifying in behalf 
 of the Manufacturers’ Association of New York, on April lGth, 1902, Chair¬ 
 man Hepburn said: “Have you given any thought to the effect that it- (the 
 bill advocated) might have on future construction of railroads? Would you 
 go into the business of putting large amounts of capital into them when you 
 knew that there was a commission, whose action might be detrimental to 
 them and which might arbitrarily say whether or not they should be profit¬ 
 able? Would you be willing to establish A PRIVATE BUSINESS which would 
 be subject to the arbitrary decision of a commission?” 
 
 When Mr. R. W. Higbee of New York testified in behalf of the National 
 Wholesale Lumber Dealers’ Association, on April 17, 1902, Chairman Hepburn 
 said: “This commission would not, in any event, have the power to regulate 
 YOUR charges or YOUR profits. Would you be content if there was a propo¬ 
 sition to supervise YOUR business and YOUR charges?” 
 
 These quotations from the record, and numerous others there found, 
 convict the chairman of strong prejudice against legislation of this character. 
 
 Bill Held Up. 
 
 Although the pending bill, H. R. 6273, was introduced and referred to 
 the committee on December 8, 1903, the most strenuous efforts on the part 
 of its friends, continuing up to the close of the session in April, 1904, did 
 not avail to gain any recognition for it further than the passage of a resolu¬ 
 tion that hearings shall be held, the time not being set. It is probable .that 
 an attempt will be made to delay the commencement of these hearings as 
 long as possible after the opening of the session next December, and then 
 retard their progress until the close of that session. This program has been 
 successfully carried out during the past five or six years, when the pressure 
 has been strong for recognition of like measures. If the opposition encoun¬ 
 tered in the House committee could be overcome, and this bill be reported 
 to the House, there is no doubt of its passage by that body by an overwhelm¬ 
 ing majority. 
 
 Situation in the Senate. 
 
 The bill will then go to the Senate, the committee on interstate com¬ 
 merce of which is constituted as follows. 
 
 —Republicans.— 
 
 S. B. Elkins of W. Va., Chairman. 
 S. M. Cullom of Illinois. 
 
 *N. W. Aldrich of Rhode Island. 
 *John Kean of New Jersey. 
 
 *J. P. Dolliver of Iowa. 
 
 J. B. Foraker of Ohio. 
 
 *M. E. Clapp of Minnesota. 
 
 J. H. Millard of Nebraska. 
 
 —Democrats.— 
 
 B. R. Tillman of South Carolina. 
 A. J. McLaurin of Mississippi. 
 
 E. W. Carmack of Tennessee. 
 
 M. J. Foster of Louisiana. 
 
 F. G. Newlands of Nevada. 
 
 The senators whose names are preceded by an asterisk (*) are believed 
 to be unfriendly to any legislation which shall increase the powers of the 
 
 commission or permit effective governmental regulation of interstate com¬ 
 merce. 
 
 The prevailing sentiment, of the Senate is, however, decidedly favora¬ 
 
 ble to the enactment of the Quarles-Cooper bill, and it is improbable that 
 this committee will “hold up” or report unfavorably such a measure coming 
 
 to it from the House. 
 
4: 
 
 THE TRANSPORTATION TAX 
 
 Demanded by the Public. 
 
 The pressure which has been brought to bear upon Congress for the 
 prompt enactment of this needed legislation has been tremendous. It has 
 come from all sections of the country and from all industries. It has found 
 voice in the messages of the President, reports of the Industrial Commis¬ 
 sion, th$ Interstate Commerce Commission, concurrent resolutions and peti¬ 
 tions from eight state Legislatures and petitions from over 300 of the leading 
 commercial and industrial associations of the United States, comprising 
 about 1,000,000 shippers and receivers of goods, such as the National Asso¬ 
 ciation of State Railway Commissioners, the National Grange Patrons of 
 Husbandry and twenty of its state granges, the National Board of Trade, 
 the Grain Dealers’ National Association and its numerous state bodies, the 
 National Live Stock Association; the National Hay Association, the National 
 League of Commission Merchants, Millers’ National Association, National 
 Wholesale Lumber Dealers’ Association, National Lumber Manufacturers’ 
 Association, National Wholesale Druggists’ Association, National Hardware 
 Association, National Retail Grocers’ Association, Pacific Coast Jobbers and 
 Manufacturers’ Association, Southeastern Cotton Buyers’ Association, and 
 state and local organizations in Alabama, California, Colorado, Connecticut, 
 District of Columbia, Georgia, Illinois, Idaho, Indiana, Iowa, Kansas, Ken¬ 
 tucky, Louisiana, Maryland, Massachusetts, Michigan, Minnesota, Missis¬ 
 sippi, Missouri, Nebraska, New Mexico, New York, New Jersey, North Caro¬ 
 lina, Ohio, Oklahoma, Oregon, Pennsylvania, ♦South Carolina, South Dakota, 
 Tennessee, Texas, Utah, Virginia, Washington and Wisconsin. 
 
 Sentiment Is Gaining Ground. 
 
 The sentiment favorable to effective regulation of interstate traffic has 
 been steadily gaining strength during the past eight or ten years. In 1896, 
 before the law had been deprived of its vitality, President Cleveland, in a 
 message to Congress, said: “The justice and equity of the principles em¬ 
 bodied in the existing law (the act to'regulate commerce), passed for the 
 purpose of regulating transportation charges, are everywhere conceded, and 
 there appears to be no question that the policy thus entered upon has a per¬ 
 manent place in our legislation.” 
 
 President Roosevelt, in a message to the Fifty-seventh Congress,,called 
 attention to the need of legislation. He stated: “That the cardinal provi¬ 
 sions of the interstate commerce act were that railway rates should be just 
 and reasonable, and that all shippers, localities and commodities should be 
 accorded equal treatment.” That, “Experience has shown the wisdom of its pur¬ 
 poses, but has also shown, possibly, that some of its requirements are 
 wrong, certainly that the means devised for the enforcement of its provi¬ 
 sions are defective.” He says in conclusion: “The act should be amended. 
 The railway is a public servant. Its rates should be just to and open to 
 all shippers alike. The government should see to it that within its juris¬ 
 diction this is so, and should provide a speedy, inexpensive and effective 
 remedy to that end. Nothing could be more foolish than the enactment of 
 legislation which would unnecessarily interfere with the development and 
 operation of these commercial agencies. The subject is one of greaj; impor¬ 
 tance and calls for the earnest attention of Congress.” 
 
THE TRANSPORTATION TAX 
 
 i:; 
 
 Strong Endorsement. 
 
 The Industrial Commission of the United States, heretofore referred to, 
 in its report of February, 1902, said: 
 
 “To the end that discrimination and inequality as between shippers, and 
 maladjustment ol' freight rates between competing markets and trade centers 
 may be abolished or minimized; that the public may be assured of reasonable 
 and stable freight rates,- which will at the same time afford fair returns upon 
 capital invested, etc., we recommend: 
 
 “The definite grant of power to the Interstate Commerce Commission, never 
 on its own initiative, but only on formal complaint, to pass upon the reason¬ 
 ableness of freight and passenger rates or charges; also the definite grant of 
 power to declare given rates unreasonable, as at present, together with power 
 to prescribe reasonable rates in substitution. 
 
 “Appeal from an administrative order of the commission should not vacate 
 or suspend an order unless it plainly appears that such order proceeds upon 
 some error of law or is unjust or unreasonable on the facts, in which case, and 
 not otherwise, the court may suspend its operation during the pendency of 
 proceedings in review. All findings of fact by the commission, when properly 
 certified, should be received as prima facie evidence in subsequent proceedings 
 in the case. New testimony offered by either party, when it appears that such 
 testimony is material and could not have been taken in the first instance, should 
 be taken by the Interstate Commerce Commission on order from the court. The 
 time in which an appeal to the Supreme Court of the United States may be 
 taken should be limited to thirty days, but such appeal should not vacate 
 or suspend the order appealed from.” 
 
 “It is incontestable that many of the great industrial combinations had 
 their origin in railroad discriminations.” 
 
 “A great change in the status and powers of the Interstate Commerce Com¬ 
 mission has taken place since its institution in 1887. The decisions of judicial 
 tribunals have greatly modified and, in general, reduced the powers and func¬ 
 tions which this commission was at first supposed to possess.” 
 
 “We recommend that the authority of the Interstate Commerce Commis¬ 
 sion, necessary for the adequate protection of shippers and clearly intended by 
 the framers of the law, be restored and that the powers and functions of the 
 commission be enlarged.” 
 
 And, further, with relation to the Supreme Court decision of 1897, 
 denying power of the commission to prescribe rates: 
 
 “The immediate effect of this* decision was to prevent any enforcement of 
 orders relative to rates by the commission. The carriers immediately refused 
 to obey any orders which the commission issued for the redress of grievances. 
 This policy has been manifested with increasing clearness during the five years 
 subsequent to the decision. It has become more and more certain that the de¬ 
 nial of the right, not only to pass upon the reasonableness of a particular rate, 
 but to prescribe what rate should supersede it, means the abolition of all con¬ 
 trol whatever. The entire inadequacy of making rate regulations dependent 
 upon the mere determination of rates as applied in the past without reference 
 to rates which shall prevail in the future is apparent on all sides. More than 
 this, all remedy for the parties who have borne the burden of an unreasonable 
 rate would seem to have been removed. . . . Experience shows that almost 
 no shippers or other parties injured actually attempt to secure the restitution 
 of moneys already paid for unreasonable charges. In only five out of 225 cases 
 down to 1897 was a rebate (or refund) actually sought, and in these cases $100 
 was the maximum sought to be recovered. As a matter of fact, the damage in¬ 
 flicted by the existence of an unreasonable rate could not be measured by hun¬ 
 dreds or perhaps by hundreds of thousands of dollars. The bearing of this cita¬ 
 tion is to show that any effectual protection to the shipper must proceed from 
 adjudication of the reasonableness of rates before and not after they have been 
 paid; that is to say, in advance of their exaction by the carrier. Power to pass 
 upon the reasonableness of such rates prior to their enforcement as a conse¬ 
 quence constitutes practically the only safeguard which the shipping public 
 may enjoy.” 
 
 Appeal of State Legislatures. 
 
 The state Legislature of Michigan, by concurrent resolution, appealed 
 to Congress to amend the law “so as to enable the Interstate Commerce 
 Commission to put into full force and effect its rulings and decisions.” 
 
 The state Legislature of Wisconsin, by concurrent resolution, petitioned 
 Congress to “speedily amend the act,” and requested the senators and rep¬ 
 resentatives of that state “to co-operate in promoting the passage of the 
 measure to that end.” 
 
 The state Legislature of South Dakota, by concurrent resolution, memo- 
 
44 
 
 THE TRANSPORTATION TAX 
 
 rialized Congress, urging prompt amendment of the act “authorizing and 
 empowering the commission to fix reasonable and just rates, and also ade¬ 
 quate and well-defined procedure for the proper enforcement and carrying 
 into effect its decisions and orders. This enlargement of the statute is im¬ 
 peratively needed to give the law efficiency, so that the objects and benefits 
 originally designed may be fully secured to the people.” 
 
 The Kansas State Legislature, by concurrent resolution, petitioned Con¬ 
 gress “to amend the act so as to enlarge the powers of the Interstate Com¬ 
 merce Commission and give to it authority to prevent unjust discriminations 
 in the interstate carrying trade.” 
 
 The state Legislature of Louisiana, by concurrent resolution, appealed 
 to Congress to amend the law, requesting the senators and representatives 
 “to urge upon Congress the passage of amendments defining with more 
 precision the powers and duties of the commission.” 
 
 Similar action has been taken by the state Legislatures of Iowa, Minne¬ 
 sota and Missouri. 
 
 The National Association of State Railroad Commissioners, in conven 
 tion at San Francisco, June 5, 1901, by resolution, appealed to Congress to 
 amend the act, saying: “Congress is earnestly urged to the prompt enact¬ 
 ment of legislation to clothe the Interstate Commerce Commission with 
 power and authority to fix charges when its judgments need to be so * 
 perfected.” 
 
 Again, in convention at Charleston, South Carolina, February 15, 1902, 
 the organization reiterated its appeal ip. forceful language. 
 
 The National Grange, Patrons of Husbandry, having about 500,000 mem¬ 
 bers, in annual convention, adopted a resolution, saying: “We furnish nearly 
 sixty per cent, of all freight carried by the railroads of this country.” “We 
 believe that the commission has tried to carry out the act, but by virtue 
 of judicial decisions it has ceased to be a body for the regulation of inter¬ 
 state carriers.” “We approve the recommendation as to enlarging the 
 powers and duties of the commission, giving it and charging it with the duty 
 of fixing maximum rates.” Similar action in support of the expression of 
 this national body has been taken by its state granges in Connecticut, Illi¬ 
 nois, Iowa, Indiana, Kansas, Massachusetts, Michigan, New York, New 
 Hampshire, New Jersey, Ohio, Pennsylvania, Rhode Island, Vermont, Wash¬ 
 ington, Wisconsin and other states. 
 
 The Congressional Record, reporting the proceedings of the Fifty-eighth 
 Congress, exhibits the fact that during the two sessions which have passed, 
 occupying the interval from November 9, 1903, to April 29, 1904, on nearly 
 every day there have been filed with the committees having jurisdiction, 
 petitions and memorials praying for the speedy enactment of legislation to 
 strengthen the powers of the Interstate Commerce Commission. The record 
 Shows that such documents were received on ninety-six different dates, filed 
 by thirty-ofte senators and seventy-three representatives, from 116 organiza¬ 
 tions of shippers and receivers. 
 
 During the exhaustive hearings held by the House and Senate commit¬ 
 tees of the Fifty-seventh Congress the strongest and most convincing testi 
 mony was presented by representatives of all the leading industries, to 
 demonstrate the need of congressional action for relief.' The substance of 
 testimony then presented appears in condensed form in a most valuable 
 
 
 
 
 
 
 
THE TRANSPORTATION TAX 
 
 45 
 
 and instructive pamphlet published by the Interstate Commerce Law Con¬ 
 vention. We recommend that those who are interested in this subject write 
 Mr. E. P. Bacon, Milwaukee, Wisconsin, for a copy of this publication. 
 
 Never before has there been demonstrated so strong and insistent 
 demand from the business interests of the country for protective legisla¬ 
 tion. It cannot be said that the Congress is ignorant of the needs of the 
 people with respect to this important subject. Failure to act can be attrib¬ 
 uted only to the strength of counter-influence exerted by the railroads and 
 their powerful lobby at Washington. 
 
 Endorsed by Both Political Parties. 
 
 This question should be entirely non-partisan in character, and thus 
 far has not become a political issue. The platform of one of the leading parties 
 in the national campaign of this year pronounces unequivocally for govern¬ 
 ment regulation of interstate transportation. While the platform of the other 
 leading party is silent upon the subject, its makers state, as a reason, that 
 inasmuch as it endorses fully the present administration and policies of its 
 candidate for the presidency, his unqualified approval of the desired legisla¬ 
 tion and recommendation of action by Congress in his messages to that body, 
 stands equivalent to affirmation of the principle by the platform. 
 
 Obstacles to Be Met. 
 
 Few have any conception of the railroad and corporate power in Con¬ 
 gress. There has never been a time when this influence was so great. It 
 is the result of education and constant application of experience of the 
 shrewdest and craftiest men who speak the English language. Armed with 
 unlimited money, with a multitude of favors to bestow upon their friends 
 and possessed of the power to deal severe punishment upon all others, the 
 railroad and corporate representatives at Washington and those who go 
 there, can and do make themselves “felt” through one individual and an¬ 
 other in every department of life, in a manner and with an effect incompre¬ 
 hensible to the uninitiated. And the power is not limited to Washington; 
 it is felt in every state Legislature, in every board of tax commissioners in 
 every city, town and hamlet where railroad interests exist. Direct bribery 
 is not indulged; it could not be thought of; it is “too coarse,” even if any 
 of them would engage in it or even if any congressman or senator or other 
 officer could be found who would be susceptible to tljat method of influence. 
 
 We believe that this question of remedial legislation to make effective 
 governmental regulation of interstate transportation has been so thoroughly 
 presented to Congress that the measure pending will pass both branches, 
 if it may but be rescued from committee and come before the members 
 for a vote. The solution of the problem lies in bringing such pressure to 
 bear that the committee, even if composed of a majority of railroad repre¬ 
 sentatives, shall be compelled, by force of public opinion, to release the 
 measure from its hands. This can undoubtedly be done by constituents. 
 
 It must be evident to those ydio read the arguments contained in this 
 pamphlet that success in this matter depends upon the public. Every citi¬ 
 zen is interested in this subject as much as he is in the taxes he pays, and 
 which are legally assessed against him. Every citizen can assist in having- 
 justice done by putting his shoulder to the wheel and pushing. By a combined 
 
46 
 
 THE TRANSPORTATION TAX 
 
 effort it is possible to secure the passage of this legislation in the short ses¬ 
 sion of the present Congress, commencing December 5, 1904. If each citizen 
 will interest himself enough to exert pressure upon his members of Con¬ 
 gress, and also upon members of his state Legislature, to induce them to 
 speak to Congress in favor of this legislation, success will be certain and it 
 will come speedily. 
 
 The remedy which the public should have is that to which each individual 
 is entitled, viz.: That rates should be just, fair and reasonable, and the serv¬ 
 ice rendered therefor prompt and efficient. More we do not ask, and less 
 the railroads should not desire that the public have. Demand it of your 
 representatives, and that you will procure. 
 
 The Cattle Growers' Interstate Executive Com¬ 
 mittee 
 
 OFFICERS. 
 
 Chairman—Hon. W. W. Turney, El Paso, Texas. 
 
 Vice Chairman—Hon. W. A. Harris, Chicago, Illinois. 
 
 Secretary—Fred P. Johnson, Denver, Colorado. 
 
 Treasurer—H. H. Robinson, Denver, Colorado. 
 
 Legal Counsel—Hon. S. H. Cowan, Fort Worth, Texas 
 
 BOARD OF MANAGERS. 
 
 Texas—Hon: Murdo Mackenzie, Trinidad, Colorado; John T. Lytle, Fort 
 Worth, Texas. 
 
 Colorado—Hon. Conrad Schaefer, Deuel, Colorado; A. N. Parrish, Lamar, 
 Colorado. 
 
 New Mexico—W. C. Barnes, Dorsey, New Mexico; Frank Law, Folsom, 
 New Mexico. 
 
 Montana—Hon. J. M. Boardman, Helena, Montana; Hon. J. M. Holt, Miles 
 City, Montana. 
 
 Utah—Hon. John H. White, Salt Lake City, Utah; M. K. Parsons, Salt 
 Lake City, Utah. 
 
 Wyoming—Al. Bowie, Chugwater, Wyoming; George Prentice, Cheyenne, 
 Wyoming. 
 
 Cheyenne, Wyoming. 
 
 South Dakota—Frank M. Stewart, Buffalo Gap, South Dakota; Mr. I. M. 
 Humphrey, Rapid City, South Dakota. 
 
 Nebraska—Mr. W. G. Comstock, Ellsworth, Nebraska; Mr. H. H. Robinson, 
 Denver, Colorado. 
 
 Kansas—Mr. M. M. Sherman, Geneseo, Kansas. 
 
 Indian Territory—Mr. H. P. Ward, Kiowa, Indian Territory; Dr. J. S. Ful¬ 
 ton, Atoka, Indian Territory. 
 
 Idaho—Mr. R. F. Buller, Hailey, Idaho; Mr. F. J. Hagenbarth, Spencer, 
 Idaho. 
 
 Iowa—Mr. A. L. Ames, Buckingham, Iowa. 
 
 Office of the Committee—1828 Curtis street, Denver, Colorado 
 
THE TRANSPORTATION TAX 
 
 47 
 
 ORGANIZATION OF THE COMMITTEE. 
 
 The Cattle Growers’ Interstate Executive Committee was organized at 
 a meeting of stockmen representing organized cattle growers through the 
 West, held in Denver, May 4, 1904. The meeting was called by virtue of the 
 following preamble and resolutions adopted at the annual meeting of the 
 Texas Cattle Raisers’ Association: 
 
 Whereas, The live stock interests of the West has had imposed upon it and 
 levied against it increases in the rates of freight charged in transporting cat¬ 
 tle and other live stock to the markets of the country to such an extent that 
 it is now paying exorbitant rates of freight for the transportation of live stock 
 to market and elsewhere; and 
 
 Whereas, These rates of freight have been fixed and the increases there¬ 
 of have been made from time to time by a combination of the railroads in the 
 country without restriction or regulation by law as to interstate shipments, 
 thus destroying competition in the making of railroad rates; and, 
 
 Whereas, By reason of the practices of railroads in handling of live stock 
 traffic which have been put into effect by the system of transportation known 
 as the ‘‘Tonnage System.” the service being rendered is poor by reason of de¬ 
 lays in transportation and by reason of loading down stock trains with heavy 
 cars of dead freight, resulting in injuries by shrinkage and otherwise to live 
 stock in shipment to a far greater extent than resulted when the rates of 
 freight were lower and when the tonnage system was not in vogue; and 
 
 Whereas, Great losses are being sustained by the live stock interests of 
 the country, and burdens being placed upon the live stock business service 
 given; and 
 
 Whereas, It is for the benefit of the whole live stock interest and the de¬ 
 sire of this association to secure the enactment of such laws as will invest 
 the Interstate Commerce Commission with the power and authority to regu¬ 
 late, in a more speedy, perfect and efficient method than now exists, the 
 charging, demanding and collecting of the unreasonable rates of freight, and 
 to provide a system of transportation for live stock less injurious to them 
 than the unrestricted method now in use by the railroads; and 
 
 Whereas, It is the desire of this association to secure in behalf of those 
 measures the combined efforts of the various live stock organizations and 
 interests of the several western states and territories: 
 
 Now, Therefore, Be It Resolved; By the Cattle Raisers’ Association of 
 Texas, in annual convenion assembled, at Fort Worth, Texas, at its March, 
 1904, meeting, That the president of this association be authorized to call a 
 meeting of the representatives of the various live stock associations of the 
 western states and territories, to be-held at some convenient point and at as 
 early a date as practicable, and to embody in that call the idea that such as¬ 
 sociations and live stock interests shall send committees to represent them 
 which will meet with a like committee representing this association, to form¬ 
 ulate, prepare and put in effect a plan and active operation looking to the 
 securing of the passage of such laws or amendments thereof, by the Congress 
 of the United States, as will afford the relief to which the live stock interests 
 of the West is entitled as against exorbitant rates and injurious practices 
 in the shipment of live stock, the object being to undertake to secure the ac¬ 
 tive support and work of the senators and congressmen from each of the 
 states represented in behalf of these measures. 
 
 •" And Furthermore, To- the end that all measures which have been intro¬ 
 duced in Congress or which shall be introduced, curtailing the power of the 
 Interstate Commerce Commission or limiting the effect of the Interstate Com¬ 
 merce Act, shall be opposed and defeated. 
 
 And Furthermore, That at such meeting the representatives of such as¬ 
 sociations shall, if they deem it proper, call upon and urge the agricultural 
 and shipping interests generally to organize against the unreasonable exac¬ 
 tions of the railroad interests of the country, and lepd their aid for the pass¬ 
 age by Congress of such measures as will secure that end. 
 
 Furthermore, That the' president of the Cattle Raisers’ Association of 
 
 / 
 
48 
 
 THE TRANSPORTATION TAX 
 
 Texas is hereby authorized and empowered to appoint a committee to repre¬ 
 sent the Cattle Raisers’ Association of Texas, to attend such meeting and 
 carry out the purposes of this resolution; and that the Hon. W. W. Turney, 
 president of this association, is hereby made chairman of such committee. 
 
 RESULT OF COMBINED ACTION. 
 
 In accordance with the above resolution, invitations were sent to the 
 leading live stock organizations through the country and each sent three 
 delegates to represent them at the meeting held in Denver May 4. As the 
 result of that meeting the permanent organization was formed to be called 
 “The Cattle Growers Interstate Executive Committee.” This organization is 
 conducted by and represents the organized cattlemen in the west. The com¬ 
 mittee consists of three members from each state and territory who have 
 power to represent their respective organizations. The active work is con¬ 
 ducted by a board of managers of one member from each state and territory 
 and an alternate. 
 
 The committee was instructed to at once take such steps as might be 
 thought necessary to remedy the evils complained of in the resolutions adopt¬ 
 ed at the Texas meeting and as the first step in that direction, the committee 
 was instructed To secure the data and information that would enable it to act 
 intelligently. 
 
 As it was thought that possibly some immediate relief might be obtained 
 direct from the railroads, a railroad committee consisting of W. W. Turney, 
 chairman, Murdo Mackenzie, A. E. de Ricqles, W. A. Harris and J. M. Board- 
 man, was appointed to confer with the railroads. This committee has been 
 very active and has been met by the railroads in a very friendly and courte¬ 
 ous manner. The committee has succeeded in accomplishing very much in 
 the way of immediate and temporary relief. Service has been greatly im¬ 
 proved and in some instances, rates have been* adjusted upon a more satis¬ 
 factory basis. 
 
 While the railroad officials with whom the committee has met, have 
 shown a disposition to treat the cattlemen with the greatest fairness, the 
 committee has realized, however, that relief granted must be of a temporary 
 nature. The policy of the railroads is established and cannot be changed 
 except through legislative interference. Some railroad men frankly admit 
 the justness of the demands of the shippers for a tribunal where these mat¬ 
 ters can be adjusted fairly, while others are vigorously opposed to any prop¬ 
 osition that permits of government control, no matter how slight, over their 
 business. 
 
 While the committee feels that the interests of the cattlemen and ship¬ 
 pers generally demand the amendment of the Interstate Commerce Act so as 
 to give the Interstate Commerce Commission authority to adjust unfair or 
 discriminatory rates, it believes that its position in relation to this matter 
 does not necessarily mean antagonism to the railroads. Through its officers 
 and sub-committees it hopes to continue the present cordial relations with 
 the railroad officials to the end that, business may be conducted with as little 
 friction as possible, but at the same time it will continue its efforts to secure 
 national legislation that will give the shipper that protection to which he is 
 entitled under the Constitution of the United States. 
 
 This committee is actively engaged in securing the passage of this leg¬ 
 islation by congress and believes it represents the unanimous sentiment of 
 live stock owners of the whole country. In fact, the only opposition to such 
 legislation comes from a few of the railroads who honestly believe that their 
 best interests are being subserved by that opposition. While the facts con¬ 
 tained in this pamphlet were secured and compiled for the information of 
 stockmen, they will be circulated among shippers generally, as all are inter¬ 
 ested and the committee earnestly solicits the moral and financial support of 
 all organizations of shippers and others who believe in the necessity of this 
 legislation. 
 
 Copies of this pamphlet may be had by addressing the secretary, Fred 
 P. Johnson, P. O. Box 1509, Denver, Colorado.