Table Showing Classification Applying to Southern Pacific Company (Northern Division). Comparative Rates, Governed by California Classification for Southern Pacific Company (Northern Division), and Western Classification for Wabash Company. In Cents per 100 Pounds. At a meeting of the Board, on February 27, 1888, the Northern Division case was again taken up. Giel & Morehouse appeared on behalf of the company, and A. C. Bassett, Superintendent, and E. J. Martin, Assistant General Freight Agent, were sworn and examined, and the following communication and comparative statement of rates were presented for the consideration of the Board: COMMUNICATION FROM A. C. BASSETT. OFFICE OF THE SUPERINTENDENT OF THE NORTHERN DIVISION, SAN FRANCISCO, February 16, 1888. To the honorable the Board of Railroad Commissioners of the State of California: GENTLEMEN: Owing to the fact that Hon. Creed Haymond, counsel for the Southern Pacific Company, is now in Washington City, D. C., and being unavoidably detained there, cannot, therefore, attend before your honorable Commission to represent the interests of the Northern Division of the Southern Pacific Company, as stated in his letter of December thirteenth last, to your honorable body, I beg leave to place before you the following reasons, together with statistics hereto attached, why your order of November 22, 1887, and the schedule of reduced freight rates served upon the said railroad company, in pursuance of the aforesaid order, should not be carried out by your honorable body. Owing to facts over which we have no control, the operating expenses of this company are much greater than the eastern lines with which comparison of rates will be made. Take, for instance, the cost of fuel, as compared with the cost of the same on the Chicago and Northwestern Railway, running through the populous State of Illinois. During the year 1887 the consumption of coal on the Northern Division was twenty thousand seven hundred and fourteen tons, costing $6 per ton. A better class of coal is readily obtained by the Chicago and Northwestern Railway at $1 77 per ton. Wood costs this company $475 per cord. The Chicago and Northwestern Railway pays $2 56 per cord. Then in the one item of fuel the excess cost to this company, for the year 1887, is the sum of $101,129 16. Again, in the item of labor, the rate of wages paid to railway employés, in California, is 36 per cent higher than is paid in Illinois. To obtain good service the Northern Division paid, for wages alone, in 1887, an excess of $201,503 40 over wages paid in Illinois for the same kind of labor. And in cost of fuel and wages, an excess of $302,632 56. You may ask, why not reduce these expenses? We answer that the item of fuel cannot be reduced, but is likely to be increased greatly, owing to the rapid growth and prosperity of the State, whilst the cost per ton of coal, as is well known, is, at the present time, much greater than the figures here given. It has ever been the policy of the managers of this company to maintain a good service to the public, and experience teaches that well paid labor insures competent and contented employés, thus avoiding all conflict between employer and employed. The great number of men employed by this company naturally fixes the price of mechanical labor in California, and it certainly is not to the best interest of labor in this State that wages should be reduced; and you cannot, therefore, wish that this company should be compelled to cut its expenses by cutting the price of labor, which would be the inevitable result of the enforcement of your order. The Pennsylvania Railroad Company obtains its coal at $2 per ton. The Baltimore and Ohio Railway Company, using the best bituminous coal in the world, pays less than $1. The Union Pacific Railway Company, using coal in Kansas, pays $2 30 per ton, and furnishes the public with coal at $2 85. Notwithstanding our greater expense over eastern lines, we yet are carrying freight on a basis of rates below that of the lines shown in the accompanying exhibits-this, too, notwithstanding the fact that our road passes through a sparsely populated country, while the roads with which we have compared pass through a crowded population, and carry, therefore, a much larger passenger and freight traffic than we do. It must not be forgotten that these eastern lines have a through traffic while we do not, and roads which are hauling loaded cars both ways can well afford to carry freight at a much less rate than we can. To illustrate: Suppose we wish to haul the wheat product of Watsonville or the Salinas Valley, we are compelled to send a train of empty cars to Watsonville and the Salinas Valley for that purpose, thus having the expense of running the trains both ways, while we only have paying freight one way; while the eastern roads would send their cars loaded with freight to such points as Watsonville and the Salinas Valley and return loaded with grain, thus carrying paying freight both ways. We cannot control this condition of things, for outside of San José our trains pass through no town of any size nor through any largely populated district of country demanding a large freight traffic from San Francisco. It will be thus seen that the expense of operating on the Northern Division of the Southern Pacific is, and until population increases must remain, greater than on the eastern roads. And yet our rates for freight are below many of the important lines in the Eastern States, as shown herewith, and lower than on any other local line in California. Is it just and right then that you should cut our rates 10 per cent when we are to so great an expense, and are carrying freights on the basis of only a just and reasonable compensation for the service rendered, especially when we are already carrying at the minimum price, and below the other California roads, and below eastern roads having a much larger freight and passenger traffic? Again, while it is only intended by your order to affect certain points on our roads, yet you must see that such a reduction, while unjust, will subject us to complaints of discrimination, extortion, and favoritism. For why should we carry freight to and from Watsonville, or to and from Gilroy, or to and from Sargents, or to and from Tennants or Millers, at a rate 10 per cent less than to and from Castroville, or Monterey, or Salinas, or Hollister? Does not the Constitution of California prohibit discrimination? And is this not discrimination? But it may be said, "Why not reduce your rates to these other places also, and thus avoid the unpleasant consequences of our order?" Our answer is, that we have of our own motion, as the records of your office will show, reduced rates along our lines, every time that the increase in our carrying trade warranted us in doing so, and that we are now carrying at as low a rate as we can afford and maintain a good service to the public. The rate of freight traffic should be based upon a reasonable compensation for the service rendered, and I know that, taking the cost of operating, our rates are reasonable and just. You are perfectly aware that the great immigration now coming to California demands the extension of our roads and further improvements, so that we may be able to aid in the development of the resources of the State; and if our rates, which are now just and reasonable, are to be cut to a lower figure, we shall be injured to such an extent that we must abandon many of these contemplated improvements. Whatever builds up a State builds up the railroad, and whatever helps to build up the railroads helps the State. If you injure the one you injure the other, and if you cut rates to so low a point that our road must suffer, you are injuring the very people you intend to benefit, and destroy the very industries you intend to cherish; for it cannot be expected that business men, having their money invested in railroad enterprises, can afford to carry on a business when that business ceases to be remunerative. I, therefore, respectfully submit: that there is no exigency or urgent demand that calls for any such reduction as is proposed by your order and schedule; and while it is not the business of railroads to reduce the rate on freights to foster any one locality, or encourage any one industry at the expense of another, yet, if such were the case, I know of no such need at any of the places mentioned in your order and schedule, and sincerely hope that you will countermand your order, and leave the rates as they now are, because such reduction will be unjust discrimination, contrary to law, wrong in fact, injurious to this company, below a just compensation for the service rendered, and the source of ill-feeling and dissatisfaction to many of the patrons of this road. Very respectfuily, A. C. BASSETT, Superintendent Northern Division, Southern Pacific Company. |