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CHAPTER IX.

RAILWAY RATES AND GOVERNMENT CONTROL-RAIL

WAY GROWTH IN THE UNITED STATES: PRESENT
STATUS-METHODS OF RAILROADS-THE LIMITS
WITHIN WHICH LEGISLATIVE INTERFERENCE IS
VALUABLE.

The railway system of the United States, as it exists to-day, is an afterthought, a makeshift, fragmentary, illy conceived, incongruous. In the beginning, railroads were located with reference to local traffic only, with regard to their profitableness as short lines. Through business was a remote contingency, something uncertain and vague, too purely speculative to merit more than a passing thought. It, however, grew apace, and with increase of wealth, and knowledge of manipulation, the process of amalgamating petty interests began. At first, only continuous lines were consolidated. Then diverging lines were absorbed; afterward, competitive interests. Isolated roads were bought and consolidated, in many cases, to meet contingent possibilities. The consolidation of roads having little or nothing in common rendered it necessary to construct connecting links to weld them together. In the course of time, the necessity of connecting the great enterprises thus formed with distant markets not considered in the original scheme,

forced itself on the attention of owners. This involved further building, the paralleling of existing lines, and other incongruous acts. In this "piecing out" process, this attempt to derive order out of chaos, primary conditions were reversed, and local traffic, from being a prime factor, became of secondary importance. Not only this, but the new lines, in many instances, by dividing the local business, destroyed its profitableness.

The railway situation was further aggravated by the presence of many roads built for purely speculative purposes, or to satisfy the sentiments of petty districts. The process of evolution is still going on, but becomes each day more and more simple.

Under the policy of giving bounties, the region east of the Missouri has been honeycombed with roads not contemplated in the original scheme. Many of them would not have been allowed, had permission from an impartial government board been required. Our railway system, having thus grown up under anomalous conditions, requires anomalous treatment. It is distinctively competitive. It is not homogeneous.

The weakness of the railway system of the United States has found frequent expression in the destructive warfare of rival companies. The introduction of pools (whereby business common to two or more lines is equitably apportioned), was the remedy whereby railway owners and managers sought to mitigate the evil. Unfortunately, however, the remedy could only be partially applied without the protection of the government-without the power

to control those who transgressed its requirements. This protection the government not only refused, but finally passed a law prohibiting carriers from entering into any kind of pooling arrangement whatsoever. No other country in the world so greatly needs the aid of this device as the United States, because of the chaotic nature of its railway system, and yet the United States is the only country where it is denied to carriers. The law referred to was in keeping with public sentiment-with the desire to outlaw railway property. The people had long been told that railway companies were extortioners, public robbers, to be placed under the surveillance of the police. They did not, therefore, care to protect them. Ignorance and demagogism had full sway. Legislation intended to weaken the hands of managers, or cut down rates, everywhere elicited approval. There was nowhere a disposition to aid in preventing rate wars. Directly the reverse. Laws were passed permeated with the false doctrine that the direct intervention of the government was necessary to prevent the community from being injured by excessively high rates.

It was sought to inculcate the belief that we should look to the government, rather than to the owners of railway property, for honesty and wisdom; to a perfunctory service, rather than a discerning and intelligent one. In framing tariffs, economic laws were no longer to be regarded. The law of supply and demand was no longer to be considered. The belief was general that rates were excessive. Nowhere was the governing principle recognized that,

while rates may be too low, the equities of trade prevent their being too high. The owners of railways were scoffed at. The selfish interest they have in protecting and fostering the traffic tributary to their lines, was ignored or disputed. They were to be regulated arbitrarily. Everyone was to be protected, save the carrier. Uniformly fair rates were to give place to uniformly low rates. Artificial competition was to be general, instead of exceptional. The statute books were filled with penalties against discrimination. These enactments, savoring of the blue laws of Connecticut, were an invocation to the discontented, a theme and justification for agrarian agitators. They covertly branded the owners and managers of railways as knaves or fools. They taught that associated capital was robbery; that it was unjust and overreaching. Those who criticised

railroads alone were honest. The disposition was general to cater to the prejudices of the people. rather than the wants of trade. The accomplishment of political rather than business ends was sought. The aggrandizement of parties and the fulfilment of personal ambitions, rather than the good of the country, became the ruling idea. Laws were based on the theory that the railway problem was a special one, exempt from economic conditions governing other industries; that the law of competition did not apply to carriers; that their duties and responsibilities might be measured as we measure grain. The subtleties of trade that can not be disregarded, that characterize the traffic of railways as much as that of other manufacturers, were ignored.

Railway administration was to be brought down to the comprehension of school children. Public opinion was perverted; it utterly failed to comprehend the situation. It sought, in the enactment of agrarian laws against railroads, relief that should have been looked for in other directions.*

The equities of railroad traffic are variable and fortuitous. We can not describe them. As well might we attempt to teach the art of violin-playing by descriptive writing, to fathom the subtleties of men's minds, to comprehend their purposes, or measure their energies. They must be studied to be understood. The operation of railroads requires practical business experience, boundless patience, a desire to please, promptitude, knowledge of detail,

*In criticising the ill advised, imperfect, and hastily-considered laws that have been passed, and the indefensible acts that have characterized their enforcement, I do not by any means wish to be understood as asserting or believing that all who advocated or voted for such laws were lacking in wisdom or sincerity. Far from it. I do not believe, for instance, that the Senate and House of Representatives were actuated by other than the most patriotic motives in passing the Interstate Commerce act. Nor did they act hastily. If the law is grossly defective in some respects, it is because the needs of the situation were not fully understood. And in this connection I wish to excuse myself if what I have written has the appearance of prejudice or undue vehemence. The matter is one about which I have thought much. My opportunities for thirty-five years have been especially favorable for observing and understanding the methods, policies, and motives of railway companies. I know them to be generally good, such as the country needs, at once businesslike, sagacious and honorable. I know, also, that as a rule, those who criticise them are not nearly so patriotic, wise, or unselfish, as the owners of railroads; not nearly such good citizens; do not contribute nearly so much as they to aggrandize the country.

14 Vol. 8

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