The Railroad Question Part 14

During the last few years systematic efforts have been made by the railroad interests to influence public opinion against the Interstate Commerce Law and restrictive State legislation through the leading magazines of the country. Mr. Sidney Dillon, president of the Union Pacific Railroad, in an article which appeared in the April (1891) number of the _North American Review_, under the t.i.tle "The West and the Railroads," endeavors to show that the West is indebted to the railroad managers for nearly all of the blessings which its people enjoy, and that therefore railroad legislation in the West is a symptom of rank ingrat.i.tude. He prefaces his argument with the remark that the elder portions of our commonwealth have already forgotten, and the younger portions do not comprehend or appreciate, that but for the railroads what we now style the Great West would be, except in the valley of the Mississippi, an unknown and unproductive wilderness. He then argues that, inasmuch as the railroads carry the wheat of Dakota and Minnesota to the sea-coast, and bring those sections of our community into direct relation with hungry and opulent Liverpool, the world should "thank the railway for the opportunity to buy wheat, but none the less should the West thank the railway for the opportunity to sell wheat." It does not seem to occur to Mr. Dillon that the railway might, with equal propriety, thank the world in general, and the Great West in particular, for its opportunity to carry wheat.

We are also told that the railway has reclaimed from nature immense tracts of land that were worthless except as to their possibilities, which once seemed too vague and remote to be considered and are to-day valuable; that it has changed the character of the soil as well as the climate of the West, and we are almost given to understand that in many respects it has a.s.sumed the functions of Providence. Mr. Dillon generously admits, however, that railways have not been built from philanthropic motives and that we find among railroad promoters and contractors men of large fortunes. He then proceeds to reprimand the States west of the Mississippi for their "ungrateful" legislation, which, he says, interferes with the business of the railway, even to the minutest detail, and always to its detriment. Such legislation exasperates Mr. Dillon the more because it originated in States "which happened to be the communities that owe their birth, existence and prosperity to these very railways." Mr. Dillon then gives vent to his wrath by the use of such terms as impertinence, ignorance and demagogism. He holds that legislative enactments as to the rights and liabilities of railway corporations are useless, "because the common law has long since established these as pertaining to common carriers, and the courts are open to redress all real grievances of the citizen." Upon this theory we might as well dispense with the legislative department of the Government, for there is no relation in the community to which the principles of the common law can not be applied. Besides this, Mr.

Dillon entirely ignores the fact that the railway company is not only a common carrier, but the keeper of the highway, and as such is subject to Government control as much as the turnpike tollgate keeper or the collector of customs. "Then as to prices." Mr. Dillon continues: "These will always be taken care of by the great law of compet.i.tion, which obtains wherever any human service is to be performed for a pecuniary consideration. That any railway, anywhere in a republic, should be a monopoly, is not a supposable case."

Like the rest of railway men, Mr. Dillon excels in painting dark pictures of railroad catastrophes. A sample production of his art is here presented:

"One of the greatest dangers to the community in a republic is this: that it is in the power of reckless, misguided or designing men to procure the pa.s.sage of statutes that are ostensibly for the public interest and that may lead to enormous injuries. Let us imagine for a moment that all railways in the United States were at once annihilated. Such a catastrophe is not, in itself, inconceivable; the imagination can grasp it, but no imagination can picture the infinite sufferings that would at once result to every man, woman and child in the entire country. Now, every step taken to impede or cripple the business and progress of our railways is a step towards just such a catastrophe, and therefore a destructive tendency."

Mr. Dillon, losing sight of all other interests, did not think that his nonsensical mode of reasoning would apply equally well to them. Let us, for instance, imagine for a moment that all of the farms of the United States were at once annihilated. Can the imagination picture the infinite sufferings that would at once result to every man, woman and child in the whole country? Now, is not any step taken to impede or cripple the business of farming a step towards just such a catastrophe, and therefore of a destructive tendency? Mr. Dillon then avails himself of an opportunity to give the people of the United States some gratuitous advice when he says:

"We do not arrogate superior wisdom or intelligence to ourselves when we suggest to the people of the United States, and especially that portion of the country where railroads have been the subject of what we consider to be excessive legislation, that the rational mode of treating any form of human industry that has for its object the performance of desired and lawful service is to let it alone, and that the railway is no exception to this principle."

This is the very plea that Jefferson Davis made when he kindled the flame of treason.

In the March, 1891, number of the _Forum_, Mr. W. M. Acworth discusses, under the t.i.tle "Railways under Government Control," the working of the railway systems of the different nations. He holds that the management of railroads which are the property of the State is, as a rule, greatly inferior to the management of those roads which are the property of private trading corporations; he a.s.signs to the railway experts of England and America the first places among the railway experts of the world, and appears to attribute all the good in the railroad management of these countries to the absence of State interference, and all the evil in the management of the railroads of other countries to the fact that such interference exists. He says of the railroads of England and the United States:

"In speed and accommodation, in the energy which pushes railways into remote districts, and in the skill which creates a traffic where no traffic existed before, they stand to-day in the front rank, as they have stood for the last half century. To say that they are very far from perfect is nothing; it is only to say that they are worked by human agency. Their worst enemies will scarcely deny that they are at least alive; so long as there is life there may be growth, and we may hope to see them outgrow the faults of their youth. The charge made against State railway systems is that they are incapable of vigorous life. The old adage which proclaimed that 'necessity is the mother of invention'

has been re-stated of late years as the law of the survival of the fittest in the struggle for existence. If the doctrine is true, the State railway system, relieved from the necessity of struggle, must cease to be fit and will fail to survive."

While it is not intended to enter here into a defense of a State railway system, it may justly be questioned whether "the State railway system, relieved from the necessity of struggle, must cease to be fit and will fail to survive." The growth of the State system in Europe is in itself a sufficient refutation of Mr. Acworth's theory. The mail service has for several hundred years been a monopoly of the government; but, while it is far from being perfect, it remains to be demonstrated that private enterprise could give to the public a better service in the long run.

Mr. Acworth is an Englishman who in former years wrote many bitter things concerning the abuses which he then thought he saw in the management of the railroads of his native country, which, according to his own statement, are, besides those of the United States, the only roads in the world for whose regulation compet.i.tion has been relied upon in the past. Mr. Acworth has become a convert to the _laissez faire_ theory of dealing with railroads and now evinces an unusual, but perhaps pardonable, zeal in the defense of his new position. In the preface to his book, "The Railways of England," he says upon the subject:

"I have published before now not a few criticisms (which were meant to be scathing) on English railways anonymously.

I find myself using, under my own name, the language of almost unvarying panegyric. This is partly to be explained by the plan of the book, which professes to set before the reader those points on each line which best merit description--its excellencies, therefore, rather than its defects. Much more, however, is it due to a change of opinion in the writer.... I have found in so many cases that a satisfactory reply existed to my former criticisms, that I have perhaps a.s.sumed that such an answer would be forthcoming in all; and if I have taken up too much the position of an apologist, where I should have been content to be merely an observer, let me plead as my excuse that I am only displaying the traditional zeal of the new-made convert."

Prof. Hadley, of whose work, "Railroad Transportation, its History and its Law," mention has been made above, contributed an article to the April, 1891, number of the _Forum_, under the t.i.tle "Railway Pa.s.senger Rates." He endeavors to show that the high pa.s.senger rates of American railroads are due solely to superior service. He says:

"Continental Europe pays two-thirds as much as America or England and gets an inferior article. India pays still less and gets still less. The difference is seen both in quality and quant.i.ty of service. In India express trains rarely run at a greater speed than 25 miles an hour. In Germany and France their speed ranges from 25 to 35 miles an hour, and only in exceptional instances is more than 40 miles an hour.

In the United States and in England the maximum speed rises as high as 50, or, in exceptional instances, 60 miles an hour. With regard to the comfort of the cars in different countries, there is more room for difference of opinion; but there can be no doubt that the average traveler in the United States, or even in the English third-cla.s.s car, fares better than he would in the corresponding cla.s.s on continental railroads, and infinitely better than the bulk of travelers in British India."

It may be admitted that upon the whole the speed of American and English railroads is greater than that of continental roads, yet the difference is much less than Mr. Hadley would make us believe. The fast trains of the Berlin and Hamburg Railroad, according to Roll's "Railroad Encyclopedia," make the distance of 179 miles in three hours and forty-four minutes. The average speed is therefore 48 miles an hour.

There are but few lines in the United States whose regular express trains run at a greater speed. The express trains of the Berlin and Brunswick line make 45-1/2 miles an hour. Trains are run on the Vienna and Buda-Pesth Railway at the rate of 42 miles an hour and on the Paris and Calais Railway at a rate of over 40 miles an hour. Official reports give the average speed of express trains in Northern Germany as 32.2 miles per hour, which is considerably more than the average speed of our Western trains, upon which the rates charged are twice as high as those charged by German roads. The average speed of the express trains in England was 35.7 miles per hour in 1890, in the Netherlands 30.7 miles, in France 30 miles, in Denmark and Southern Germany 28.8 miles and in Austria 27.8 miles per hour. Accurate statistics showing the average speed in America are not in existence, but it may well be questioned whether the difference between the speed of American and European trains is sufficient to justify upon that score any essential difference in the rates. Mr. Hadley's statement that the average traveler in the United States, or even in the English third cla.s.s, fares better than he would in the corresponding cla.s.s on continental railroads, is far too sweeping to be true. It is certain that the Belgian, German, Austrian or French second-cla.s.s coupes are much to be preferred to the smoking and emigrant cars which in America are made to take their places.

To prove that much more work is demanded of American railroads than of European railroads, Mr. Hadley presents the following table:

Annual Train Miles run Service per by Trains head of Countries. Population. annually. Population.

United States (1889) 61,000,000 724,000.000 12 Great Britain (1889) 38,000,000 303,000,000 8 Germany (1889) 48,000,000 181,000,000 3-3/4 France (1888) 38,000,000 145,000,000 3-3/4 Austria-Hungary (1887) 40,000,000 66,000,000 1-2/3 India (1889) 200,000,000 51,000,000 0-1/4

And he adds: "These figures are for pa.s.senger trains and freight trains together, as some countries do not give statistics of the two separately; but the general results would be nearly the same if pa.s.senger trains alone could be considered. The figures show that, for every man, woman and child, a train is run twelve miles annually in the United States, in Great Britain eight miles, in Germany or France a little less than four miles, in Austria not much more than a mile and a half, and in British India less than a quarter of a mile."

This statement, even if correct, is certainly misleading. No allowance is made for the greater distances and the greater average haul in America, and none for our bulky raw products, which require more car room than the manufactured goods predominating as freight in Europe.

If Mr. Hadley's statement of miles run by trains annually is used in connection with Mr. Poor's statement showing the length, for 1889, of the railroads of the countries given in the above table, it can be shown that the average number of trains run annually per mile is considerably less here than in Europe:

Length of Average Number Railroad Miles run of Trains in miles by Trains per mile per Countries. (1889). annually. annum.

United States 161,396 724,000,000 4,485 Great Britain 19,930 303,000,000 15,203 Germany 25,360 181,000,000 7,137 France 21,910 145,000,000 6,618 Austria-Hungary 15,990 66,000,000 4,127

It is seen that while the average number of trains run per mile per annum is only 4,485 in the United States, it is 6,618 in France, 7,137 in Germany, and 15,203 in Great Britain. In Austria-Hungary it is somewhat less than here. It is not claimed that this is in every respect a fair argument; but it is at least as fair as Mr. Hadley's. As has been stated before, the average earnings per train mile are larger in the United States than in most nations, and, excepting Sweden, railway capital has the highest gross earnings of any nation in the world; and when Mr. Hadley bases his argument in favor of higher rates for American railroads than for those of Europe upon the claim that the latter secure larger train loads, he simply reasons from false premises.

Mr. Hadley then continues:

"But why cannot our railroad men, with our present train service, secure larger loads by making lower rates, and give us cheap service as well as plenty of it? Why cannot we secure two good things instead of one? For two reasons: First, because it is not certain that low rates will be followed by greatly increased travel; second, because such increased travel would not be so economical to handle in America as it is in Europe. It is wrong to a.s.sume that, because reductions of charges in Europe have increased travel enormously, they would have a proportionate effect in America and a corresponding advantage in American railroad economy.

It is a somewhat significant fact that second-cla.s.s trains at reduced rates have been extremely successful in Europe and not at all so in America. Other things being equal, the American public would be glad to have its travel at lower fares; but it cares more for comfort and speed, and for being able to travel at its own times, than for a slight difference in charge. The a.s.sumption so frequently made, that a reduction in fares would cause an enormous increase in travel in this country, is for the most part a pure a.s.sumption, not borne out by the facts."

The great increase in business which has everywhere followed reductions in postage rates, telegraph rates and street-car fares, as well as railroad rates, sufficiently refutes the a.s.sertion that it is not certain that low rates would be followed by greatly increased travel. If the second cla.s.s has not been as successful here as in Europe this is solely due to the fact that the American railroad companies have systematically discouraged second-cla.s.s travel by forcing pa.s.sengers into filthy and over-crowded cars. The statement that increased travel would not be so economical to handle in America as in Europe scarcely needs a reply. If, as Prof. Hadley says, the American public demand more frequent trains than the people of Europe, and if these frequent trains are not at present profitable to our railroad companies, it would seem to be plainly to their interest to hold out every inducement to the public to increase travel and thus fill their trains.

Mr. Hadley does not aid his argument when, referring to the Hungarian zone system, he says: "The importance of the zone system in Austria and in Hungary lies in the fact that its adoption was accompanied by a great reduction in rates. The unit rate for slow, third-cla.s.s trains, which had previously been nearly a cent and a half a mile, was reduced to less than one cent.... The use of railroads under the new system, though vastly greater than it was before, is vastly less than that of a well-managed American road at American rates." Mr. Hadley inadvertently presents here one of the very best reasons why our pa.s.senger rates should be reduced.

The fact is, railroad men are opposed, and always have been opposed, to reduction of rates, and to all progressive movements that require increased expenditures or threaten to temporarily reduce their revenues.

When the introduction of the zone system was first advocated in Hungary it was opposed by just such men and just such arguments.

No one can contradict the following facts, viz.: That the average cost of European roads is much greater than that of American roads; that the number of railroad employes per mile is much greater there than here; that much larger sums are expended for repairing and improving the roads, and that therefore the lives of pa.s.sengers are much safer in Europe than in America; and that the average speed and corresponding accommodations of European trains, and especially those of England, Germany, France and Austria-Hungary, compare quite favorably with the average speed and corresponding accommodations of our roads. It is, under these circ.u.mstances, absurd to claim that the higher prices charged by American roads are due to the greater cost of service.

Mr. Hadley's labors as a railroad author have, it seems, greatly increased his corporation bias. In an address which he delivered before the American Bankers' a.s.sociation at New Orleans in November, 1891, upon the subject of "Recent Railroad Legislation and its Effects upon the Finances of the Country," he made a number of a.s.sertions which ill comport with the fairness of a public statistician or the wisdom of a Yale professor. After a few introductory remarks, Prof. Hadley made the following statement:

"Every one knows that railroad property has fallen in value since the pa.s.sage of the Interstate Commerce Act four years and a half ago; few have made any accurate estimate of the amount of that fall. Let us take the stock of the leading railroad systems centering in Chicago as a type. Here we find an aggregate shrinkage of over $60,000,000, or more than one-quarter of the par value of the stocks.

Par Value. Price. Shrinkage.

Apr. 4, Nov. 4, 1887. 1891.

C., M. & St. P. $30,904,261 93 75 $5,560,000 " " Preferred 21,555,900 122 119 647,000 C. & N. W. 31,365,900 121 116 1,568,000 " " Preferred 22,325,454 148 139 2,009,000 C., R. I. & P. 41,960,000 126 82 18,462,000 C., B. & Q. 77,540,500 140 98 32,567,000 ----------- ---------- Total. $225,651,000 $60,815,000"

The table shows that fifty-one million of these sixty million dollars are the shrinkage of the Chicago, Rock Island and Pacific and the Chicago, Burlington and Quincy stocks. It is surprising that Prof.

Hadley should be ignorant of the real causes of this depreciation, which are known to nearly every Granger in the West. In 1887 the Chicago, Rock Island and Pacific Railroad Company owned 1,121 miles of road, only 172 of which were outside of the States of Illinois and Iowa. In 1891 the same company owned 2,725 miles of road, with 1,776 miles outside of Illinois and Iowa and scattered through Missouri, Kansas, Nebraska, Colorado, Indian Territory and Oklahoma. In Kansas alone the Rock Island system grew from two miles in 1887 to 1,059 miles in 1891. In other words, to a little over a thousand miles of _good_ road the company's managers added nearly 2,000 miles of poor road and a proportionate amount of new stock, and the depreciation in the company's stock which followed was no greater than one should have expected under such circ.u.mstances. The managers of the Rock Island and the promoters of these new lines found the transactions to their advantage, while the original stockholders of the company had to bear the imposition, as hundreds of thousands of railroad stockholders had done before them. But neither the law of Congress nor that of any State was to blame for this depreciation of the Rock Island stock.

Since 1891, railroad stocks have advanced on an average at least twenty per cent., and during the last sixty days have declined about twenty-five per cent., although there has been no essential change in interstate or State legislation. It is certainly as fair to call the advance the ultimate result of restrictive railroad legislation as to attribute to that legislation the shrinkage above referred to. Extensive speculations similar to those just mentioned were, during the same period, indulged in by the managers of the C., B. & Q. Railroad Company and its protege, the C., B. & N., who, in addition to this, greatly injured their road in 1888 by the unjust provocation of the engineers'

strike. So destructive were this strike and its consequences to the company's business that it is difficult to account for the motives of those who provoked and stubbornly prolonged it except upon the theory that it played an important role in their stock manipulations.

But the recent legislation of a considerable number of States has, in Prof. Hadley's opinion, been still more detrimental to railroad interests than that of Congress. He says;

"In the second place, the legislatures of several States, stimulated by the example of Congress, hastened to pa.s.s in imitation, of the Interstate Commerce Act, laws which, in many instances, went far beyond their model in point of stringency. Examples are furnished by the statutes of Iowa, Maryland, Minnesota and South Carolina in 1887-88; of Florida in 1888-89, and of no less than thirteen States in 1889-90, viz.: Georgia, Iowa, Kentucky, Ma.s.sachusetts, Mississippi, New Hamps.h.i.+re, New Jersey, North Dakota, Ohio, Rhode Island, South Dakota, Virginia, Wyoming; as well as by the recently adopted Const.i.tution of Kentucky. The legislation of 1890-91 shows a slight reaction against the movement of the three years previous.

"In two respects the State legislatures went quite beyond the scope of the Interstate Commerce Act. They tried to prescribe safety appliances to the operating department, and rates to the traffic department. Of the first of these groups little need be said, except that as a rule they have failed to accomplish any great progress toward the result in view, and have in some instances actually hindered such progress. The attempt at prescribing rates was more serious.

It involved a return to the methods of the Granger legislation, fifteen years earlier, which had operated so disastrously upon the railroads and the public alike. The system of commissioners with powers to make schedules which should be at least _prima facie_ evidence of reasonable rates had, during the intervening period, never been wholly abandoned; but the powers thus conferred had been sparingly exercised. It was either left unused, as was generally the case in the North from 1877 to 1887, or the schedule rates were put so high as not to interfere with good railroad economy, of which examples are seen in Georgia and other parts of the South. But from the year 1887 onward there was a pressure upon the Commissioners to make schedules, and to make them low; and lest these boards should not be able to reflect the popular feeling directly enough, they were, in some instances, no longer to be appointed by the Governor, but elected by popular vote. The law which was most severely applied and attracted most public attention was that of Iowa.... The agitation against the railroads has many points in common with the land agitation in Ireland. Absentee owners.h.i.+p is at the bottom of the trouble in either case.

Property is owned in one place and used in another, and the users, not satisfied with the conditions of use, insist on taking the business direction into their own hands. They claim the right to fix rates in Iowa for the same general reasons by which they claim the right to fix rents in Ireland."

It must be presumed that Mr. Hadley is ignorant of the fact that under the Iowa Commissioners' tariff the gross earnings of the Iowa railroads increased $7,000,000, or more than 17 per cent., in about three years, and their net revenue increased in proportion. Never have the railroads or the people of Iowa enjoyed a healthier prosperity than they do at present. It is true that the State of Iowa denies to the railroad companies the right to charge what they please; but this claim does not prevent them from doing justice to the absentee owner of railroad property. That absentee owners of property are disposed to take undue advantage of those who use it is ill.u.s.trated in the very case which Mr.

Hadley cites. So flagrant was the injustice done by the English landlord to the Irish tenant that the English Parliament was constrained to interfere and correct it.

Mr. Hadley says further:

"It is seen in Iowa to-day, where, as a result of radical legislation with regard to rates, railroad construction has almost entirely ceased, the average for the years 1888-90 being less than fifty miles."

Now Professor Hadley hails from the State of Connecticut, where railroads are permitted to make their own tariffs and where legislators are supposed not to be hostile to them. According to Poor's Manual, that State had 1,004.02 miles of railroad in 1888, and just 2.52 miles more in 1891, while Iowa had 8,364 miles in 1888, 8,436 in 1891, and 8,505 miles on January 1, 1893. Will Mr. Hadley please explain why railroad construction has ceased in Connecticut? Iowa has one mile of railroad for every 227 inhabitants, and Connecticut has one for every 741 inhabitants, although the per capita valuation is $473 in the latter, and only $273 in the former State. Nor have other Eastern States done much better than Connecticut. During the three years 1888-1891 there were built 74 miles of railroad in New Hamps.h.i.+re, 50 in Vermont, 23 in Ma.s.sachusetts and 9 in Rhode Island. Iowa has an area of 56,000 square miles and a population of 1,911,896, an a.s.sessed valuation of $520,000,000; New England has an area of 66,400 square miles, a population of 4,700,745, and an a.s.sessed valuation of $3,500,000,000.