r uults oß the
Oregon Politician
and How to
Cure Them
How Our Pax Commission and
Our Railroad Commission
Are Selling Us Into
Slavery to the
Corporations
rhis Little Pamphlet is Worth Over
$100,000,000 to the People of Oregon if
They Only Understand and Act With
Judgment in the Future
Faults of the Oregon Politician
—»frioe-i—
INTRODUCTION.
In undertaking to write this little volume I deem it best to
be just as brief as is consistent. Tbat all may read as they run,
and may understand without difficulty.
Be it remembered, that not long since the people of Oregon
adopted the initiative, referendum and recall. The great reason
in adopting these measures and making it possible for the people
to make their own laws, was that the Legislature had been negli¬
gent in the performance of its duty and had failed to provide
proper remedies for railroad extortion. The politicians and
railroads knew that it was possible for the people to secure the
services of a competent leader and initiate some very appro¬
priate statutes which would be worth many millions of dollars to
the public and at same time stop railroads collecting millions of
dollars that was purely extortion.
The railroads wanted to continue this; the people wanted it
stopped, and here was a duality of interests. The politicians
wanted office and wanted it badly. So here was a chance for
some extremely two-faced work by the politician. Politicians
can fool most of the people a part of the time, a part all the time,
but they cannot fool the railroads any of the time. Consequently
the best office getter in the world, and the politician who makes
the most money out of politics is the person who can fool the
most people and at the same time best serve the corporation. By
this I mean get the people to submit to that which is wrong and
at same time secure for corporations things they are not entitled
to.
THE DEVELOPMENT LEAGUES.
Be it also remembered, that soon after Oregon adopted its
new lawmaking power, certain citizens got together and or¬
ganized development leagues. I do not doubt but my readers
will know that the people adopted the new law to protect them¬
selves. And I am going to endeavor to show you that the de-
Copyrighted 1914 by Franklin Wilks Gaines
o
velopment leagues were organized to protect the rail lines and
also fool the people and continue extortion.
The slogan of these leagues was "A Greater Oregon." These
leagues advocated the creation of a tax commission and a railroad
commission. A tax commission may be a benefit and it may be
a curse, and it certainly has been a great curse in Oregon on
account of the fact that it over-valued our railroads and other
public service property. This was tantamount to watering
stock. It doesn't make any difference whether the county,
the assessor or tax commission oveiwalues, and on account of
this fact licenses extortionate rates, it is one and the same thing.
It is not water in stock that makes trouble, hut extortion.
WHAT THE TAX COMMISSION HAVE DONE FOR
OREGON.
The reason we regulate rail lines is because under the law
they are public highways. Owned by private parties, it is true,
but nevertheless public highways, operated by these private
parties under a contract with the State to perform a public
service. That is, furnish transportation for the people. In the
operation of this highway these lines have been granted by
statute the privilege of collecting rates or taxes as pay for their
service. The State should never permit more than reasonable
rates. Making reasonable rates for railroads is much like mak¬
ing reasonable rates in our county budget. Most of us know
what it means to leam that our tax will be 22, 24 or any number
of mills for the coming year. In our county budget we pay on
each dollar's worth for which we are assessed. In the railroad
business we pay a certain number of mills on each ton mile
carried by the line. This charge is known as the mills per ton
mile charge. All of us know what it means to pay three cents
or 30 mills per passenger per mile, but few of us understand the
ton mile charge for carrying freight. Here is a chance for rail
lines to overcharge or discriminate in the freight business while
it would he easy to catch them in the passenger service. I
have found some freight rates that were eleven times as much
as others in proportion to distance. The line I am going to
write about first was entitled to collect seven mills per ton mile
and no more. Because in the support of our highways we
have to pay rates as taxes much the same as though we owned the
lines.
3
On this line operating expense requires 5.30 mills
Tax on property 20 mills
Interest on bonds 50 mills
6 per cent, to stockholders 1.00 mill
Total mills per ton mile charge 7.00 mills
Now remember the stockholder owns the road and gets
all after the first three items are paid and these three items
always absorb 6 miUs and stockholder gets all else. Be sure
and get this down in your memory good and hard for it is neces¬
sary to understand it in future rates that will be mentioned. If
exhorbitant rates are collected it will be shown in the exhorbi-
tant rate of interest return to stockholder. If the line be over¬
valued it also increases the stockholder's return and conse¬
quently is an unjust charge against the rate payer. This 0.
E. & N. Co. was reorganized in 1896 and all that was put into
it, from good authority, was bonds $20,060,000; Payment on
stock $1,441,500. This was a little less than $25,000 per mile. I
hold it is the well established law that the value of the line does
not exceed the cash put into it at the time it was acquired. Now
6 per cent, interest on $25,000 per mile is $1500 per mile and is
certainly all the owners of line should be permitted to collect
on their investment.
If the people of Oregon had initiated a law they cer¬
tainly would not have allowed a greater return than this. But
the tax commission placed a value of $82,000 dollars per mile on
nearly the entire property, or more than 3% times what was paid
for it. They certainly spoke into existence over $23,000,000
worth of property that will cany an aggregate interest return of
$1,380,000 to the stockholders, which was absolutely wrong, and
something the company was not entitled to at all, and fastened
this burden upon the citizenes of Oregon. This is not all.
Remember, that the bondholders' interest covered over
$23,000 per mile of this line, while the stockholders only invested
less than $1,700 per mile. But of this advance of $57,000 a mile
put on by tax commission the stockholders got all.
Here the stockholder got this vast property on an invest¬
ment of a little over 2 per cent of the value put on same by tax
commission. The tax commission also raised value over cost
nearly 100 per cent on all branch lines of this company in the
state. Courts hold, and rightfully, that states may tax lines at
three times their value if the line is collecting three times a rea-
4
sonable interest return on its value. That is if a line is only worth
$25,000 but is collecting what amounts to 6 per cent on $75,000
a mile then we may assess it at and collect on a value of $75,000
per mile, because a property is worth all it is pa3dng 6 per cent on.
Courts also hold, and rightfully, that the state may regulate
and take oif this extra 12 per cent return after which we only
have a right to assess at $25,000 per mile. But we also save
$3,000 per mile interest return to owner of propertj^ But our tax
commission and railroad commissioners seem to work in collu¬
sion with the rail lines and the result this terrible abuse. E._H.
Harriman was the active head in the reorganization of this line
aud at same time a director of Standard Oil Company. Kuhn
Loebe & Company, of New York, or what is known as the Stand¬
ard Oil group of capitalists, own the line. This is history of
course, but I don't think it need be doubted for a moment.
This being the case it ought to shock us to note such terrible
transactions. Harriman died recently with a fortune estimated
at $140,000,000, nearly all of which had been accumulated within
15 years before his death. What I have been reciting certainly
.shows where a part of it came from: There is absolutely no pos¬
sibility of Mr. Harriman or any one else picking up millions of
dollars in anj- state in the Union in this manner except through
the dishonesty or incompetency of the state's officials. The city
of Portland is a wealthy city with manj' millionaires and some
multimillionaires, but it has not been assessed for this much upon
an average for the past ten j'ears.
THE RAILWAY COMMISSION BILL.
The development leagues advocated the creation of a railway
commission law and commission and both were provided for
in the 1907 session of the legislature. But, oh, gracious! What
a law! The politicians at Salem that session did not want a
law to protect the people from further extortion, but one that
would protect the roads in continued extortion. The legislature
as a whole was not to blame, for not one member in ten ever
knew what was the effect of the law. It was the corporation
crowd and those high in the administration that was to blame.
They put a railroad attorney on the committee of railroads
and transportation and he certainlj^ did see to it that nothing
was permitted to become law only what suited the railroads.
The law should have given the commission full power to stop
5
the collection of all extortionous rates. For where there is extor¬
tion the people are paying it, and the company getting it, hence
corrections ought to he jorompt. The lines are required to make
full reports to commission and this work is similar to field
deputies in assessing for county purposes. Commissioners should
take these reports, make a mathematical proposition of them and
do the fair thing between road and patron. This is all very
simple and we have women stenographers in Oregon working
for $75 a month who could provide rates for every road in the
state in three months time. And all the preparation they would
need make would he to study the theory of regulation for one
months time to prepare themselves for the duty. Our railroad
law provided three men at $1,000 a month for the three and ex¬
penses. But the worst of it was they were certainly expected to
do nothing nor have they done anything hut jockey the people
and protect the railroads. The first provision in the law that
ruined its usefulness was, instead of making it the duty of the
commission to regulate and provide proper rates for all service
and protect the people from extortion. The law provides that:
"Upon complaint of any person that any rate is unreasonably
high, that the commission set a date for a hearing and notify the
road complained of that complaint has been made and have an
investigation and appear with lawyers and meet the railroad and
their lawyers and go into litigation, and if the rate is found to
be unreasonable the commission may reduce it. This absolutely
killed the usefulness of the law; it was absolutely worthless;
worse than no law with this provision, and Oregon's politicians
in possession of the administration.
How many people in the state will quit their own work and
file a complaint because the freight on their shoes is too much
or on their groceries, or their dry goods, or any thing else? Not
one person in 1,000 has the slightest idea of how to determine
whether or not a rate is reasonable. Not one lawyer in twenty-
five can successfully handle a rate case. So this absolutely
ruined the law and it was exactly what the politicians and roads
wanted done. But to make it more dead, sure dead, and worse
than no law, they put in section 16. Section 16 provides that all
rates for service in the state must he filed with the commission
and when so filed become the lawful rates until changed by the
road or the commission. Other states where there is an honest
effort to regnlate make rates prima facie reasonable and if a
shipper can show the rate is extortionate he may go into court
6
and have the rate made reasonable. But the Oregon law makes
the rate lawful simply if filed with the commission, and no redress
is possible in Oregon though rates may be twice as much as
they ought to be, or more. This gives the commission a chance
to play politics with the road and they surely have done it.
Here is another and greater reason for putting section 16 in
the law and that is this: The Supreme Court of the U. S. had
decided that the courts had power upon an action to determine
whether or not a rate was reasonable, and if unreasonable to
award such reduction as would bring the rate within the bounds
of reason, and compel a return of all excess collected. But this
Oregon law makes it lawful to charge any old rate and there is
no possibility of going into court and getting the rate reduced
in Oregon, because the commission has been given power to
make rates reasonable and to them you must look. Our railway
law was put up this way certainly as a corrupt political deal
between the rail lines and the state administration. Soon after
the commission bill was passed the 0. R. & N. Company had
over $32,000,000 in their treasury they seemed afraid to divide.
All of half of this was purely extortion and it was possible for the
people who had paid it to sue and force its return. But after
section 16 was put in, making rates lawful until changed by the
commission, then nothing could be done and the company dis¬
tributed their ill-gotten gain. If we had no commission law,
people could force the return of millions of dollars under the
common law, that is now being collected. So it is a fact that our
law and commission is much worse than the way we were sit¬
uated before. So much for the worthfulness of our railway com¬
mission law. If the commission had gone to work and made rates
reasonable, very good; but what have they done?
SOME OF RAILWAY COMMISSION'S WORK.
The first case of importance to be taken up by the commis¬
sion was class rates from Portland to eastern Oregon points.
In reviewing the commission's work on this line in figuring value
of line, I will figure on a value of $57,842 per mile line. This is
over 214 times as much as company invested, but I use this value
so no one can say I am unfair with line or the commission. Of
this, the stockholder invested $1,700 per mile, and I figure a 6
per cent return on $32,842 per mile. This I do because the new
company got the line off the bargain counter at about 5 per cent
7
of former cost. This I do not claim is fair by any means to the
rate payers, but it makes my figures safe.
In handling these rates in this case they only made rates
from one station, Portland to eastern Oregon points. There
were ten rates all told. The lowest was 17 mills per ton mile,
which after 6 mills is allowed for operating expense, tax and
interest on bonds, left 11 mills for stockholder and paid him the
fabulous return of 66 per cent a year on all goods handled under
this rate. The commission reduced this rate to 15 mills which
pay same charges and 54 per cent a year to stockholder. Mind you,
this was the lowest of ten rates and figured on an investment that
onlj^ cost 5 per cent of price figured at.
The highest carload rate was found to be paying 41% mills,
which leaves 35% mills, for stockholder and was paying fixed
charges of 6 mills and 213 per cent a year to stockholder. The
commission reduced this rate to 38 mills, which leaves 32 mills to
stockholder or 192 per cent a year on his investment. This sounds
so fishy many do not believe it, but this rate was 64 cents per 100
pounds for a SCO-mile haul. While other rates, Boston, Mass.,
to Portland, Ore., were 65 cents per 100 and over same line for
a 3,200-mile haul. Here was only 1 cent difference in a 300-mile
haul in Oregon and a 3,200-mile haul coast to coast and over the
same line. Can any one doubt that it paid 213 per
cent a year to stockholders? Sugar was one of the
articles carried at this high rate in Oregon. The commis¬
sion reduced this rate to 58 cents per 100 pounds, making 7 cents
difference between the coast to coast rate and the Oregon haul,
or over nine times as much in proportion to distance between the
Oregon haul of 300 miles and coast to coast haul of 3,200 miles.
There were six of these rates and commission reduced to an
average of 41%2 cents per 100 pounds for a 300-mile haul, or nearly
seven times as much in proportion to distance as coast to coast
haul. After this these rates averaged 27.66 mills per ton mile
paying fixed charges of 6 mills per ton mile and an average of
130 per cent a year to stockholders. I have only noticed carload
rates because the less than carload rates were so much higher
I will not mention them at all. It took the commission eleven
months to get these reductions into effect with the above result.
This was practically all that was accomplished the first year's
work of the Oregon commission so far as rate making was con¬
cerned. The commission in this case employed an attorney who
had drafted a commission bill for the development league. He
8
had been very active at Salem, session of 1907, provided the
terrible railway commission law or knew quite well the kind
of a weakling it was. Yet he made arguments before the com¬
mittee on railway and transportation, pretending to be on the
side of the public. I have been finnly convinced for years that
this attornej^ is a railroad tool in disguise. I am of that opinion
yet. This attorney had previous to this handled a case for the
lumbermen's association in which he got a rate continued of 40
cents per 100 pounds on lumber, Portland to Omaha, an 1800-mile
haul, yet he got a rate on sugar over same line, Portland to La
Grand, 305 miles, of 58 cents per 100, or nearly 50 per cent higher
than the long haul. This was 8.55 times as much for Oregon haul
as Portland to Omaha haul in proportion to distance. The reason
he did this was certainly this: When he got the long haul rate he
was working for the lumber trust, that could not nor would be
fooled. Wlaen he got the rate on the Oregon haul he was working
for the state administration, for the dear people who it is very
easy to fool. There is certainly no excuse for sugar or fifth class
to be charged 8.55 times as much as lumber, but three times as
much is sufficient and were it charged three times as much in
proportion to distance the rate would be 15 cents per 100 instead
of 58 cents.
RATES ON GRAIN.
Grain is carried the nation over for 79 per cent of the aver¬
age charge for all tonnage. Ignoring this fact and permitting
grain to be charged at the average price for which all tonnage is
charged, grain was paying its portion of the operating expenses,
interest on bonds, taxes on line of 6 mills per ton mile and 46
per cent a year to stockholder on his cheaply acquired property
when commission bill was provided. The excess was $30 a thou¬
sand on every thousand bushels wheat sold and was consequently
a very interesting item to farmers. The sugar rate was about
three times as much. Grain sacks about the same. Salt about
twice as much. All class rates, 10 in number, more than twice
as much. Grain was about the most reasonable rate we had.
But we often heard the remark: "If we could only get a reason¬
able rate on grain." N. E. Winnard, at Reppner, filed complaint
asking a reduction on grain. The commission say of this in their
report 1908, page 41: "On June 29, 1907, the Reppner people
were advised that the matter seemed to liave reached a point
where a formal complaint was necessary and the services of the
9
commission were tendered in this connection. They also advised
Mr. Winnard to join all other points of shipment in presenting
the matter. This meant file formal complaint, get an attorney
and witnesses and go into litigation with the railroad. It is need¬
less to say Mr. Winnard dropped proceedings.
Next Mr. Biggs on August 8, 1907, filed a formal complaint
urging the commission to give proper reductions in time to ben¬
efit crop of 1907. The commission advised him to join other
parties. But Mr. Biggs insisted and the commission put him off
until the latter part of October to commence his litigation. This
would be but little benefit on crop ready to move in August, so
Mr. Biggs did not press his case. Mr. Biggs died without ever
getting a hearing. Case closed. The next case came from
Umatilla County farmers, who filed a complaint asking for a
reduction on grain. To this the commission replied: "We have
no evidence upon which to grant a reduction—if you farmers
have, we vdll sit and hear it and make reduction if you show you
are entitled to it. So one of the farmers took the matter up with
his associates, tried to raise $2,500 to go into litigation with the
railroad company and this knocked the farmers off the perch
here. Case closed. Every grain case had been a failure up to this
time, and it was exactly what the law was made this way for, to
bluff people out of their rights. When you suggest to the timid
people to put up money to litigate with a railway line they are
very apt to say NO, and they did in these instances.
At this juncture the writer associated with himself Judge
Fee and Geo. Feebler, of Pendleton, and went into a contract
with many farmers to do just what the law provided and just
what the commission had advised. Get together, file formal
complaint, get witnesses and attorneys, meet railroads and their
attorneys, and show the commission what rate farmers were en¬
titled to. It seems strange that shippers were required to do
this, but it was what the Oregon law required, and it is this way
yet. We were to have 50 per cent of the reduction for the first
year for our services to be paid by fanners. After we had worked
four months on our case the commission say, in their report for
1908: "On July 8 they passed a resolution to investigate grain
rates on O.-W. R. & N. line." Now, what were they to investigate
for? They had been in office for fourteen months. They ought to
have been able to make a reasonable rate for all service in one
month after they took office and now they conclude to investigate.
Four months later they sat and heard evidence in this case at
10
Pendleton. Soon afterwards at Wasco, Condon, and Reppner,
Not one word did they ever introduce in these pretended hearings
to show that there was an unreasonable rate being charged or to
form a basis upon which a reasonable rate could be based.
They subpeoned farmers who came and testified about price
of land, rates of interest, profits in farming and a few other de¬
tails, and then stopped. They investigated four months before
having hearing and pretended to litigate for 360 days longer
before they got their reductions into effect. Had first hearing
on November 5. 1908, had reduction into effect November 1, 1909.
All this time the road was collecting about $14,000 a day more
than it was entitled to, and the people were paying it. And what
a reduction. This rate had been paying its portion of operating
expenses, interest, taxes and 46. a year to stockholder and the
commission reduced it to 33.42 per cent net in future.
It is the same now.
We intervened in this case and made an argument claiming
"that farmers ought to only have to pay 6 per cent on the invest¬
ment represented by the capital stock and placing a value on this
capital stock of over $32,000 per mile. We did not know that
this $32,000 per mile had been acquired at about 5 per cent of
the price we figured on or we would have claimed a good deal
more for our clients than we did. We also showed that this line
was owned by 23 stockholders and that if all rates were unre¬
duced to that price 6 per cent, each of these stockholders would
get a net fortune of $76,500 on his holdings each year, and at the
then enormously unreasonable rates, they were getting an aver¬
age of $210,000 a year net on their holdings. But we might as
well have had a yellow dog go and bay at the moon as to make
an argument to this commission. They certainly resorted to
every subterfuge they possibly could to tire us out and protect
the company, going so far as to misconstrue court deecisions to
gain their point.
RIVER IMPROVEMENT.
Some politicians and the corporation press is pointing to
river improvement as a panaca for railroad extortion. We in¬
vestigated the river proposition. We found it took 20 men to
run a 200-ton boat, while 5 men run a 2,000 ton train. And it
takes 200 men on boats to handle as much tonnage as five men
on a 2,000 ton train handle. We found freight rates on boats
and rail both unreasonably high from every part of compass.
11
Even, from The Dalles to Portland, where there is unrestricted
competition. But the great big thing we found by sending to
War Department, Washington, D. C., was that by figuring cost
of locks at 3 per cent a year a $30,000 appripriation which they
got and $16,000 maintenance which we pay, it cost the people of
the nation $2.80 for each ton that went through locks in a year
and $2.80 if applied on a haul Baker to Portland will pay operat¬
ing expense, interest and taxes and 6 per cent a year to stock¬
holder. Indeed, $2.80 a ton is the proper rate that this company
ought to be limited to between Baker and Portland. This is not
all. Umatilla is where the Spokane line and Huntington lines
come together and from there in to Portland is by far the most
dense traffic on this line. The road is doing about $25,000 per
mile a year on this part of their line. While they only average
about one-third this on entire line. Law writers and courts hold
that the denser the traffic the lower rates should be, yet when
we figure the rates by rail alongside the river at same as we have
figured line from Portland to Huntington and cut out the fact
that traffic is so dense here, we find them making the same 33
per cent on grain, 192 per cent on sugar and grain sack, and an
average of 130 per cent a year on all claiss rates, all over and
above operating expense, interest and taxes the same here as
elsewhere. This part of the line is also the easiest railroading
on the entire line. The decline from Umatilla to Portland is
1.60 feet to the mile and the verj' maximum of trains can be
moved either up or down the river. The line is collecting all of
$10,000 per mile a year alongside this river, or an aggregate of
$1,860,000 each year in excess of justice.
The administration of Oregon have a perfect right to stop
this and can, whenever they try, and it is their duty to do it.
But the corporation, the press and political machine don't want
it stopped. Simply for the reason that when we allow the corpo¬
ration to collect millions of dollars they are not entitled to and
give the press a rake off out of it, and divide with some politi¬
cian's heli3, some politicians get office with a part of it and keep
other politicians from getting office with a part of it, the people
need not expect the practice to be stopped. Figured on a mileage
basis excess collected by this line shows the amoimt collected of
each county to be as follows:
12
Baker
Hood River
Multnomah
Umatilla . .
Wasco ....
$475,360 Gilliam
191,565 Morrow
305,085 Sherman
734,687 Union .
238,037
358,297
114,336
106,428
535,671
These figures are not far from what is being collected today.
There may be a little more or less collected now, but difference is
slight, if any.
It may be wondered at that merchants are paying such stu¬
pendous rates and passing the burden on to their customers, hut
they are doing it and this is the way it is worked: A commercial
club is organized and some of the members are either railroad
men or very enthusiastic supporters of the political machine.
The wise ducks on inside see to it that this element is chosen
for officers. And if a committee on transportation is chosen the
same element is used on this committee. And if an expert rate
man is employed he never tries to get reasonable rates in the
interest of all, but confines his efforts to saving money for his
particular clients. They may pay 25 per cent more freight
charges than the}^ ought to, but if the other shippers pay 40 per
cent more his clients have a decided advantage. Some people
may think that rates are the same to all nowadays, but there is
many ways whipping the devil around the stump yet. I have
known jobbers on committee of transportation to pay 192 per
cent a year on capital that transports sugar and pass it on to
their customers. Yet this jobber belonged to the most influential
element in our state, and if his element would demand and work
for a square deal it would he absolutely impossible for present
conditions to exist. This element is standing squarely with the
political machine and sordid corporation. I have visited most of
the cities in the state, and I am convinced that this condition
exists everywhere I have been. So far as getting reasonable
rates for public is concerned the railroads might appoint each
member of this committee and the transportation expert and ap¬
point them with a view to keeping up rates. Indeed, I have been
convinced that these transportation experts are on salaiw both
from railroad and club. This transportation expert is the man
that is looked to for most all information on the rate question,
and if he is on two salaries he has to fool one and serve the other.
He can't fool the railroads. The readers may answer as to who.
13
THE PEOPLE TO BLAME SOME.
These fabulous extortions amounting to hundreds of millions
of dollars are being collected by a very small number of extremely
rich people. These rich people are "entitled to a reasonable
return on the capital they employ for public use," says our
Supreme Court. As low as 4 per cent a year has been held to
be reasonable by this court. Yet the people go on and permit
these iDCople to collect the fabulous returns mentioned in this
work and make but feeble protest. If rates are made so low that
they get less than they are entitled to they go into court and
have rates set aside. If the public would act with same prompt¬
itude these extortions never would have existed, but, alas! They
scarcely try to protect themselves.
PROFITS TO O.-W. R. & N. CO.
This line was reorganized in 1896 by E. H. Harriman for
Kuhn Loebe & Co. or the Standard Oil group of capitalists. From
good information all that was invested in the $35,000,000 of cap¬
ital stock was $1,441,500.
Got road for less than cost by $27,809,404
Profits from operation fourteen years 48,136,161
Improved line charged to operating expense 5,121,044
Tax commission raised value main line 6,724,186
Tax commission raised value Columbia Southern 924,083
Tax commission raised Arlington-Condon branch. ... 545,500
Tax commission raised branch Pendleton to Pilot Rock 101,367
Grand total $90,894,245
This means a profit of $89,452,745 in fourteen years. Or an
interest return so stupendous I will not undertake to figure it.
Verily, verily, when the political machine combines with corpo¬
rations to hoodwink us, we stand anything.
IS IT AMENACE?
Among the property owned by this Standard Oil group of
capitalists in the West is the 0. R. & N. Railway Co., the Oregon
Short Line Company, the Union Pacific Railway Co. and Southern
Pacific Railway Co. They are also reported to own beef trust,
steel trust, tobacco trust, oil trust, sugar trust, and life insur¬
ance, stock up to billions of dollars. The above enumeration is
14
only a part of the railway interests they own. By reference to
statistics I find the net income per year on the above enumerated
railroads to he as follows on roads and the corporate stock held
for their interest hy these roads:
Union Pacific Eailroad $ 59,188,998
Oregon Short Line Eailroad 49,315,144
Oregon Eailroad & Navigation Co 7,356,108
Southern Pacific Co 57,801,774
Making a total annual net income of $173,662,024
This is $14,555,968 a month after their operating expenses
and taxes are paid. The U. P. and 0. S. L. were reorganized
about the time the 0. E. & N. Co. was, and at nearly as favor¬
able a speculation as recited above about that company. Many
many millions of dollars of this is known to be purely and solely
extortion and tolerated only because our administration is sub¬
stantially holding our hands while these corporations go through
our pockets. But when we remember our own state is permit¬
ting this company to charge our poor wash women and every
other poor citizen served by this line 192 per cent a year on
capital that transports their sugar this certainly is the limit.
Although our railroad commission has been given power to make
reasonable rates in the state and to secure reasonable rates on
interstate service by applying to the interstate commerce com¬
mission, comparatively^ nothing in the former instance and almost
absolutely nothing in the latter has been done. This terrible
condition certainly can not continue much longer without serious
results. People now living and responsible for this awful
malfeasance may live to see the day that their children will pay
the penalty of these wrongs with their property and possibly
their lives.
THE OREGON & CALIFORNIA RAILROAD.
This line is second in importance in the state and presents
possibly a more aggravated case than the 0. E. & N. Co. This line
was chartered in 1869 and the important conditions of the char¬
ter was, it was granted millions of acres of land to assist in
establishing a public highway for the people of the state. The
land was to be sold at not to exceed $2.50 an acre, and to actual
settlers and not to exceed 160 acres to each settler and aJl land
situated in Oregon was to be applied on that part of the road in
15
Oregon. Thus it was clearly the intention of Congress to have
the people provide the land which was to be sold and the pro¬
ceeds to go towards establishing their public highway, and
thereby lessen the investment of the company, so that the people
would not have to pay an interest to the company for this much
of the value of the road. But this company sold part of the land,
mortgaged the rest of it and finally succeeded in getting the road
established and now have over 3,000,000 acres left that they want
to divide as a dividend with their stockholders and yet charge
very exorbitant rates on the road and much more than they would
be entitled to if they never had had any land grant. This
land is said now to be worth $70,000,000, while the road cost
less than $40,000,000. This line now is trying to keep this land
and turn it over to stockholders, and if they do the people of
Oregon will have contributed about $2.00 in land alone for every
dollar that ever went into the road. And if politicians of Oregon
can make money by it, they will certainly help them get away
with this land. This line's reports show that it is owned by
sixteen stockholders and that the land alone will give them each
a fortune of over $4,300,000 as net dividend which is clearly the
people's property.
The assessor of Jackson County assessed this line at $10,000
per mile and the company went into court and asked for a reduc¬
tion to $3,500 per mile, and the court reduced this assessment to
$4,500 per mile.
The tax commission raised this value to $65,000 per mile and
the company is standing it without a murmur. Verily the com¬
pany would rather have an interest return on $65,000 a mile than
a smaller value and this is certainly why they stand this high
valuation. The tax commission have placed a value on this
line of over $36,700 per mile on branches and main line averaged
together. This certainly is all the property is worth, not figur-
uring any credit for the land. To show readers how we know that
excess is being collected and that rates are extortionate, we
append the following table:
Aggregate value road in Oregon $23,309,885
Eevenue collected for year 8,609,945
Operating expense and taxes for year 4,532,760
Leaving net income to capital 4,127,185
Six per cent on above value would be 1,398,593
Thus showing excess to be 2,728,592
16
This is 17.70 per cent interest a year, when they were only
entitled to 6 per cent.
People in the southern part of state are paying much more
of this excess than the northern end on account of the fact that
charges are so extremely high from either direction to southern
Oregon points. The same river improvement dodge is brought
forward by politicians here that has been mentioned about 0. E.
& N. line and certainly for some reasons.
This is for all services both state and interstate, and when
it is remembered that rates for hauls in the state are much higher
in proportion to distance it is truly a wonder that such a condi¬
tion could exist. To show specifically of the exorbitant rates for
service in the state I will say that the lowest class rate out of
Portland for the average length haul is paying operating ex¬
penses, taxes and 30 per cent a year on entire value of line. While
the highest carload class rate is paying these fixed charges and
152 per cent a year on entire value of the property. Averaging
these carload class rates they pay fixed charge and 90 per cent
a year on entire value.
WHAT IS THIS EXCESS COLLECTION COSTING THE
PEOPLE OF WESTERN OREGON?
This line is certainly collecting $2,728,592 that it is not en¬
titled to, and nearly all on the main line. That is, they collect
this much more each year than is reasonable. Figured on a
mileage basis the following shows amount of excess in each of the
counties the line runs through:
Josephine $275,058 Douglas 860,344
Linn 267,624 Jackson 473,210
Multnomah 36,170 Lane 304,797
Clackamas 163,548 Marion 304,530
This account gives Multnomah only $36,170, while it gives
Douglas $860,344, this on account of the fact that a mileage basis
is used. This is probably incorrect. But on account of high rates
to southern Oregon the citizens of Douglas, Jackson and
Josephine Counties are paying more than five times as much as
Multnomah county of this extortion in proportion to population.
HOW THE LEGISLATURE IS FIXED.
All the prominent members of the legislature, or perhaps one
in ten of the members certainly know that the facts I complain
17
of and the charges I make are true. But perhaps nine out of ten
do not know existing conditions and never find them out, and the
prominent members keep them just as ignorant as possible.
How is this accomplished?
The writer has attended four sessions of the legislature and
it was not until the third session that he dropped on to how the
game was worked. It has been the custom for many years to
appoint committees for the different branches of legislation and
these committees recommend that the bill pass or do not pass.
One is committee on railroads and transportation. The influential
members of this committee are certainly always good friends of
corporations. And also, of the political machine. If a good bill
is presented it is killed in committee. If a poor one is presented,
one that fools the people and continues abuses and extortion this
bill is recommended to pass. And here we have the incubator of
most of the corrupt deals in the legislature. These committees
are appointed by the speaker of the house and president of the
senate. Both these officers are aspirants for higher places usual¬
ly. They are willing to log roll. Both these officers are elected
by their house. How to get the necessary votes to be elected is
the first question to them. If some one comes to them recom¬
mending a person for a certain committee and explains—Our
count}^ with 5, 10, 15 or 20 votes wants this person, and it is best
bid offered it is apt to knock the parsimmons. The speaker and
president may not themselves know why this committeeship is
wanted. But they do know that if they serve the corporation the
corporation may help them and the people won't know anything
about it, and will support this aspirant in future. But if he
does square for the people the corporations will know all about
it. The present political machine in Oregon can and does fool
most of the people all the time. But they can't fool and don't
try to fool the corporations any of the time. In concluding this
part of my narrative I will say in all earnestness, and with all
candor that if I was bound by the most solemn oath that it is
possible for mortal to take and liable to the pains and penalties
visited for perjury if I make a false statement, that I would say—
There is no more chance for the people at large in Oregon to secure
legislation in the common interest of society than it is possible
for an angle worm to escape if plowed up in the garden with
three hungry hens following the plow for every worm that comes
in sight. And there is no more a party organization with the
object in view to serve the whole pepple than there is an organ-
18
ization among the sheep in Oregon to protect themselves from
coyote wolves, so far as leaders are concerned. I have absolutely
no quarrel with honest democrats, republicans or the members
of any political party as such. It is only the two-faced politician
playing the dishonest game that I complain of.
WHY I DON'T GIVE NAMES.
I am not going to give a single name in this volume. Just
console yourself, dear readers, that it is not any apter to be a
member of your party than any other party—and if it is a member
of your party that gets hit it is not because he is a member of the
party at all,'but because he is a party crook—Working against
your interest and mine—That is unless you are a crook yourself
and beating the game. To illustrate why I don't give names I'll
tell a story;
A colored parson once told his congregation that the place
that plagues the abode of sin was terribly cold.
Taken to task about it he said: "I gist had to do it; had I
said it was hot these old rheumatic cusses would want to go
down the fust frost."
Many good honest, first rate citizens act with the judgment
of the female swine that devours her young and defends her
nest. These unfortunate people are actuated by party love and
party hate.
They want reform but they do not want their loved politician
bothered. They want reform but they don't want to support
any one in the other party, they have opposed so long. You must
get out of this, dear reader.
The politician takes advantage of your loves and hates,
counts noses and throws the election to your enemy. To me the
politicians that are permitting the collection of tMs $10,000,000
of an unearned increment in our state are doing just as repre¬
hensible a thing as if they were systematically stealing the same
value of our grain, stock and produce. And there is no greater
reason or excuse for one of these abuses than the other.
THE REMEDY.
I have taken considerable space to rake muck and show up
the terrible conditions in our state. I am not going to take near
so much to prescribe a remedy. But I think I am going to pre-
19
scribe an efficient one. In the past few years thousands of arti¬
cles have been written raking muck, hut not one article in a
thousand has prescribed a remedy to prevent the future accumu¬
lation of muck.
All I have said in this work would he of little consequence
if I did not provide a remedy. Our politicians are permitting the
collection of $10,000,000 a year from our people that is unjust and
wrong and $10,000,000 each year is 5 per cent interest on $200,-
000,000. This gives full knowledge of the magnitude of this
terrible burden with regard to this affliction. We are much like
our nation was some years ago with regard to the Louisiana lot¬
tery. This lottery flourished like a green bay tree, and the
authorities claimed that no one had jurisdiction of the crime but
Louisiana. But a member of Congress got a "hunch." He re¬
membered that Uncle Sam was the messenger between this lot¬
tery and its victims. He remembered that this lottery was pros¬
tituting Uncle Sam's mail service, and using it for immoral,
vicious and criminal purposes. Had Uncle Sam quit carrying
these messages? He made it a felony for any person to post in
any post office any communication to or from any lottery, and
the Louisiana lottery was a thing of the past. I am reminded
of an attorney who turned the light on his critics. He says:
Near my office was a pond and nightly the frogs set up a fearful
din. I got a lantern and hung it so it reflected its light over
the pond, and the frogs husned. He also turned the light on his
critics and they hushed, too. Now, let us turn the light on our
politicians and they will hush, too. How will we do it? It is
just as easy to do it as it was for Uncle Sam to stop the lottery
business.
The professional man when he undertakes to treat a disease
he first diagnoses the malady. When we undertake to diagnose
our political affliction in the state of Oregon we find that our
railroads, express, electric, gas, and other public service com¬
panies are owned by the wealthiest people in the world. That the
people these companies employ get none too much. That interest
on their bonds is usually reasonable. But the stockholder is
often getting 2, 5, 10, 20 and as high as 40 times as much as he
is entitled to, and our politicians are protecting him in it. The
law establishes the price this stockholder should get just as well
as it establishes what the common laborer is entitled to. The
common laborer is entitled to the going wages for the work he
does. These stockholders are entitled to a reasonable interest
20
on the value of this property and that is all. The people are
entitled to the facts about this matter. Indeed, it is far more
important for our people to have the facts about this matter than
to have the market reports. But they should have both. It is the
law-making power of the state that is to blame for this condition
of affairs. Now, let's turn the light on them. When we do it
these pretenders will scuttle for cover faster than the speculator
does when the market goes against him. Now we have diagnosed
the case. The next thing is the cure. All we need to do is to
publish one little weekly eight-page paper giving specific facts
of this extortion. Showing what it amounts to, who is paying
it and who is getting it.
When our railroad commission took office the lowest carload
class rate was paying stockholders 66 per cent a year on his in¬
vestment. The highest carload rate 213 per cent a year. The
six carload rates averaged 148 per cent a year. The commission
reduced the lowest to where it onl.y paid 54 per cent a year. The
highest to 192 per cent a year and the average on the six carload
class rates to 130 per cent a year as annu^ interest on his in¬
vestment. When our commission took office the 0. R. & N. was
collecting $3,000,000 a year more than it was entitled to. After
they had been in office for two years at a salary of $4,000 a year
each being paid for protecting the people from extortion, this
company was only collecting $2,880,000 a year more than it was
entitled to. Our people paying it, the company getting it. This
was terrible protection. Suppose this little paper would
expose all those facts, how long would the people of Oregon stand
this treatment by officers they were paying liberal salaries to
protect their interest?
Suppose this paper would expose the fact that the South¬
ern Pacific that the people gave millions of acres of land to en¬
courage and help was keeping the land and charging people that
gave the land rates that afforded the owner of the road 17.70 per
cent a year on full value of road. Suppose and it would show that
in order to give these people 17.70 per cent a year on full value
of road that the Oregon people were paying rates on hauls in
Oregon that afford 30 per cent on lowest rate, 152 per cent on
highest carload rate, an average of 90 per cent on the six car¬
load class rates. How long would the people of western Oregon
tolerate this treatment. How long would the people of Oregon
stand this treatment from their state officers if they had these
21
facts from a reliable source? They certainly would not stand
it at all.
This paper could expose every abuse and advocate every
right from week to week from now until the end of time.
Now a few words about this paper or publication. The
object of this publication should be to tell the sacred truth,
advocate the sacred rights and aim to do absolute justice to all.
The editors and manager should be under oath to be guided by
this object. It should be made a felony for them to depart from
it. Every contributor should be liable for felony if he contri¬
bute anything known to be untrue. The editor should be required
to criticize every contribution if the welfare of the people re¬
quired it. Every other paper in the state should be prohibited
criticizing or making any argument against anything appearing
in this paper unless they told the truth and aimed to advance the
welfare of the people. No paper published outside the state
should be permitted circulation in the state containing any un¬
truth or unfair argument about matter appearing in this pub¬
lication. It should be made a misdemeanor for any person to
criticize, untruthfully make any false statement or unfair argu¬
ment about this publication. This would give people a chance
to establish the truth beyond question, about all questions of
public importance and prevent present abuses so prevalent that
make it impossible for the average citizen to make up his mind
about what his rights are. Our present press is jobbing us. This
would stop it. When our voters can sit down by their own candle,
take up this paper and read specifically of the things that are
being done that are wrong who profits by it and who pay the
bills and who among our state officers are responsible for its con¬
tinuance and its existence, our state officers would begin to be
good and do things instead of fooling us. Indeed, they would
have to be good to get our support. They now certainly fool us
and play into the hands of the corporation and get the support
of both. This would stop.
CONCLUSION.
The writer is only a humble and obscure layman. But he has
made a deep study of conditions in the Northwest for the past
ten years and the above facts recite a part of which he has found
out.
He has had emplo3rment for years where he elbowed with
22
the politician and studied their shorticomings at short range.
An investigation into these affairs will prove that he is right. He
challenges anj'' person on the glohe to go into an investigation,
confine themselves to the truth and successfully deny the charges
in this indictment. The only object he has in this work is to do
his duty as a citizen of the state and use his humble influence to
emanciiDate an enslaved people. He hereby renews a declara¬
tion he has often made. I had rather be the instrumentality of
emancipating the people of Oregon from' the present slavery they
are enduring at the hands of the present political machine, com¬
posed of politicians, the press and corporations, than to be
U. S. Senator or President of the United States. Indeed, anyone
who would he able to overthrow this foul combination and make
the people's emancipation eomi^lete would have done more for his
people, a greater service than any person ever accomplished
before in their history. It should erect a monument in the mem¬
ory of the people that would cause his name to be reverenced to
the end of time.
(THE END)
IS THERE COLLUSION ?
Is the Tax Commission and Railroad Commission in collusion
to sell us into slavery to corporations?
A Tax Commission can be a blessing and can be a curse, and it
certainly has been and is now a curse in Oregon because it over¬
valued our railway and other public service property. This
overvaluation by the Tax Commission amounts to same as water¬
ing stock.
Tax Commission valued the 0. R. & N. line (nearly all of it)
at $82,000 per mile, when it had cost from best information at
hand less than $25,000 per mile.
This line is entitled to 6 per cent a year net on its true value,
says the law. Six per cent on $25,000 per mile is $1500 per mile,
and is the price the people should pay each year on capital in
this road if $25,000 is its value. But if $82,000 is its value, then
the people must pay $4920 each year on capital invested or 3.28
times as much on $25,000 value. $25,000 is certainly all prop¬
erty is worth, and $57,000 per mile added by Tax Commission
is certainly water.
THE SOUTHERN PACIFIC LINE.
Jackson County assessed this line at $10,000 per mile. Com¬
pany went into court, claiming line only worth $3500 per mile.
Court reduced assessment to $4500 per mile. Now comes Tax
Commission and raises value to $65,000 per mile. This is cer¬
tainly a terrible overvaluation. The people gave land to this
company the value of which was nearly $2.00 for every $1.00 that
ever went into the road, and Tax Commission now paves the way
for charging us 6 per cent on a $65,000 per mile value to go to
capitalist on their capital as net interest return to them, or
$3900 annually for each mile of road. This certainly can't be
Just.
WHAT RAILROAD COMMISSION HAS DONE.
This work on 0. R. & N. line.
A Railroad Commission can be a blessing or a curse, and cer¬
tainly is a curse in Oregon. A reasonable rate, says the law, is
one that pays the operating expenses, tax on line, interest on
bonds, and 6 per cent to stockholder on value held hy him.
Notwithstanding this terrible overvaluation by Tax Com¬
mission, increasing the stockholders' interest to 20' times as much
as" was put into Toad^ by stockholder, the Railroad Commission,
in making rates, ordered rates on grain that paid three items
mentioned above and not 6 per cent, but over 22 per cent a year
to stockholders on property thus greatly overvalued. They made
6 carload rates, the lowest paying these three items and over 34
per cent to stockholders.. The two highest netted stockholders
122 per cent. This is unbelievable, but can be proved. These
6 rates made by Commission averaged 80 per cent a year net on
this extreme overvaluation.
THE S. P. LINE.
Tax Commission put value on this line for purposes of taxa¬
tion (on branch and main line) of $23,309,885, and Railroad
Commission permits them to collect 17.70 per cent a year on this
value. If this line was cut to 6 per cent it would save people
over $2,500,000 a year. This 17.70' per cent is on all rates, state
and interstate, and many of the rates for hauls in state on this line
are paying from 40 to 100 per cent a year net interest to stock^-
holders at this value. This looks like conspiracy between state
officers and corporations.
THE TROUBLE.
The theory of two parties is that each will criticize the other
and vie with each other as to which will serve people best. We
have no such parties in Oregon. Plenty of good honest demo¬
crats, republicans and socialists, but how about our leaders?
How about our press? They certainly are in a most foul combi¬
nation to make money off the people by standing in with corpora¬
tions.
These are very interesting facts and timely questions. All
should understand. F. W. Gaines, who has attended the four
last sessions of the legislature and had employment alongside
politicians for seven years, will speak on these questions here
at o'clock inst.
He will also tell the people how the legislature is fixed to prevent
reform legislation. All are earnestly invited, both ladies and
gentlemen.
F. W. GAINES.
12 1915
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Vancouver, Wash.
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