41 
 
 
 ABGUME1TT 
 
 II . 
 
 E. P. ALEXANDER 
 
 RAILROAD BILLS 
 
 > 
 
 BEFORE 
 
 JUDICIARY COMMITTEE LEGISLATURE OF ALABAMA. 
 
 FEBRUARY, 1881. 
 

Gentlemen of the Committee: 
 
 In endeavoring to lay before you my views on some of the proposed 
 legislation now under your consideration, I beg leave first to discuss, in 
 as narrow limits as possible, some of the principles involved in the 
 “ Railroad Problem,” on which there is much popular misconception, 
 and a clear understanding of which is essential to any one honestly de¬ 
 siring to find a practical solution of the difficulties which surround it.. 
 These principles will be best brought in order before you, and their 
 bearings illustrated by a discussion of the following questions: 
 
 What are the ev-ils complained of in the present system of railroad 
 transportation ? How have these evils arisen, and who is responsible 
 for their existence? 
 
 What has been or can be done, either by railroads themselves or by 
 legislation, to correct these evils? 
 
 The evils may be classed under three heads : First, Extortion, or rates 
 positively too high. Second. Unjust Discrimination, or rates in them¬ 
 selves fair and reasonable, but higher than rates charged other markets. 
 Third, Fluctuations in rates. 
 
 Now, of the first of these evils there is very little general complaint. 
 It is one of the standard boasts of the press, that in spite of a compara¬ 
 tively sparsely settled country, the average freight tariffs of the United 
 States are the lowest in the world. As our freights have grown in vol¬ 
 ume, the average rates have been reduced to figures which are both sur¬ 
 prising and instructive. 
 
 The returns of thirteen of the largest roads in the country, whose 
 freight earnings represent about one-fourth of the total freight earnings 
 of all roads in the United States, show a reduction of about forty-three 
 per cent, in the average rates charged in 1879, from the rates charged in 
 1873. The tons of freight moved one mile had meanwhile increased 
 about eighty per cent and the gross receipts for moving it increased only 
 three and a half per cent. Surely these figures do not indicate that the 
 railroads as a whole are practicing extortion to any great extent. They 
 were certainly not growing rich very fast in 1873, but the most of them 
 were on the verge of bankruptcy; and in 1879, they were rendering the 
 public eighty per cent, more service, for only three and a half per cent, 
 more gross receipts. 
 
 I do not claim for them any particular credit for their modera¬ 
 tion in this respect, for they would doubtless have cheerfully ac¬ 
 cepted ampler returns for such a largely increased service with its at¬ 
 tendant expenses; but the fact illustrates that there are laws of trade, 
 
 587547 
 
2 
 
 working out their own results with a power whicli neither individuals 
 nor corporations can successfully oppose; and that the idea that the com¬ 
 merce of the country is at the mercy of the railroad corporations is a 
 mere old woman’s tale. 
 
 The railroads of the country have no more real power to enforce 
 extortionate rates of freight upon commerce than the shoemakers have 
 to enforce extortionate prices on shoes; grocers on eggs; or farmers on 
 cotton. If they could, at least one road in Alabama might have man¬ 
 aged to escape a condition of bankruptcy in the last ten years, but not 
 one did. 
 
 As might have been anticipated from the figures above given, where 
 complaints of extortion exist at all, they are generally confine 1 to roads 
 whose business is small. Of course, roads whose business is small must 
 have a larger margin of profit on each transaction tha n those whose business 
 is large. This is the universal rule in all kinds of business, and I see no 
 reason why the same test should not be applied to a railroad as is applied 
 to individuals, in judging whether or not their profits are extortionate. 
 If they do no more than pay expenses and a profit on the capital in¬ 
 vested, proportionate to risk, deterioration and the average profits of suc¬ 
 cessful trade or manufactures, they cannot be called extortionate; and, 
 indeed, if any investment of money is entitled to liberal consideration by 
 a community that invested in a railroad should be. For it not only 
 brings to the whole community increased values of real estate^ and in¬ 
 creased facilities for trade and travel, but in itself it is exposed to greater 
 average risks than any other class of investments. It is unnecessary to 
 stop to show how and why. The history of ninety-five roads out of every 
 hundred will illustrate. 
 
 If, therefore, the investors in railroads benefit their neighbors more 
 largely and universally than the average money lenders, and invest¬ 
 ors in trade and commerce, and at the same time run pecidiar risks, 
 they are certainly entitled to expect fair and liberal treatment at 
 the hands of the State, which would otherwise be putting a penalty upon 
 any capitalist who withdrew his money from other investments to help 
 build a railroad, and as in all other enterprises it may be safely assumed 
 that whenever a railroad secures a business which yields it exceptional 
 profits, another railroad will certainly be built to divide them. And in 
 the majority of cases there is not even that much delay. 
 
 How many of the railroads now in existence would have been built 
 under laws limiting their earnings, under most favorable circumstances, 
 to eight per cent., and providing no guarantee against loss under unfa¬ 
 vorable circumstances? 
 
 In this connection there are two ideas which are often discussed in 
 the papers and magazines of the day, upon which I wish to offer a few 
 words. The first is that it would be a very simple matter to make the rail¬ 
 roads adopt a system of keeping accounts which should show what it costs 
 
 Southern Pamphle 
 Bare Book Collecti 
 L T NC-Chapel Hill 
 
3 
 
 to move a ton of freight, or a passenger, a mile, and then let each road 
 charge that amount with a reasonable profit and no more, and be done 
 with it. The idea is so charmingly simple that it is no wonder it be¬ 
 guiles many persons who have no practical experience in railroad mat¬ 
 ters; but I find it hard to condense within my limits a sufficient idea of 
 its utter absurdity and impracticability. 
 
 Kindred inquiries in other branches of business would be: What does 
 it cost a doctor to prescribe for a headache? a dentist to pull a tooth? a 
 lawyer to give an opinion? an editor to write an editorial? a merchant 
 to sell a pair of shoes? a freedman to pick 100 pounds of cotton? a 
 farmer for his hen to lay a dozen eggs? or, the United States Gov¬ 
 ernment to carry a paper of seeds from Mobile to Montgomery? Try 
 to analyze fully and minutely these questions, and imagine an attempt 
 to regulate prices for such services on the results. Even far less sen¬ 
 sible and satisfactory to the community would be an attempt to regu¬ 
 late railroad tariffs on any such basis. 
 
 As a single illustration of a number of difficulties which would be met, 
 I instance the utter impossibility of satisfactorily dividing many of the 
 current expenses of railroad maintenance and management and assign¬ 
 ing its accurate proportion to each of the four ordinary sources of rev¬ 
 enue, freight, passengers, express, and mail. What proportions of the 
 salaries of President, Superintendent, Comptroller, Attorney, and all 
 employes, from general officers down to track hands and car greasers, 
 shall be set aside to each of the four departments as the actual expense 
 of conducting it. I 'am aware that some roads try to do this, but the 
 divisions made are very various, and are all arbitrary. One mode of 
 division, which has more plausibility than any other, is to divide these 
 salaries in proportion to the revenues from each department. But a mo¬ 
 ment’s reflection will show that this division is really as arbitrary as any 
 other. For the comparative revenues fluctuate every day, every month, 
 and every year. And mail or express service, for instance, might be 
 discontinued altogether, and many of these expenses not be decreased a 
 cent. Then in the renewal of a cross-tie which will last somewhere 
 from six to ten years, a rail which may last from from fifteen to twenty- 
 five years, or an iron bridge which may last fifty to a hundred years, the 
 future proportions of business must be guessed at. With so much guess¬ 
 ing in the problem, the very few expenses which could be divided satis¬ 
 factorily would have no value. The result would be about as useful and 
 reliable as the weight of a stack of hay arrived at by weighing one arm¬ 
 ful and guessing at the rest. 
 
 The basis on which prices of transportation must be fixed, as well as 
 the prices paid for the great majority of all services of all kinds, which 
 are bought and sold, is as follows : 
 
 The seller of the services estimates, not so much what it costs him to 
 render the services, for such an estimate involves inquiry into the cost of 
 
4 
 
 his qualifying himself to render them, and many other questions which 
 can not be definitely answered, but he estimates what he, could save by 
 declining to render them , and that sum, is the minimum price at which 
 he can sell his services without loss. For a profit he endeavors to secure 
 an additional sum, which, by the universal laws of trade, and with the 
 approval of the common sense and idea of justice of all mankind, bears 
 some proportion to the value of the services sold, to the person receiving 
 them. 
 
 A recent article on the relations of the railroads to the states, by 
 Judge Black, has, as I conceive, very grossly exaggerated and misrepre¬ 
 sented the application of this principle in the adjustment of rates of 
 transportation. The railroads are held up to public indignation, as 
 endeavoring to extort from the community “ all the traffic will bear .” 
 It is indeed true that what the traffic will bear is one of the elements to 
 be considered in adjusting freight rates, and very properly and even 
 necessarily so. Otherwise, there could be no classification of freights; 
 but a car load of salt would have to pay as much freight as a car load 
 of coffee, guano as much as dry goods, and pig iron, bricks, coal and ice 
 as much as drugs and chemicals, shoes and fancy goods. The uniform 
 rate charged on all shipments would be an average of the present rates. 
 How would the community relish having the rate of freight on shoes 
 reduced even fifty per cent., if the rate on coal was advanced at the 
 same time, even five per cent. The average freight on a pair of shoes 
 from New York to Montgomery, Alabama, is perhaps three cents, and 
 they would not be retailed any cheaper if railroads carried shoes free of 
 cost. But by charging rates for shoes, and such valuable commodities, 
 bearing some reasonable relation to what the traffic will bear, the roads are 
 able to meet many of their fixed expenses of maintenance and manage¬ 
 ment, and be in a position to haul the cheap and heavy freights at rates 
 lower than have ever before been seen in the world, and under which no 
 one can deny that the country is growing rich and prosperous faster than 
 any country in the world. 
 
 Again, if the amount of service rendered was the only element to 
 be considered in adjusting freight rates, all rates would have to be 
 proportioned nearly exactly to distances, which would upset commer¬ 
 cial relations all over the country. It would, indeed, be far simpler 
 and easier for the railroads if these things were not so. If they 
 could have but one class of freight and one rate per 100 pounds, as wagon 
 trains used to have in the olden times, and as the first railroads even 
 did, it would save them not only great trouble, but great expense, and they 
 could stand it if the community could. But the present complication of 
 rates and tariffs has grown up, as the full uses and capabilities of the 
 railroads have come to be understood, and it has been forced upon the 
 railroads by that inexorable law of trade, that the prices of services will 
 always be regulated in part by their value, as well as by their cost, or, in 
 
other words, they will be to some extent, proportioned to what the traffic 
 will hear. 
 
 And if the argumentum ad hominem is ever legitimate, it may be 
 well asked of Judge Black on what basis' eminent members of the Bar 
 charge for their opinions and services. Is it by the hour for the time 
 consumed, or is it “ all the traffic will bear ?” Clients sometimes spite¬ 
 fully say it is on the latter basis, but I prefer to believe that among 
 them even, as among railroads, and in spite of either pools or agreed 
 fee bills, the laws of trade and competition are too strong for either cor¬ 
 porations, associations, or individuals; and that although their services 
 are not paid for by the hour, or on the basis of cost, they nevertheless 
 only succeed in getting compensation bearing a reasonable proportion 
 to the value of the services rendered . 
 
 There is one other consideration worthy of thought in this connec¬ 
 tion : 
 
 There is no rose without its thorn, and very low freight rates, 
 like many other blessings of this life, are not entirely unmixed with 
 evil. While they cheapen foreign products, and benefit those who 
 deal in and consume them, they discourage and frequently destroy many 
 home industries, by bringing them in competition with distant locali¬ 
 ties which may enjoy superior advantages. For instance: low rates 
 of freight have brought the large manufactories of wagons and agri¬ 
 cultural implements of the AVest so close to our doors that smaller home 
 establishments in the South have almost ceased to survive. Cheap 
 transportation has brought the cheap and fertile lands of the Far West 
 so near to the East that the value of grazing and wheat lands every¬ 
 where east of the Mississippi is being affected. Minnesota now fur¬ 
 nishes the wheat which formerly came from the Genesee A r alle} r , and Min¬ 
 neapolis grinds the flour which Rochester formerly produced. The re¬ 
 sults will doubtless accomplish the greatest good to the greatest numbei, 
 but nevertheless they may disappoint many who are urging them for¬ 
 ward from selfish motives. 
 
 The second evil of which complaint is made, is unjust discrimination. 
 
 The very word, “ discrimination has acquired such an odium in 
 discussions upon railroad tariffs that I wish to emphasize the fact that 
 not only are many discriminations right and proper, but that the gieat 
 business of transportation is peculiarly dependent upon judicious dis¬ 
 criminations and without them probably one-half of the manufaetuies 
 and commerce of the country would be brought to a stand-still, and 
 great and sudden changes would be wrought in the value of piopeity and 
 
 location of business centers. 
 
 Some of these essential discriminations have already been referred to. 
 We discriminate between salt and shoes, because a cent a pound makes a 
 great difference to the consumer of salt, but no difference at all to the 
 purchaser of shoes. Instances might be multiplied by thousands. Every 
 
6 
 
 classification is a discrimination. We discriminate whenever we consider 
 at all in fixing a rate, the value of the service rendered to the person who 
 pays for it. Discrimination in itself, therefore, does not deserve the pop¬ 
 ular odium which is too often attached to the word in discussions of rates 
 of transportation, for without proper and fair discriminations the cost of 
 transportation could not be distributed where it can be most easily borne. 
 It would crush out of existence many of the most important industries 
 of the country. It is no pet scheme of railroad managers, but is the 
 most difficult and delicate branch of all their duties, and has been 
 forced upon them with all its attendant expenses by the necessities of 
 manufactures and commerce, which necessities they are forced to under¬ 
 stand intimately. 
 
 But much of this is tacitly admitted, even by the bitterest assailants 
 of the railroads, who confine their complaints to unjust discrimination. 
 
 Of course for unjust discrimination I have no defense to make and 
 no excuses nor apologies to offer. 
 
 But it is not out of order to suggest that human views of justice are 
 always greatly affected by the interest and selfishness of those who sit 
 in judgment. Every commercial community is the bitter and uncom¬ 
 promising rival of every competing commercial community, and will 
 remain so until the millenium is fully inaugurated—long after the lion 
 and the lamb lie down together. Meanwhile, purgatory itself has no 
 position so hopelessly unhappy as that of the railroad manager, charged 
 with giving satisfaction among their conflicting claims and interests. 
 
 It is impossible to lay down any general rule to determine what is 
 just discrimination, and what is unjust discrimination, but discriminations 
 will always exist. They have their foundations deep and strong in that 
 discrimination, practiced by the Creator himself, which so excited the 
 admiration of the old minister, in making the large rivers always flow 
 by the large cities. 
 
 And an examination of the subject will show that competition with a 
 water route is at the bottom of nine-tenths of all the cases of so-called dis¬ 
 crimination in the United States. 
 
 But surely, railroads should be both permitted and encouraged to 
 compete with water routes, for thereby more roads may be built and 
 sustained, giving transportation facilities to districts that the rivers do 
 not reach. 
 
 If discriminations could be abolished there is no railroad manager in 
 the country who would not hail their disappearance with unutterable 
 delight; and the result of the experiment would teach the whole country 
 more in a week than all the arguments by amateur railroad reformers 
 will teach in a century. But there is no doubt that to draw the line 
 between just and unjust discrimination is sometimes a difficult and deli¬ 
 cate task. 
 
7 
 
 Perhaps it will give a clearer idea of some of the difficulties which 
 arise in questions of this kind to illustrate by one or two examples. 
 
 A. ceitain Southern road runs through a country which produces a 
 great deal ot turpentine, and has made rates for the distilleries upon its 
 line which are satisfactory, on the whole, to all its customers. 
 
 One of those customers is located near a river, beyond which there 
 is a considerable virgin forest of pine. But the difficulty and expense 
 of crossing the river, and its wide swamps, made it impossible for 
 the distiller to bring the products of that forest to his distillery with¬ 
 out a loss. He therefore represented the facts to the manager of the 
 railroad, and proposed that if the railroad would reduce its rates 
 upon the turpentine, which he would get beyond the river, enough to 
 pay the expense of bringing it over, he would build a ferry and a cause¬ 
 way through the swamp, and bring into cultivation the forest which was 
 inaccessible at the ordinary rates of freight. 
 
 The arrangement was made and proved satisfactory and profitable to 
 both parties. The turpentine distiller continued to pay, cheerfully, the 
 original rates upon all products of the forest on his side of the river. 
 For the turpentine he brought across the river at a considerable expense, 
 he paid a lower rate of freight, which left him the same profit as on his 
 original productions. The railroad company got the steady hauling of 
 the products of this forest, which would otherwise have gone to waste 
 and benefited no one. The owner of the forest received a royalty on 
 his trees, bringing him in an income which he could never otherwise 
 have derived. A number of laborers received daily employment which 
 they could not otherwise have gotten. And the whole mercantile com¬ 
 munity which is interested in naval stores received the benefit of the 
 increased production. 
 
 Who was injured? 
 
 Nobody that I have ever heard of. Yet, if there had been any law 
 against discrimination, that railroad manager could not have made that 
 concession in rates to the distiller, without at the same time reducing his 
 rates for hauling turpentine to every other distillery upon the road. 
 
 Such a reduction would have cost him, perhaps, five hundred dollars 
 where it would have made him one dollar. 
 
 Now is such a discrimination as this a just and fair discrimination, or 
 
 is it an unjust one? 
 
 I leave the question unanswered; only pointing out that it belongs 
 to a class of discriminations usually considered more obnoxious than 
 any other class. It is a discrimination in favor of a certain indh idual 
 only. In fact, it is worse than that: the individual is actually gi\en a 
 discrimination against himself. 
 
 Thousands of illustrations of this kind might be given by any rail¬ 
 road manager. 
 
 I will instance one more discrimination of a different cla>^. 
 
8 
 
 There are perhaps twenty different lines by which shoes may be 
 shipped from Boston to Galveston. They may go direct by steamer to 
 Galveston, or they may go by steamer, either to New York, Philadel¬ 
 phia, Norfolk, Wilmington, Charleston, Port Royal, Savannah or New 
 Orleans, and from either of those ports, complete the journey by rail. 
 Or they may go “all rail” from Boston by any of the numerous lines 
 to the West, and down into Texas by the Memphis & Little Rock 
 Railroad from Memphis, or the Iron Mountain Railway, or the Missouri, 
 Kansas & Texas Railroad from St. Louis. The rail line from Savannah 
 to New Orleans competes for this business, and gets a small portion of it. 
 
 Of course the rate upon it is very low, as it is in competition with so 
 many other lines, and with the ocean itself; and as the local rate on shoes 
 for interior points along this line is higher, here exists a discrimination 
 in favor of Galveston on shoes from Boston. 
 
 But whom does this discrimination hurt? 
 
 It really benefits the very parties who seem to be discriminated 
 against—the shoe merchants of the interior markets of the line—for 
 every dollar that this line of railroad can secure to itself from foreign 
 business goes that far towards bearing its necessary expenses, and ena¬ 
 bling it to reduce its rates on local business, and it is not a mere theory 
 that these rates are reduced as its through business increases, as the his¬ 
 tory of the rates of this line for the last ten years will abundantly show. 
 
 Discrimination has therefore distributed, both in Massachusetts and 
 Texas, a part of the burden of supporting the interior railroads of Geor¬ 
 gia and Alabama—roads of vital importance and inestimable value to 
 the local communities whom they serve, but whose local business alone 
 could not support them even at double the present local rates. 
 
 Examples might be multiplied indefinitely; but these are perhaps 
 sufficient to illustrate how discriminations are necessary to give legitimate 
 freedom of action to the transportation lines of the country, and how 
 difficult to draw the line between the just and unjust. 
 
 The railroad laws of England give great freedom in this matter, and 
 recognize and sustain a clearing house, which is practically a pooling 
 arrangement, whereby the evils of unrestricted competition are prevented. 
 
 In the course of its railroad legislation, the British Parliament has 
 frequently appointed able commissions to investigate and report upon 
 this and kindred subjects. 
 
 The following is an extract from the report of the Royal Commission 
 of ’65 to ’67: 
 
 “Inequality of charge in respect of distance, besides being a neces¬ 
 sary consequence of competition, is an essential element in the carrying 
 “trade: that is to say, the principle which governs the railway company 
 “in fixing the rate is that of creating a traffic , by charging such a sum 
 “for conveyance as will induce the product of one district to compete 
 “ with another in the same market. 
 
9 
 
 “The power of granting special rates thus permits a development of 
 trade which would not otherwise exist, and it is abundantly evident that 
 “ a large portion of the trade of the country, at the present time , has been 
 “ created by, and is continued on, the faith of special rates. 
 
 The conditions under which such rates are granted are so numerous 
 “ that no special law could be framed to meet them.” 
 
 In 18 r2 still another special railway commission reported that the 
 enforcement ot equal rates was “inexpedient ’ and “impracticable,” 
 giving the following excellent reasons: 
 
 “It would prevent railway companies from lowering their rates so as 
 “ to compete with traffic by sea, by canal, or by a shorter or otherwise 
 “cheaper railway, and would thus deprive the public of the benefit of 
 “competition, and the company of a legitimate source of profit. It 
 “would prevent railway companies from making perfectly fair arrange- 
 “ ments for carrying at a lower rate than usual, goods bought in large 
 “constant quantities or for carrying for long distances.” 
 
 The italics in the above quotations are mine. There is a great deal in 
 the “art of putting things.” The principle which necessarily governs in 
 fixing rates is here correctly and honestly stated in words which com¬ 
 mend themselves to every man’s common sense, to be that of “creating a 
 traffcy 1 This is distorted by prejudice into “charging all that the traffic 
 will bear ” and made the text of infinite lamentations over the perversity 
 of railroad managers, prophecies of terrible but vaguely defined evils, 
 both political and commercial, with which these misguided men are about 
 to overwhelm the country and exhortations to the people to crush out 
 the tyranny. Did space permit, and were figures obtainable, it would be 
 exceedingly interesting to compare this tyranny with some others, in the 
 amount and value of services rendered to the community at large, and 
 the gross and net earnings received for the same. It the Census Bureau 
 would only spare for this purpose about five per cent, of its insatiable 
 curiosity about-everything connected with railroads, and prepare a set 
 
 of questions for each member of the honorable tyrannies ot lawyers, 
 doctors, bankers, brokers, grocers, butchers, bakers, farmers, hotel keep¬ 
 ers, hackmen, undertakers, &c., some very interesting tables would result 
 in comparing the gross and net ean ings, and the value to the community 
 at large of services rendered by a given number ol each fraternity, and 
 
 an equal number of miles of railroad. 
 
 These two evils, “discrimination and fluctuating rates,” are the result 
 of unchecked competition. When a line competing for business with 
 another line is dissatisfied with the proportion of business which it car¬ 
 ries, it attempts to increase its proportion by reducing rates at the point 
 of competition. Other lines discover the reduction and make greater one.q 
 and the point of competition at once enjoys freight rates which are out ol 
 
 line with the rates from neighboring markets. 
 
 It has been found utterly impracticable to prevent these railroa 
 wars by simple agreements between roads to maintain rates. Lheir 
 
10 
 
 jealous}'- of each other is so great, and it is always so easy for shippers, 
 who wish to secure the temporary advantages which such wars bring, to 
 excite this jealousy by concentrating shipments on one line, or any other 
 means to lead competing lines to believe? that some advantage is being 
 given by one of their number, that the history of all such agreements 
 shows them to be mere ropes of sand. It is not unusual for such an ad- 
 justment, both of through rates from competing markets, and of local 
 rates, to be arrived at as to give for a time pretty general satisfaction; at 
 least as general satisfaction as the selfishness of human nature ever allows 
 in the adjustment of matters involving pecuniary interests. But such 
 agreements do not stay made, and it is in the wars which intervene so 
 incessantly that unjust discriminations originate, and can not be always 
 as easily removed. 
 
 How then can these railroad wars be put a stop to, and how can the 
 adjustment of rates be so made as to satisfy the jealousy of competing 
 markets ? 
 
 Railroad managers have not been lacking in their study of this ques¬ 
 tion, or their efforts to attain a solution. 
 
 Not having force to compel each other, and doubting the wisdom and 
 policy of any compelling power, the principle upon which they have 
 worked recently is, to remove the temptation from every line to engage in 
 a war of rates. Certainly, if this can be done, we may hope for the best 
 results. There would be no necessity for laws against arson, robbery, for¬ 
 gery, or even murder, if every temptation to commit these crimes could 
 be taken away from mankind. None of us are inherently bad ; let us 
 hope, not even railroad managers themselves, and being delivered from 
 temptation, a virtuous path is always the easiest. How can these temp¬ 
 tations be removed ? 
 
 The only solution devised by railroad managers is what is opprobri- 
 ously called by the public, a pool. It is really an agreement between 
 competing lines at any given point about to this effect: That if all will 
 agree to maintain the equal rates, which have been generally arrived at 
 by long struggles between the competing markets, in which each has had 
 all the benefit of its geographical position and advantages, then any line 
 which dues an excess of business, above the average of former years, and 
 above what would seem its natural share of the business, tk^-Jin^L-whieh 
 do es the oxoc . jj shall compensate the line which is deficient in some sat¬ 
 isfactory manner. It is hard to explain how such an effort to prevent 
 discriminations and fluctuations should become so generally misunder¬ 
 stood. 
 
 No man can study the railroad problem intimately without be¬ 
 coming convinced that bv far the greatest good of the greatest number 
 would result from what the railroad managers attempt in their pools. 
 The misrepresentations of their policy and efforts doubtless come from 
 individuals who had been able to turn railroad wars to their individual 
 
11 
 
 advantage. In such wars large shippers always have an advantage over 
 small ones. Their business is sought by rebates and private concessions, 
 while small shippers are disregarded. The large shippers in those 
 markets where railroad wars have been common, are therefore often 
 loth to see any arrangement by which rates will be maintained, however 
 low those lates may be. In fact, large shippers seldom care a straw 
 whether rates are low or high; their profits for the handling are the 
 same in any case. I heir whole care is to secure rates for their markets 
 lower than those for competing markets, or rates for themselves lower 
 than their neighbors. The large shippers too are men of influence 
 and ability, and it is they who usually cry out against the pool. 
 So the position of the railroad managers is that between the upper and 
 the nether millstone. The public cry out, and justly, against fluctua¬ 
 tions, rebates, and unjust discriminations. There is no power on earth 
 to prevent fluctuations, rebates, and unjust discriminations but to remove 
 the temptation to commit them. The only way to remove the tempta¬ 
 tion is to make some arrangement equivalent to what is called a pool; 
 but against a pool, the large shippers have an especial antipathy. The 
 pool cuts off their rebates and special rates. No law could cut them off, 
 because they can always be made by some part of the line which lies 
 out of the State, so that State law can never reach it. And even a gen¬ 
 eral law bv Congress could be evaded in a hundred wavs. If A wishes 
 to grind B’s axe in consideration of B’s doing a similar service for A, no 
 human law, or police regulations, can prevent the little transaction. No 
 law based upon penalties can ever regulate these matters. But let temp¬ 
 tation be removed, and A’s axe be taken care of in an axe pool, and odi¬ 
 ous as axe pools may appear to B, he will have to turn his own grind¬ 
 stone with his neighbors. 
 
 Theoretically, indeed, if the roads at at a competing point have agreed 
 among themselves to pool the business, they might then raise the rates 
 to whatever limit the traffic would bear; and it is on this theory that the 
 public is led to distrust and fear them. But there is one fact which is left 
 out of view in these discussions. Should the roads at such a point fix the 
 rates out of line with those in competing markets, the business ot that 
 place would be drawn to the competing markets, and every road center¬ 
 ing there would be the sufferer. Self-interest alone will usually prevent 
 any abuse of this power; which, in fact only exists in theory. 
 
 There have doubtless been complaints of the rates made by pools, 
 but these complaints are universally, so far as I know, that the rates are 
 not positively high, but only comparatively high, as contrasted with the 
 rates from some other place. 
 
 Questions of this sort, as I said before, are of the greatest delicacv and 
 difficulty of adjustment. The twelve apostles themselves could probably 
 never give satisfaction if they had to adjust the rates between twelve 
 competing markets. It is in fact, to my mind, rather a doubtful question 
 
. 12 
 
 whether there is any such thing as Justice in settling such a question. To 
 illustrate by an example away from home, in which none of us have any 
 interest or feeling. 
 
 What should be the comparative rates from Chicago to the different 
 seaports of the East, and of the Southi Montreal, Quebec, Portland, 
 Boston, New York, Philadelphia, Baltimore, Charleston, Port Royal, 
 Savannah, Pensacola, Mobile and New Orleans. And what should be 
 the comparative rates from St. Louis to these ports. And what from 
 Cincinnati, Indianapolis, Louisville, and all other interior Western 
 markets? Is there any principle which recommends itself to the human 
 mind as one of justice , upon which these rates shall be adjusted ? 
 
 The present relation which exists between them has been arrived at, 
 not bv any argument, or upon any theory, but by the struggles and wars 
 of the different lines of transportation supplying these different ports. 
 Each line of road has worked for itself, regardless of the interests of all 
 others; and between them all, the rates have been at times depressed to 
 figures which did not pay one-half of the cost of transportation, and bank¬ 
 rupted a great many of the roads engaged. 
 
 Then truces have come, such as are obliged to follow all wars; and 
 the present adjustment of rates holds, simply because each line interested 
 fears that any attempt to change it would result in more harm than good 
 to itself. And, what it may surprise the general public to know is, that 
 the earnest wish and secret hope of every one of these competing lines 
 is, not to advance its rates but to get them a little lower, while their 
 competing lines keep the other rates up. And should any principle ever 
 be discovered and recognized as a principle of justice, but which would 
 change the present adjustment in any material point, its application 
 would immediately and greatly change the course of trade to and through 
 these cities and enormously disturb the values of property in every 
 one of them. 
 
 Boston, for instance, is further from Chicago than New York is. Now, 
 should the principle ever bo adopted of making all rates a pro rata per 
 mile, the rate from Chicago to Boston would be so much higher than the 
 rate from Chicago to New York, that all the foreign trade now going 
 through the former port would be diverted to the latter. This, of course 
 would be an enormous injury to every interest of Boston. In fact, no 
 such principle ever could be enforced, for the lines injuriously affected 
 by it would never submit to it, but would work at rates far below the 
 cost of transportation for years, rather than give up their through busi¬ 
 ness forever. 
 
 A fair illustration, however, of the actual working of one of these 
 pools I give from the history of the Southern Railway and Steamship 
 Association. The following table will show the rates in force upon 
 cotton at Atlanta, the principal competitive point in Georgia, in 1875, 
 at the formation of the Association, and those in force in 1879. To 
 show, also, that the decrease in rates which resulted from the pool was 
 
13 
 
 not confined to cities and competitive points alone, I give the rates also 
 from Bankhead, a small local station about the center of the Georgia 
 Railroad, being a fair sample of a little place of about two houses, havUm 
 no influence, and neither asking or receiving any favors, viz: 
 
 COTTON RATES 
 
 — from— 
 
 Year . 
 
 PER 100 POUNDS TO 
 
 Charleston 
 
 or 
 
 Savannah . 
 
 New York. 
 
 Boston. 
 
 Atlanta. 
 
 (1875 
 
 (l879 
 
 $0 GO 
 
 45 
 
 $1 10 
 
 70 
 
 fl 20 
 
 75 
 
 Decrease . 
 
 
 15 
 
 30 
 
 45 
 
 Buckhead. 
 
 T1875 
 
 (1879 
 
 74 
 
 GO 
 
 $1 24 
 
 90 
 
 $1 39 
 
 95 
 
 Decrease. 
 
 14 
 
 24 1 44 
 
 
 l>ut whatever criticisms may be made upon either the purposes of 
 the railroad pools, or upon the practical operations which have taken 
 place under them at any point, I do assert most positively and sincerely 
 that they have been resorted to by the railroad managers as the onlv 
 solution which their experience in these matters has been able to sug¬ 
 gest; and that any imperfections or abuses have been the result of 
 neither carelessness nor indifference, but of the inherent difficulties of 
 the problem itself. 
 
 And as an earnest of their honest intent to correct the abuses, and to 
 arrive at just and fair solutions of questions between conflicting interests, 
 the principle of arbitration of such questions, by the most disinterested and 
 competent tribunals obtainable is universally recognized and adopted; 
 and if either the State or the National Government would provide such 
 tribunals, the railroad managers would he only too glad to avail them¬ 
 selves of their services. r , 
 
 The Railroad Commissions, both jh England and of Massachusetts, 
 have accomplished the most valuable results by acting in this manner ; 
 not so much as arbiters over the railroads, as arbitrators between them 
 and the public. 
 
 The Railroad Commission of Massachusetts has no power except to rec¬ 
 ommend and report. Rut this power has proved amply efficacious. 
 
 I quote from a letter of the Hon. Charles Francis Adams, dated Feb¬ 
 ruary 20, 1879, to the Chairman of the Railroad Committee of the Massa¬ 
 chusetts House of Representatives, a few paragraphs, giving a general 
 view of what the Massachusetts Commission has attempted, and how it 
 has succeeded, viz: 
 
 “Among the duties of the Commissioners, hy far the most difficult 
 “and delicate, are those which arise out of its supervisory functions over 
 
14 
 
 “questions between the railroad corporations and the community. Its 
 “jurisdiction in this respect is, I believe, peculiar to itself. It is com¬ 
 pelled to receive all complaints against the railroads of the State, no 
 “matter how they may reach it, or to what they may relate, or whether 
 “ coming from communities or individuals, and to investigate and find 
 “some remedy for them. In doing this the Commissioners have no 
 “ power except to recommend and report. Their only appeal is to pub¬ 
 licity. The Board is at once prosecuting officer judge u,nd jury, but 
 “ with no sheriff to enforce its process. This method of railroad super¬ 
 vision is peculiar to Massachusetts; but I do not hesitate to say that I. 
 “believe it is the best and most effective method which has ever been de- 
 “ vised—the best for the community and the best for the corporations. It 
 “needs, I am confident, but to be developed and understood to be uni¬ 
 versally adopted. In dealing with railroads as between railroads 
 “and individuals, it is futile to talk about laws, declaratory and 
 “pe^al, and the usual process of the Courts; except in extra¬ 
 ordinary cases. The remedy through this process is too slow and 
 “ too expensive, while the pow.er and wealth of the corporations, as 
 “compared with individuals, is too great. It is altogether different 
 “in proceedings before this commission. There are here no tech- 
 “ nicalities, or forms of procedure. The investigation takes place 
 “ at once and upon the spot, and a conclusion is reached with no unnces- 
 “ sary delay. That conclusion can not be enforced in law, and carries 
 “ weight only in proportion to the reasons adduced in its support; but in 
 “ practical experience the recommendations of the Board have almost 
 “ never been disregarded. It is true thev have sometimes been com- 
 “plied with under protest, and with the utmost reluctance; but they 
 “ have almost invariably been complied with. First and last, they have 
 “covered all sorts of questions, from the putting on of a system of trains 
 “to the adoption of some improved appliance of safety—questions which 
 “could hardly have been reached in any other way. Statements of 
 “these will be found accompanying our reports during the ten years 
 “they have been issued; but only the more difficult are there given. 
 
 “ The many other similar cases settled by private conference are nowhere 
 “recorded. I am very confident that this principle of public supervis¬ 
 ion might be developed so as to work a complete solution of the rail- 
 “ road problem as it presents itself in this country. To do this, however, 
 
 “ it must be developed by men who are not only competent but who en- 
 “joy the confidence both of the community and the corporations. If 
 “ they have not this they are powerless ; if they have it, there is nothing 
 “they cannot bring about, no abuse they cannot correct. 
 
 “Having said thus much, 1 need not add that it is perfectly useless to 
 “expect this Board to develop into what it might be, and what it must 
 “be, if it is to be of any use at all, unless it is composed of men very care¬ 
 fully selected for the position. They have nothing outside of them- 
 
“ selves to sustain them. If the Board is to consist of men of detail, or 
 “clerks, or professional office-seekers, or politicians, it may as well, in 
 “fact, had much better be abolished at once. Like other similar Boards 
 “so constituted elsewhere, it will speedily fall into contempt, and be 
 “ swept away. Its incompetence could not long be concealed, and neither 
 “the corporations nor the public would tolerate it.” 
 
 I have said nothing as yet on a question, which has been recently 
 discussed a good deal by some of the best legal minds in the country, as 
 to the relation existing between the State and the railroads. I do not 
 feel competent to discuss this question in its legal aspects, and in its 
 practical aspects, it seems to me, there is verv little in it. Whether or 
 not the railroad shall be called a “public highway,” as canals and turn¬ 
 pikes are, to-wit, by being free to all to put their own vehicles upon, is 
 not a practical question. The magnitude of the business of the country 
 is so great, and the speed which the public necessities demand, both for 
 freight and passenger trains, is so high that accidents can only be 
 avoided by having the entire control and the entire responsibility 
 placed upon asingle corporation. It would not even be safe for one 
 corporation to own the track and maintain it, and another single 
 corporation conduct all the transportation over it. There would be 
 constant difficulties arising between them as to the improvements which 
 the track demanded, the location and maintenance of additional side¬ 
 tracks, water-tanks, stations and platforms, and when accidents occurred 
 it would frequently be impossible to decide who was responsible. 
 
 When railroads were originally built, it was supposed that they might 
 be used in this way; and the charters of many of the older roads in the 
 United States contemplated and provided for it. But experience has 
 shown its utter impracticability, and there is not a railroad track in the 
 world, to my knowledge, that is used in this manner. It is therefore un¬ 
 necessary to point out any more in detail, although it might he readily 
 done, the impossibility of making public highways of railroads, in 
 the old and original sense of that expression. Yet, while the railroad 
 can never be a public highway in this sense, it is certainly a public ser¬ 
 vant, and subject to the control of the State to a sufficient extent for all 
 practical purposes. 
 
 The State can condemn private property for public uses; but it 
 can not take property, already devoted to public uses, from the hands 
 of A and turn it over to B to apply to the same uses. The State can take 
 a portion of A’s farm for a public highway, or public works of any char¬ 
 acter; but it can not take a portion ot A’s farm to give it to f> lor a 
 farm, nor can it take A’s railroad and give it to B for a railioad. 
 
 The railroad is simply under State control to this extent: it must 
 sell its services to all applicants at reasonable rates without individual dis¬ 
 crimination. That is, where the conditions and value of the services ren¬ 
 dered are identical the price must be the same to all. It might be claimed 
 
16 
 
 theoretically, that the price should be the same to all where the cost of the 
 service rendered is the same to the railroad. But, however this may sound 
 in theory, I think I have fully shown above that this principle can not be 
 applied in practice. It would be simpler and easier for the railroad if it 
 could be. But the entire cost of the transportation of the country must 
 be borne by the articles transported, just as the entire cost of maintain¬ 
 ing any business, or any institution, must be borne by the interests or in¬ 
 dividuals benefited thereby. Governments must be maintained by those 
 who are governed. The pavements and streets of a city must be main¬ 
 tained by the citizens who use them. Gas and water-works must be 
 maintained by those who use gas and water. Banks must be maintained 
 by those who avail themselves of their facilities. Hotels must be main¬ 
 tained by travelers; and lawyers, doctors, undertakers, butchers, bakers, 
 and all other trades and professions must be maintained by those who 
 have need of their services. So the products of the country which 
 demand transportation must pay the expense of that transportation. 
 And, just as in a government, all classes bear the burdens of taxation in 
 proportion to their ability to support the same, and the benefits derived, 
 so, in transportation, all classes of freight should contribute to the 
 expenses of transportation in some proportion to the benefit derived 
 from the same, and to the value of the services received. Whether or not, 
 therefore, the railroad is to be called a public highway seems to me not 
 a practical question. 
 
 The only practical inquiry before us is, Who shall decide the compli¬ 
 cated and difficult and delicate questions as to how the burden of trans¬ 
 portation shall be distributed, and what proportion of it shall be borne 
 by each of the innumerable articles of trade and commerce under all the 
 various conditions under which they demand transportation ? 
 
 The present status has been arrived at, like the boundaries of the dif¬ 
 ferent countries in Europe, as the result of long struggles among the 
 interests involved. 
 
 If a being of superior intelligence could be imported from another 
 planet, with the power to regulate all such things on this, according to his 
 idea of right and justice, he would doubtless make some great changes, 
 both in the boundaries of the European countries, and in the freight 
 rates and classifications of American railroads; and, perhaps, also in 
 a few other sublunary matters. But I would hardly expect even 
 his administration to give universal satisfaction. The idea of regulating 
 rates by State supervision is somewhat akin to the idea of importing a 
 new intelligence, and a new power, to influence and regulate what has 
 heretofore been left to regulate itself by the “struggle for existence,” as 
 a Darwinian might term it. It is only to be regretted that this new in¬ 
 telligence will, after all, be merely human, and subject to like frailties 
 with other men. There should be no objection, however, it seems to 
 me, on the part of railroad managers to the experiment being made, but 
 
17 
 
 they should heartily concur in the same, only advising that the attempt 
 be made in such shape as to give the best promise of satisfactory results. 
 
 But, in the discussion of these matters before the public, there is a 
 great parade of catch-phrases and political maxims, which have a very 
 ponderous sound and, doubtless, often seriously disturb good people who 
 do not fully understand them, but who imagine there must be some great 
 danger, simply from the clamor that is being raised. 
 
 One of these maxims is, “ where combination is possible competition 
 is impossible. That is simply an assertion that, wheie combination is 
 possible railroads, will certainly combine. But that proves nothing, for 
 the question remains, is combination possible? 
 
 There are many degrees of possibility and many varieties of combi¬ 
 nation. It is earnestly to be hoped that so much combination may be 
 found possible that, at least, uniform rates may be maintained and unjust 
 discriminations avoided. 
 
 Railroad managers, impressed by the logic of facts and actual expe¬ 
 rience, believe that a certain degree of combination is the only possible 
 cure of these evils, and are cautiously experimenting in that direction. 
 
 But even this very mild degree of combination is scarcely yet de¬ 
 monstrated to be attainable, and, as the proof of the pudding is in the 
 eating, Stephenson’s famous apothegm simply proves, if anything, that 
 combination among railroads is impossible. For the clamor against 
 what are, demonstrably, the evils of unrestrained competition is rising 
 to heaven. 
 
 The difficulties in the way of railroad combination are plain, and are 
 the same difficulties that prevent combination between all the Southern 
 planters to raise the price of cotton. There are too many people raising 
 cotton, and there are too many things that can be used as substitutes for 
 cotton to a great extent. So there are too many railroads in the country, 
 and there are too many rivers, canals, turnpikes,.and too much ocean 
 around the country, all of which can be used as substitutes for the rail¬ 
 roads to a great extent. 
 
 Another one of these aphorisms of the day is, that “ if the State does not 
 control the railroads, the railroads will control the State.” Why cannot 
 the same thing be said about the national banks, or about the lawyers, 
 or about importers, or whisky distillers, or about manufacturers of all 
 kinds? I have even heard some good Protestants say, that the State 
 must control the Catholics, or the Catholics would control the State. This 
 maxim, in short, seems to me to have about as much logic and good 
 sense in it as Johnson’s celebrated satire on such arguments: “ Who 
 drives fat oxen, should himself be fat.” 
 
 The assertion that the railroad companies are charging "ail that the 
 traffic will bear ” is another one of these ridiculous alarms that are being 
 sounded over the country, to which I have already referred. If railroad 
 companies thus monopolized all the profit of transportation, there would 
 
18 
 
 be no business done in the country. ISTo man does business simply for the 
 pleasure of doing it; and the flourishing state of the commerce of the 
 country, and the very existence of every firm in trade, and of every 
 manufacturing enterprise proclaims the falsity of any such assertion. 
 There is a profit in transportation ; and, that the railroads have not re¬ 
 ceived on the whole any undue proportion of it, is shown by the fact that 
 so very many of them in the last few years have passed through bank¬ 
 ruptcy, or narrowly escaped it. Of course, the railroad, like the merchant 
 or manufacturer, likes to secure a liberal share of the profits; but the 
 matter regulates itself like all other struggles between competing interests. 
 
 If a merchant or manufacturer is so circumstanced as to be able to 
 derive an unusually large profit from his trade or his factory, some other 
 merchant or some other factory will generally spring up to divide this 
 profit with him. And if a railroad is so located as to be able to make 
 larger returns upon the investment than the average investments of the 
 community, another railroad line is sure to be built, to divide these 
 profits with it, and for every single railroad which is able to secure larger 
 dividends to its stockholders than average investments yield, there can 
 be shown a thousand merchants and manufacturers who are securing 
 profits on their investments enormously above the average. 
 
 There is one more of these catch-phrases on which I wish to say a 
 few words, to-wit: That railroads “ must not be allowed to charge more 
 for short distances than for long distances.” At the first glance I must 
 admit that here does seem to be at least one rule to the universal appli¬ 
 cation of which no one could reasonably object. 
 
 But, if the cases where it occurs are investigated, it will be found that 
 the freight which is hauled a longer distance at the less rate is simply 
 freight which must be hauled at that rate , or not hauled at all. If, then, 
 the railroad is forbidden by the law to take it at the lesser rate, the law 
 simply prevents competition to that extent. The railroad certainly does 
 not choose the lesser rate for the long distance from any whim of its own. 
 The lesser rate is forced upon it by circumstances. The less distant 
 points then claim that the railroad is discriminating against them. But 
 it is not the railroad that is discriminating ; it is the circumstances at the 
 more distant point , which would send the freight from that point by 
 some other route unless the railroad was willing to accept the lesser rate. 
 
 A single example will illustrate: Corinth, Miss., at the intersection 
 of the Mobile & Ohio and the Memphis & Charleston railroads, is 93 
 miles from Memphis and 328 miles from Mobile. A reasonable local 
 rate on a bale of cotton from Corinth to Memphis would be say one dol¬ 
 lar per bale. Memphis is about as good a cotton market as Mobile. 
 Consequently all the cotton raised in the vicinity of Corinth will go to 
 Memphis, unless the Mobile & Ohio rate to Mobile is made the same as 
 the Memphis rate. Between Corinth and Mobile, however, on the line 
 of the Mobile & Ohio road, are many stations where a great deal of cot- 
 
19 
 
 ton is brought for shipment. We will take Tupelo as an illustration, 
 280 miles from Mobile. Now, if a dollar a bale is a reasonable rate for 
 98 miles, the rate from Tupelo to Mobile, 280 miles, might very well be 
 two dollars. If, therefore, the Mobile & Ohio road competes in the mar¬ 
 ket at Corinth for cotton, it will be charging less for the longer haul 
 from Corinth, than for the shorter from Tupelo. And if the law should 
 step in and forbid this practice, the Mobile & Ohio road would simply 
 have to withdraw from competition at Corinth. The shipper at Tupelo 
 claims that the Mobile & Ohio is discriminating against him, when it 
 hauls Corinth cotton for a dollar and charges two dollars from Tupelo. 
 But would it benefit him to have the road give up all Corinth cotton and 
 withdraw from competition at that place? The Mobile & Ohio road 
 could not afford to reduce at Tupelo, and twenty other stations similarly 
 situated, and would simply have to withdraw from Corinth business. It 
 would then be less able to reduce local rates at Tupelo and all other local 
 points on its line; and nobody on earth would be benefited but the Mem¬ 
 phis & Charleston Railroad, which would then have a monopoly of the 
 hauling of Corinth cotton, and Corinth would lose the benefit of compe- 
 tion from the Gulf for her cotton. 
 
 Practical cases like this might be illustrated by hundreds. But these 
 practical questions are not understood, or are obscured by the majoritv 
 of the writers who are discussing the railroad problem. If they would 
 only deal less in generalities and propose some sets of figures, the public 
 would soon comprehend some of the difficulties of the problem, and 
 the true inwardness of the proposed reforms. Judge Black, Mr. 
 Thurber, and the New York Chamber of Commerce can doubtless enun¬ 
 ciate many principles and theories which seem to be entitled to general 
 acceptation. But if they will only work out their proposed results in 
 figures , the railroad managers who are practical men will be under im¬ 
 mense obligations and may probably even be willing to make some ex¬ 
 periments for them. To begin with something easy and simple, these 
 gentlemen might at least declare what adjustment they propose between 
 the rates from Chicago to Boston, Chicago to New York, and Chicago to 
 Baltimore. Let them come to the point, and let the country know ex¬ 
 actly what they want. All of their principles are vague, and liable to 
 misconstruction until they are crystallized into figures. Do they want 
 these rates to be pro rata per mile, or do they want the rates to be the 
 same, or do they want arbitrary differences? And, if the latter, what 
 differences? And will they guarantee that the Boston and Baltimoie 
 Boards of Trade will cheerfully accept? As one of the railroad 
 fraternitv, I beg for figures , and not for theories. Pigutes are 
 plain, and we know what they mean, and the people can under¬ 
 stand them. Let us have a single page of proposed rates in prefer¬ 
 ence to a volume of the most glittering generalities that the legal 
 mind can propound. Then we will all know what we are talking about. 
 
20 
 
 It will be no small matter to disturb the present adjustment of freight 
 rates in the United States, however that adjustment has been brought 
 about, and whether it is divinely fair or not. But if the reformers will 
 
 only give us the figures on which their hopes and aspirations for thetrans- 
 
 % 
 
 portation millenium are based, the discussion on all abstract principles 
 can be cut very short. 
 
 I have written to very little purpose if I have failed to make it plain 
 that what it is desired to accomplish by legislation upon this subject is a 
 task of great embarrassments. I think I can assert emphatically that 
 no law can be framed, which can formulate any theory or principle to be 
 of universal application in the regulation of railroad charges for trans¬ 
 portation. As there are some processes in the arts which can not be 
 confided to machinery, but which require the skill and touch of the 
 human band, so the niceties of the “railroad problem” can never be 
 adjusted by any formula or by any law. The experience of all States 
 and countries which have tried the experiment has borne out this con¬ 
 clusion. The device of a railroad commission is the only one which has 
 in any way stood the test of experience. And the more unhampered 
 such commissions have been by the laws creating them, the better the 
 results they have been able to accomplish. The Massachusetts commis¬ 
 sion has probably accomplished greater results than that of any other 
 State; and it has accomplished them without any legal power even to 
 enforce its decisions. In making the experiment, therefore, in this State 
 for the first time, I earnestly advocate a commission upon the same plan 
 With this in view, I have looked over the bills before the Committee, 
 and will proceed to make some comments and suggestions upon their 
 respective peculiar features. 
 
 I have before me copies of Senate bills Nos. 207 to 215, inclusive, 
 and of House bill No. 171. 
 
 House bill No. 171 and Senate bill No. 212 provide for the appoint¬ 
 ment of a Board of Railroad Commissioners ; the other bills seek to regu¬ 
 late railroad matters by direct legislative enactment, except Senate bills 
 Nos. 213, 214, and 215. These last simply repeal the law at present in ex¬ 
 istence. The repeal of this law, I think, is demanded even more by the 
 commercial interests of the State than by the railroads, as experience has 
 shown it to be oppressive and injurious, while having no beneficial effect 
 whatever. As it stands upon the statute books and has been interpreted 
 by the Supreme Court, it is simply to this effect. That local freight shall 
 not be charged more than one and one-half times as much per ton per 
 mile as through freight. I was familiar with the history of the passage 
 of this law, and I am very sure that it was not intended to be construed 
 on a per mile basis, as the Supreme Court has construed it; but, without 
 going into detail on that matter, the law now stands as stated. But if 
 local freight shall not be charged more than one and one-half times as 
 much as through freight per ton per mile, then through freight must be 
 
21 
 
 charged at least two-thirds as much per ton per mile as local freight. 
 Now, in the transportation of local freight, besides the expense of haul¬ 
 ing, are the expenses of loading and unloading, billing, and the time 
 lost by the car. Necessarily, therefore, for very short distances, such as 
 five or ten miles, the local rate must be a high rate per ton per mile, 
 because it includes these terminal expenses and time of the car, which, 
 owing to its having to wait for schedules, can generally make a trip of 
 k f ty miles and letuin as cpiick as a trip of five miles. Suppose, there- 
 foi e, that the rate on a bale of cotton hauled five miles is made twenty- 
 five cents, or five cents a mile, this law will compel the through rate 
 upon cotton to be two-thirds of five cents, or three and one-third cents 
 per mile, say $6.00 a bale from Montgomery to Mobile. 
 
 Again, this law does not apply to cotton going to New York or New 
 Orleans or Savannah, as that is inter-state traffic, and not subject to State 
 legislation. The'effect of the present law then is, simply to place Mobile 
 at a disadvantage in competing with all other markets. Innumerable 
 other instances can be given, of its unequal operation, if desired. But I 
 believe it is generally understood that its repeal is called for by everybody 
 in the State who understands the question. I therefore pass on to the 
 consideration of the other bills. 
 
 Bills 207 to 210 attempt to regulate freight and passenger rates by 
 direct enactment. What I have said before is sufficient to show, I think, 
 that this plan is injudicious and impracticable, yet, I will proceed to 
 speak briefly on a few of the most objectionable points in the bills them¬ 
 selves: In the first place none of these bills set any limit of time within 
 which suits under them must be brought. Without some such definite 
 provision, the right would exist under the code for many years. Bail- 
 road corporations would be at a great disadvantage in meeting and de¬ 
 fending suits, under these acts, after any lapse of time. The multiplicity 
 of their transactions with the public, changes of employees, and impossi¬ 
 bility of preserving for a long time complete records of every minute 
 transaction, would make it impossible for them to make a fair showing 
 for themselves, after the lapse even of many months. I think, therefore, 
 there should certainly be attached to each of these bills an additional 
 provision, that any suits brought under it must be entered within six 
 months from commission of the act complained of. If any one is injured 
 there is no reason why he should not seek redress at once, while the trans¬ 
 action is fresh. 
 
 To take up the bills now separately. The object of bill number 
 207 is, to require each railroad to exchange business with its connect- 
 in 0- roads. I see no necessity for any legislation upon this subject 
 whatever. It has always regulated itself in Alabama satisfactorily, so 
 far as I know, to the entire community, except during a short period in 
 the summer of 1880. Even then the railroads which were supposed to 
 be discriminated against were able to protect themselves bj means in 
 
22 
 
 their own control, and to regain satisfactory arrangements after a very 
 short time. All such connections at present, so far as I know, are satis¬ 
 factory to all concerned and to the community; and I think the bill, as 
 a whole, unnecessary. If, however, the committee should think other¬ 
 wise, I suggest that at least in section one, line three, the words “and 
 cars” should be stricken out. If the railroad company has cars of its 
 own available, it should not be compelled to use and pay for cars of 
 another road to pass over its line. In section three, line two, “one 
 year” I think should be changed to “six months;” and to line four 
 should be added, “and either party may require prepayment of freight 
 and charges from the other.” 
 
 Bill 208 seems to me exceedingly injudicious and ill-considered. It 
 gives the right to fix all rates to juries. I am sure no reasonable man 
 can justify or defend any such proposition. Neither the railroad nor the 
 public w r ould ever know what the rates were. They would differ in 
 every county and in the same county at different terms of the Court. 
 Juries would not be impartial, because every citizen has a moneyed in¬ 
 terest in the cost of transportation, as much as he has in the price of 
 corn, cotton and dry goods; and it is no more right or just to give him 
 the power to regulate the price to be paid for one of these than the other. 
 The penalties, too, which this law provides would practically be “ ex post 
 facto;” for the railroad manager could never tell whether or not his 
 rates were a violation of the law, until after the event. This bill simply 
 seems to me the very height of communism. 
 
 Bill No. 209 is a bill to prevent and punish rebates. If a Railroad 
 Commission is decided upon by the Legislature, this act becomes 
 unnecessary. The Commission can regulate all such matters better 
 than a law. If, however, the bill is to be passed, I respectfully suggest 
 the following modifications: In line four, after “any,” insert “ unjust;” 
 in line five, after “made,” insert “under the same circumstances and at 
 “the same time,” and in line six, after “corporations,” insert “shipping 
 “equal quantities of the same sort of freight.” As the section stands, it 
 prohibits any special reductions in freight rates. My modifications 
 would make it prohibit only such as are unjust , and as are not made 
 under the same circumstances and at the same time to all persons simi¬ 
 larly situated. I also suggest the addition of a section as follows: 
 “Sec. 4. The provisions of this bill shall only apply to freight destined 
 “to or coming from points without the limits of this State.” Also, 
 “ Sec. 5. Suits under this act must be brought within six months after 
 “the act complained of.” My object in suggesting section 4 is, that the 
 section shall not; on its face, attempt to do anything that can not be 
 accomplished. Freights to and from other States can not be controlled 
 by laws operative only within the State. Contracts for rebates can be 
 made by connections, and the statute evaded without difficulty; and to 
 save unnecessary litigation, and not to tie the hands of Alabama lines 
 
23 
 
 in competing with lines through other States, the intent of the statute 
 should be unquestionable. 
 
 Bill No. 210 requires railroads to issue duplicate receipts to shippers 
 upon application. I have never heard of this being refused, or of 
 necessity lor any such act. But if anybody desires its passage, I have 
 no objection to suggest, only asking that suits under the act shall be 
 barred after six months. 
 
 Bill No. 211 is intended to regulate the corporate business of railroad 
 companies in this State. I think this hill exceedingly objectionable, on 
 the following grounds: So far as existing corporations are concerned, 
 where the rights of the stockholders are already defined by their charters 
 and by-laws, the bill would be ex post facto. If its provisions are to 
 apply to new corporations only, in my judgment it would prevent either 
 home or foreign capital seeking investment in any new road in this State. 
 It is entirely uncalled for, and strikes at imaginary evils. It would sim¬ 
 ply be a source of litigation and of blackmailing operations, enabling 
 any person who wished to give annoyance to any railroad to buy a few 
 shares of stock, and force the company to buy him out at an advance. 
 Minority stockholders are already amply protected, both in law and in 
 equity. Moreover, every single stockholder in any corporation volun¬ 
 tarily takes all the risks of being in a minority when he subscribes to, or 
 purchases, the stock of any corporation. Is a stockholder in a 
 railroad entitled to any more protection than a stockholder in a 
 bank or factory? Again, the prosperity of all the roads in this State is 
 greatly dependent upon their being Trunk Lines in the path of the pro¬ 
 ducts of the great West to the Gulf and Atlantic seaports. They are in 
 competition for this business with the Trunk Lines passing through ad¬ 
 joining States on each side. They are dependent for this business on the 
 co-operation and good will of their connecting roads in the States north 
 of us, which gather the business, and have choice of routes over which 
 to forward it. And the more the territory drained by these connections, 
 the greater the business they can control. 
 
 Now, should it not be the policy of this State to encourage these con¬ 
 necting roads to take an interest in, and to feed, the Alabama roads ? To 
 feed them is to build them up; to lay them with steel rail, and equip 
 them with first-class facilities; to add to the number of their employes, 
 and the consumption of the wood from our forests, and the coal from 
 our mines. To secure this good will and co-operation, foreign corpora¬ 
 tions must be induced and encouraged to take a pecuniary interest in our 
 roads. There is not a road in Alabama whose original projectors did not 
 anxiously seek foreign aid; and foreign capital built the majority of 
 
 them. 
 
 The Chinese policy of building a wall around a State is foolish and 
 wicked, and a State can no more isolate its railroads from all other inter¬ 
 ests than a county could. 
 
24 
 
 The lowest local freight rates now prevailing in the State will be 
 found on the roads controlled by the largest foreign corporations. It 
 would be worse than unfair and unjust; it would be foolish to weaken 
 or destroy in any way the interest of foreign railroads in building up 
 and sending freight over Alabama railroads. 
 
 I earnestly trust that this bill will receive your condemnation; be¬ 
 lieving that the courts of Alabama already afford ample protection to the 
 owners of stock in any railroad within our limits, and sure that such 
 matters had best be left to the laws of trade and competition. 
 
 House bill Ho. 171 and Senate bill Ho. 212 are designed to establish 
 a Board of Railroad Commissioners for the State. The bills are similar 
 in their general outlines, the Senate bill being the most complete and 
 thorough of the two. The latter bill provides that the railroad companies 
 shall have the nomination of one of the three commissioners to be ap¬ 
 pointed. I think this a liberal and desirable feature, as tending to secure 
 the services of an expert in railroad matters, which is equally desirable 
 both for the railroads and for the community at large. The bill, however, 
 disqualifies any one from being a Commissioner who owns any railroad 
 stock or bonds. This provision seems to me both petty and unfair. It 
 is petty because any man who would be influenced by an ownership of 
 railroad stock or bonds would be purchasable by a direct offer of money. 
 The strictest integrity must be looked for in a Commissioner, and if it 
 does not exist it will not be secured by this qualification. 
 
 Again, it is unfair because every citizen of Alabama has a pecuniary 
 interest in opposition to that of railroads. If a man owned railroad 
 stock, his interest might be balanced on each side of the question; but 
 if he has none, his interest will preponderate against the railroads. I 
 do not, however, consider this a very essential matter, so I pass over the 
 first three sections of this bill without any further comment. 
 
 Section 4 requires the Commission to revise all freight tariffs and 
 make such changes as they deem necessary, and section 5 requires the 
 Commission to hear and decide upon all complaints of extortion or dis¬ 
 crimination. 
 
 In my judgment the latter section will accomplish all desired results 
 without loading the Commission with the very onerous task of revising 
 all the freight tariffs. Every tariff includes a classification covering 
 from twelve hundred to fifteen hundred articles, and it requires long 
 familiarity with such matters to adjust these articles in the different 
 classes, and to understand all the conditions of each railroad in the 
 State, which must be taken into consideration in adjusting its tariff, such 
 as its physical characteristics, its grades and curves, amount and char¬ 
 acter of business, expense of maintenance, etc. 
 
 The Commission, when it enters upon its labors, will be new to 
 them, and if too much is given it to do, its work can not be well 
 done. By leaving it at least for a year or two to gain experience 
 
25 
 
 by simply hearing and adjusting complaints , it could at least correct all 
 evils of such magnitude as to lead to complaint, and would be better 
 qualified at the end of that time for undertaking such a task as prescribed 
 in section 4, should it then be deemed necessary. I do not believe, how¬ 
 ever, that it would then be found either necessary or desirable. Where 
 no complaints are made it may be safely assumed that no great abuses 
 exist. But should it attempt to revise all classifications immediately 
 upon its appointment, I am sure it would give ground for many just 
 complaints on the part of railroad companies by making unnecessary 
 changes. The safe course to be pursued is not to see how much the State 
 can interfere with the present management of the railroads—for doubtless 
 the power exists to do very much which would be very unwise—but to 
 see how little is absolutely necessary to be done. 
 
 Two of the Commissioners at least will be only theorists in railroad 
 matters, and theorists compelled to act in such affairs are very apt to be¬ 
 come experimentalists—where the experiments cost them nothing. 
 
 I think it very unwise to subject the railroads to any further experi¬ 
 ments than may be necessary to adjust matters actually complained of. 
 
 The duties of the Massachusetts Commissioners are prescribed on this 
 basis: They are not required to interfere with anything where there is 
 no complaint on the part of any individual. 
 
 Section 7 prescribes that the expenses of the Commission shall be 
 levied as a license tax upon the railroads. I think this section is decid¬ 
 edly unfair. The theory upon which the Commission is formed is that 
 it is for the benefit of the whole people of the State. Tt is not to plunder 
 the railroads, but to do justice between all interests. Then all interests 
 should share in the expense; and, so far as I know, the Commissions in 
 all other States are supported by the whole people, just as all other State 
 institutions are. r l liis is not only fair to all, but it puts the Commission 
 
 o* the footing that all such institutions should be placed. If they 
 become useless the people grumble at the expense and abolish them. But. 
 if their support is thrown upon the railroads, the Commission might be¬ 
 come entirely useless to the people at large, but there would be no call 
 upon the Legislature to abolish it if the people did not have to bear the 
 
 expense. 
 
 Section 9 enacts that no railroad corporation shall buy stock in any 
 other railroad in the State without the consent of the Commission. . I 
 think this section also very unwise. It confers too much power to give 
 to any set of Commissioners. It tends to drive railroad capital from 
 the State, and ties the hands of lines within the State seeking to protect 
 themselves against competing lines in other States. When such pur¬ 
 chases are made they are always made in the struggle for through busi¬ 
 ness- and as I have shown before, the railroad lines which run through, 
 the State should certainly be left free to protect themselves by all neces¬ 
 sary alliances against the consolidated lines on each side. If the history- 
 
26 
 
 of such purchases as have heretofore been made in this State is looked 
 into, it will be found that they have invariably resulted in the lowering 
 of rates on the roads purchased, and in improvement of the condition of 
 the roads. There would be also many ways of evading this act. In¬ 
 dividuals could make the purchase and accomplish the same results as 
 if a corporation had purchased them. As all unnecessary legislation is 
 obnoxious, 1 therefore trust that this section will not meet your approval. 
 
 Section 10 forbids contracts for pooling of business between compet¬ 
 ing roads. I have already explained that in my judgment the public 
 hostility to such arrangements is founded in ignorance of their true in¬ 
 tent and object and results, and has been incited by individuals who are 
 interested in having railroad wars and rebates and fluctuations continue. 
 
 1 think that the power conferred on the Commissioners in section 5 will 
 be found ample to regulate this matter; at least it will he until another 
 meeting of the Legislature, when the Commissioners will have had some 
 experience, and be able to report whether or not they think furthei legis¬ 
 lation desirable. 
 
 Sections 11-16, 17 require the Commissioners to exercise a personal 
 supervision over the physical condition of every road in the State, and to 
 prescribe repairs and additions to rolling stock, and to in\estigate the 
 causes of all accidents. 1 think this, too, is loading the Commission with 
 onerous and unnecessary duties, and duties for which at least tw r o of the 
 members will have had no previous training and no special fitness. And 
 the duties would be simply enormous. It might be very hard, too, upon 
 a railroad to have improvements prescribed without providing the means 
 with which to pay for them. Many of the roads in the State are very 
 poor, and can not procure at once even what they know very weJl that 
 they need ; all of them have to study economy, and their own officers are 
 the best judges of what is necessary, and how and when it shall be pro¬ 
 vided. And the law, too, already holds them rigidly responsible for any 
 accidents which may result from false economy. 
 
 Section 12 gives the Commissioners and all witnesses whom they may 
 summon the right to pass free over the railroads. This matter seems to 
 me to be beneath the dignity of legislation, and I think this section 
 would be pronounced unconstitutional. I don’t believe that the State 
 has the right to legislate that any person or corporation shall perform 
 services for nothing. 
 
 Section 14 authorizes the Commissioners to require the several railroad 
 companies to fence their roads. 1 think this section is unjust and op¬ 
 pressive. Fencing costs $300 per mile and the law does not provide the 
 rnonev. It is verv expensive tc maintain, and it is often but a question¬ 
 able security against accidents to stock. It is impossible to prevent gaps 
 being made in the fences by persons who wish to cross ; and when a fence 
 is not maintained and stock once get inside, they are almost certain to be 
 killed. Stock owners are already amply protected by special laws, and 
 
I think that.this matter can be left to regulate itself, as it doe.- in all the 
 adjoining States. 
 
 Section 15 requires- the railroad companies to make annual returns of 
 their business up to dune 50th. Every road in the State now makes 
 up an annual return; but they begin and end their .fiscal year 
 at different times. The making up of an annual return is very labori¬ 
 ous, and I think that all the purposes of the Commission would be an¬ 
 swered by simply requiring roads to send copies of their annual reports 
 to the Commissioners whenever they are made. These annual reports to 
 the stockholders are usually full and exhaustive on all topics; they are 
 in print, the most convenient form for use, and the Commissioners else¬ 
 where have power conferred to call for any special in formation they may 
 need at any other time. 
 
 Section 'J1 requires the Railroad Commissioners, in fixing their rates, 
 to consider what rate is necessary to yield a dividend of not exceeding eight 
 per cent, on the value of the railroad. To so adjust any tariff as to make 
 it yield any given dividend is utterly Impossible. The Commissioners 
 are already empowered to require that the tariff shall be fair and reason¬ 
 able; and that, 1 think, is the only rule that can be practically applied. 
 No one can foresee what the business of a year is going to be; and to 
 attempt to fix a rate to give a certain dividend would require a knowl¬ 
 edge of the future, long experimenting and frequent changes. Again, 
 as scarcely a railroad in Alabama has paid its stockholders a dividend 
 since the war, they might now be allowed profits on the whole invest¬ 
 ment represented by their capital stock, provided they can earn them at 
 fair and reasonable rates; especially as the State does not guarantee 
 them any dividend at all. 
 
 On the remaining sections I have no comment to make, but would 
 suggest one in addition, to-wit: “ That wherever freight or passenger 
 
 “rates are referred to in this act, they shall be understood to apply only 
 “ to rates on traffic which does not come from or go beyond State limits.” 
 Inter-state traffic has been held by the courts to be subject only to Con¬ 
 gressional legislation. I think I have already shown that State laws 
 alone could not reach and control it under any circumstances. Their 
 onlv effect, 1 am sure, should it be attempted to apply them to traffic 
 coming from or going into other States, would be to injure the markets 
 of this State, at the expense of markets in adjacent States. Mobile, for 
 instance, would most certainly be injured, and Pensacola and New Or¬ 
 leans benefited, if any interference by State laws whatever is attempted 
 with the rates from Mobile to New York. To make this matter, then, 
 very clear and avoid anv misunderstanding whatever, I urgently ask that 
 whatever legislation is decided upon, it be plainly and unequivocally 
 stated on the face of each and every law that it is to apply only to traffic 
 not destined to or coming from points beyond the limits of the State. 
 
 1 must apologize to the committee for the length of my argument, 
 
and for its lack of systematic arrangement. It has been prepared amid 
 a pressure of daily duties, and many interruptions. I have endeavored 
 to give only a practical idea of the questions before you for discussion, 
 based on a long experience in such matters, and an honest effort to un¬ 
 derstand them and arrive at solutions for them. 
 
 In conclusion, permit me to emphasize one point only. There has 
 been so much discussion of how far the power of the State can go in the 
 regulation of railroad transportation, that the impression is being created 
 that that is the only question in the matter. On the contrary, T think 
 that is not even a part of the question at all. If it ever was it has been 
 settled long ago that there is ample power, and a superabundance, to 
 accomplish all that the community can ever need—and if it did not 
 already exist it would doubtless be found. The real and only ques¬ 
 tion is this: “Shall all the conflicting interests in transportation be 
 left to adjust themselves under the laws of trade and of demand and 
 supply alone; or shall a tribunal be set up over them, to which all shall 
 bow ; and if the latter, how shall that act? ” 
 
 E. P. 'ALEXANDER.