ADDRESS 
 
 OF 
 
 MR. THEODORE P. SHONTS 
 
 BEFORE THE 
 
 THIRD ANNUAL CONVENTION 
 
 OF THE 
 
 Lakes-to-the-Gulf Deep Waterway 
 
 Association 
 
 AT CHICAGO, ILLINOIS 
 
 OCTOBER 9, 1908. 
 
3 r k 
 
 Svn 
 
 
The Future of Rail and Water Trans¬ 
 portation in the United States. 
 
 It is a great pleasure to be here today and I am glad 
 of the opportunity to give you my views on a subject in 
 which we are all deeply interested—The Future of Rail 
 and Water Transportation in the United States. 
 
 I am no recent convert to the Deep Waterway Cause. 
 I have believed in it and favored it from the first. 
 When I had the pleasure of addressing the Chicago Com¬ 
 mercial Club nearly two years ago, I urged that the enter¬ 
 prise be given greater attention because of the changing 
 conditions, due to the construction of the Panama Canal. 
 
 The widening and deepening of the waterway built by 
 nature between the Lakes and the Gulf has long since 
 ceased to be a local or sectional question. It has become 
 a matter of national, and in fact international, importance 
 on account of the effect which it promises to have on our 
 commerce with other countries:' is therefore entitled to the 
 active support of every patriotic American. Not satisfied 
 with being the granary of the world, the United States 
 has recently undertaken to become its workshop. Great 
 as has been our gain in population, we have grown more 
 rapidly in the production of manufactures and if we are 
 to continue to advance we will be compelled to engage in 
 the wars which are to come—wars not for the 
 acquisition of territory, but to secure supremacy 
 in international commerce. The country which has the 
 
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2 
 
 best transportation facilities will have a distinct advan¬ 
 tage in such contests and the completion of the waterway 
 in which you are interested will go far towards giving 
 this country that advantage. The construction of a great 
 inland harbor reaching from the Gulf to the Great Lakes 
 will not only develop the whole Mississippi Valley until it 
 becomes as great in manufacture as it is in agriculture, 
 but it will aid in the further progress of the entire na¬ 
 tion. 
 
 With the completion of its sister enterprise, the Pan¬ 
 ama Canal, the markets of Central and South America, 
 which have been too long overlooked, will be brought to 
 the very heart of our country. Ships will be able to load 
 in Chicago, St. Louis, New Orleans, or intermediate 
 points and deliver the cargo along both coasts of Central 
 and South America without breaking bulk before vessels 
 from European countries have more than fairly started 
 on their journey. Nature and the Monroe Doctrine have 
 given us an advantage in these markets which the people 
 there appreciate. We should therefore avail ourselves of 
 their friendly disposition before the merchants of Europe, 
 who also recognize the situation and are seeking to coun¬ 
 teract our advantages by extending and cementing their 
 relations with these countries, become so firmly en¬ 
 trenched that it will require great effort to drive them out 
 and secure that share of the trade which properly should 
 be ours. 
 
 I think I fairly represent the general sentiment of their 
 officers when I say that the Railroads of the country do 
 not look upon your enterprise with unfriendly eyes. I 
 know that, as President of The Chicago & Alton Rail¬ 
 road, one of whose main lines reaching from Chicago to 
 
3 
 
 St. Louis will be paralleled its entire distance by the con¬ 
 struction of your deep waterway, I can truthfully say that 
 our Company will cordially welcome the early completion 
 of your great undertaking. I favor it and we all favor 
 it because we realize that this work when finished will 
 make it possible, as nothing else short of the expenditure 
 of appalling sums of money could, for us to handle the 
 commerce which is certain to follow the return and firm 
 establishment of national prosperity. 
 
 The greatest obstacle that steam railroads have to over¬ 
 come if they are permitted to operate and expand as the 
 traffic of the country grows, is the providing of adequate 
 terminals. It is an easy matter to lay rails between im¬ 
 portant centers and to run trains over them. The diffi¬ 
 culty is to provide terminals sufficiently large to permit 
 the expeditious disposition of the traffic at terminal points. 
 The growth of great cities and the consequent enormous 
 increase in real estate values have made terminal prop¬ 
 erty, to the extent that conditions demand, almost pro¬ 
 hibitive, so that only the very richest railroads, and those 
 whose credit is most firmly established, can hope to pro¬ 
 vide adequate facilities and reasonable conveniences for 
 the public. In New York, Boston, Philadelphia, and 
 Baltimore the situation in this respect has become so 
 serious that the bulk of the grain business has been 
 driven to Canadian ports where land is cheaper and 
 facilities can be provided at more reasonable expense. 
 The fact is, this problem has attained such magnitude 
 that some profound students of transportation affairs are 
 already discussing the feasibility of having the Govern¬ 
 ment provide the terminal facilties for the railroads of 
 the country in order to protect American commerce—but 
 
4 
 
 this is the solution least to be desired because it would be 
 the first actual step towards Government ownership of 
 railroads. 
 
 The opening of this waterway, however, would greatly 
 aid in the solution of this question because every point 
 of the thousand mile harbor, stretching from Chicago to 
 New Orleans would be accessible and feasible for the con¬ 
 struction of great terminal facilities so that the trunk 
 lines of the East and West could converge and inter¬ 
 change their traffic and load into ships which would serve 
 Europe, Mexico, and the Central American States, the 
 East Coast of South America and, through the Panama 
 Canal, when it is completed, the West Coast of North 
 and South America and the Far East. It will give the 
 Mississippi Valley—the vast territory between the Rock¬ 
 ies and the Alleghenies—a system of outlets for its prod¬ 
 ucts that ought to take care of the future needs for cen¬ 
 turies to come. It will not injure the cities and seaports 
 which are now the gateways of our export trade, nor will 
 it affect the railroads in any other way than to aid them 
 in developing the country. The effect of the Erie Canal 
 and other waterways has not been to compete with the 
 railroads but to supplement them and the Deep Waterway 
 will be the greatest achievement in this direction which 
 has ever been accomplished. With a population of ninety 
 millions the railroads now have all the business they can 
 well handle under normal conditions. It is at times, 
 chiefly on account of the congestion at terminals, almost 
 impossible for them to transport the traffic that comes to 
 them without delays which may well cause complaint from 
 the shipper. With this condition prevailing in times of 
 ordinary prosperity, what will the situation be when our 
 
5 
 
 population is doubled? The situation as it now stands is 
 serious. However, the construction of this Deep Water¬ 
 way, by furnishing an easy outlet for the present and 
 prospective products of the great Middle West will re¬ 
 move the danger which now threatens of a traffic conges¬ 
 tion that would affect practically every industry in the 
 land. 
 
 The history of transportation by rail and water in the 
 United States shows that the traffic created by the rail¬ 
 roads has grown more rapidly than it has been possible 
 to extend the lines of transportation on land, and that 
 because of the governing conditions the railroads have - 
 absorbed the higher class of freight, while the cheaper 
 classes which could bear only a low tariff have been turned 
 over to the canals. This cheaper class of freight while not 
 in itself profitable to the railroads must be transported to 
 aid in the development of communities and industries, 
 which, in turn, will produce an increased higher grade 
 tonnage for the railroads. For instance, the construction 
 of this canal will convert Kansas into' a great cement¬ 
 making State. That State has great beds of rock that 
 make first class cement but, on account of the long rail¬ 
 road haul and the fact that cement is a cheap product 
 which cannot stand railroad charges for any considerable 
 distance this industry has never been developed to any¬ 
 thing like its fullest extent. 
 
 In the construction of the Panama Canal, as I happen 
 to know from personal experience, the cement makers of 
 Kansas were unable to successfully compete with the 
 manufacturers in the East who were close to the seaboard 
 and those of Europe, who were similarly situated. With 
 the completion of this Deep Waterway, however, Kansas 
 
6 
 
 will be able profitably to' market millions of tons of ce¬ 
 ment where it now sells only hundreds of tons. The 
 railroads will not profit materially by the short haul to the 
 canal, but the building up of the cement-making industry 
 will encourage a vast line of other industries which will 
 furnish high class and remunerative traffic to the rail¬ 
 roads. This is only one illustration of the manner in 
 which canals not only aid the railroads, but assist in the 
 development of the whole country. There will always be 
 a large tonnage which the railroads cannot handle so far 
 as the long haul is concerned at sufficiently low cost to 
 enable the industries to* thrive, and, on the other hand, 
 there will be, in normal times, enough traffic which de¬ 
 mands quicker service and can afford to pay more remu¬ 
 nerative rates to keep the land lines of transportation 
 busy. 
 
 The steam railroad is, and from the nature of things 
 must always be the backbone of all transportation. It is 
 the growth of the steam railroad that has made possible 
 the marvelous development of our country. The canal 
 aids the railroad in our national development, but it can¬ 
 not alone carry the burdens of commerce. The railroads 
 carry traffic to the canals and haul it away from them. 
 
 . If there is no freight for the railroads to carry, the bosoms 
 of the canals will be unruffled. It is impossible therefore, 
 to strike a blow at the railroads without hitting the canals, 
 and, to go further with a plain statement of fact without 
 making the impact felt to the uttermost limits of the 
 nation. 
 
 What is the situation today respecting our American 
 railroads? Are these great arteries of trade whose con¬ 
 struction originally made possible the development of our 
 
( 
 
 inland commerce in position to respond to the increasing 
 demands which are continually being made upon them? 
 Is this most representative of all American industries, 
 which normally gives direct employment to 1,600,000 
 men, and indirectly gives employment to as many more 
 through the industrial concerns which have no market 
 except the railroads—is this industry, which, in normal 
 times, purchases itself 25% of all the manufactured prod¬ 
 ucts of our country, and handles every day almost every 
 item which enters into the daily life of our ninety millions 
 of citizens, now in condition to properly perform the serv¬ 
 ice necessary to insure our country’s further growth? 
 Does the daring spirit which inspired our pioneer railroad 
 builders, the spirit which assumed the risk, conceived the 
 processes, and defied the obstacles which beset the laying 
 of the wire across the sea and the rail across the plains 
 still exist? Have we as much of that alert, re¬ 
 sourceful and self-confident individualism, which has been 
 our greatest national asset today as formerly? Do the 
 coffers of the 2,000,000 American investors in American 
 railroad securities open as readily as in the past to provide 
 the funds necessary to keep our railroad development 
 abreast of our traffic requirements ? You gentlemen who 
 are all deeply interested in the transportation affairs of 
 the nation and are consequently familiar with the true 
 situation, at once answer “No” to each of the questions 
 just propounded. But what is the reason for all this? 
 What is it that has taken the heart out of our Railroad 
 Managers—that has chilled their laudable ambitions, that 
 has frightened away our financial support, that has shad¬ 
 owed our horizon on every side, that has made us cease to 
 act, and only wait? The answer is clear—it is the fear of 
 
8 
 
 Government operation of our roads through Commissions 
 who have ik> financial responsibility, is the thing which 
 has produced these results. The idea of operation through 
 Commissions is the illogical outcome of public measures 
 at first preventive and justified, but which, with the swing 
 of the pendulum, have become a dangerous interference 
 in matters which have their private as well as public con¬ 
 cern and which, if extended and continued, will portend 
 disaster. And so I beg leave this morning before this 
 audience of competent judges to state the case, as a busi¬ 
 ness man talking to business men, or, better still, as an 
 American citizen talking to his fellow citizens,—to state 
 the case calmly and dispassionately in behalf of the com¬ 
 mercial independence of our American railroads. 
 
 I think we will all agree that our future as a nation 
 depends more than any other one thing on the character, 
 extent and cost of the service our transportation lines 
 render and that we have already shown that the interests 
 of the rail and water lines are inseparably linked together 
 so that whatever injures the one will to a greater or less 
 extent cripple the other. 
 
 The railroads were built and developed by men who 
 had a high order of courage, wisdom and faith, but who 
 were, after all, men. Until earth becomes Paradise per¬ 
 fection will not dwell in man, so- it is not surprising that 
 the work of these men, while splendid from many points 
 of view and unparalleled in the history of human en¬ 
 deavor, was not perfect. Selfishness crept in and grew 
 and avarice sometimes overcame conscience. Then, too, 
 conditions changed and policies which seemed wise and 
 just in order to encourage the development of a new coun¬ 
 try, and without which great stretches of virgin soil now 
 
 i 
 
9 
 
 peopled and prosperous would not have been settled in a 
 hundred years, became questionable after the newly 
 opened territory became self-sustaining. 
 
 Without any desire to excuse past wrongs, I submit 
 that, when you consider the vast interests involved and 
 the swiftness of their development, the wonder is not that 
 evils crept into the railroad business, but that the evils 
 were so few r . Many of these the railroads discovered and 
 corrected; others they discovered but found it impossible 
 under the then existing conditions to correct. Take the 
 question of rebates, for example. Do you suppose that 
 any self-respecting railroad man of his own free will paid 
 money out from his Company’s treasury to secure traffic 
 to which he was rightfully entitled? He did it because 
 he was compelled to do it, or lose the business. The traffic 
 which levied tribute in this way became so tremendous 
 and the system so widespread that legislation was re¬ 
 quired to stop the payment of rebates. New laws were 
 required, too, to put an end to all forms of unjust dis¬ 
 crimination, to prevent the issue of fictitious securities, 
 to standardize accounts and to compel publicity—not pub¬ 
 licity of the kind to satisfy the inquisitiveness of a morbid 
 curiosity, and which will entail millions of useless expense 
 upon the corporations if allowed to stand—but a degree 
 of publicity which will satisfy stockholders as to the man¬ 
 ner in which their properties are being managed, and 
 enable the Government, through its expert accountants, 
 to make it certain that no law r s are being violated. Such 
 law^s either have been or should be enacted, and almost 
 every railroad man wall not only welcome them, but will 
 co-operate in securing their adoption. 
 
 But, going beyond these necessary laws, which provide 
 
10 
 
 for wise regulation, the idea of physical operation of rail¬ 
 roads by Commissions has come into being, and therein 
 lies the greatest danger which our country faces today. 
 The danger is not in the Commissions as they are now 
 made up but in the law itself; in the fear on the part of 
 the investors in railroad securities that the management 
 of their properties will be taken out of the trained hands 
 which now direct them and placed in charge of men who 
 know nothing about railroad operation and have no finan¬ 
 cial responsibility and are accountable to no one but the 
 man who appoints them, or to the political organization 
 which procures their appointment. Railroads have no 
 business in politics, but if the present tendency is not 
 checked they will ultimately be thrown intoi the hands of 
 politicians and become their prey. 
 
 To point out the possibilities of plunder through the 
 injection of politics into railroad management would be 
 to digress into details. It is the principle of the operation 
 of railroads by Commissions which we are all interested 
 in just now, and I insist that it is a grievous and vicious 
 wrong, that it amounts in the end to confiscation of prop¬ 
 erty without due process of law and that it is filled not 
 with probabilities but with certainties of evil and that it 
 is wholly un-American and a violation of the first prin¬ 
 ciples of free Government. There are two fundamental 
 features which must not be lost sight of in the discussion 
 of this question, and the first is the human phase. What 
 is the thing which has made our nation great? Individual 
 effort. What has been the incentive behind this individual 
 effort? The hope of individual reward. In no field of 
 human endeavor has this hope been more fully realized 
 than in the railroad field, with the result that men with 
 
11 
 
 the best brain, with the most upright character, possess¬ 
 ing ceaseless energy, infectious enthusiasm, and broadly 
 constructive faculties have been attracted thither. Take 
 away responsibility from these railroad officers, place 
 them where they can neither initiate nor carry through 
 what they do initiate, and you will destroy the element 
 which has made the railroads and the United States 
 what they are today. 
 
 The operation of our railroads has become so complex 
 that it presents scientific problems more difficult of solu¬ 
 tion than those of any manufacturing concern—yet men, 
 born full fledged over night, talk glibly of the most diffi¬ 
 cult and technical railroad problems and how to master 
 them. Who would think of operating the great steel works 
 of the country, or any other line of industry involving less 
 complicated features, through Commissions? Yet the 
 idea is just as rational and the theory contains just as 
 much of right as does the operation of railroads by Com¬ 
 missions. I do not claim a monopoly of brains for Amer¬ 
 ican railroad managers, but they have in fifty years con¬ 
 structed more than 50% of the railroad mileage of the 
 world; they are giving a service superior to* that of any 
 other country at from one-half to one-third the cost, and, 
 while doing these things, they have paid more than double 
 the wages that are paid anywhere else on earth. I am 
 willing to stand on that record and let the people decide, 
 after they have considered it, whether it is safe or wise to 
 risk a change and to legislate away the very foundations 
 on which human success is based. 
 
 There is a financial as well as a human side to the ques¬ 
 tion, and this is of importance to you, as canal builders, 
 because of the inter-relation of land and water transpor- 
 
12 
 
 tation. Because of this hostile legislation, national and 
 state, and the consequent fear on the part of the owners 
 of railroad securities that they will not be allowed to man¬ 
 age their own properties, the railroad development of the 
 country, which should now be making great strides, while 
 there is plenty of labor, to prepare for the return of pros¬ 
 perity, is at a complete standstill, with distressing effects 
 which are felt in every line of business. I think you all 
 understand, without my saying it here, that there can be 
 no return of prosperity that will stay with us until the 
 railroads are fairly treated. 
 
 We have in New York State today practical operation 
 of transportation lines by Commission and I find, from 
 speaking on the same subject in the West before, that it 
 is not generally understood that this situation really exists 
 as an actuality. The New York Public Service Law 
 has placed its Commissions (we have two, one for New 
 York City and one for the rest of the State) practically 
 in the shoes of the Directors of the railroad corporations 
 throughout the State and has given them complete control 
 of the corporate affairs. The Commissions may compel 
 railroads to change or add to their structures; to change 
 or add to the operations of trains; to change their rates, 
 or to change the kind and quantity of rolling stock; their 
 terminal facilities, motive power or any other property or 
 device used. State regulation under such a statute is in 
 effect State prohibition of new enterprise and State opera¬ 
 tion of existing railroads. What is the result? Trans¬ 
 portation development in New York is not paralyzed—it 
 is dead. This is not because of anything that the men 
 who now constitute these Commissions have done; they 
 have been prudent, careful, and honest, but the menace is 
 
13 
 
 in the law. We do not know who the next Commission 
 will be or what it will do. Some of the present Commis¬ 
 sioners themselves, have talked of recommending such a 
 change in the Public Service Law as will remove those 
 things which are dangerous and which act as an effective 
 barrier to further development, and leave in the law only 
 those things which make for reasonable regulation. Until 
 legitimate regulation is substituted for the physical opera¬ 
 tion which is now authorized there can be no railroad 
 progress in New York or any other State which has 
 analogous laws. Rather than see this anomalous con¬ 
 dition become general and permanent, I, as a railroad 
 man, would prefer Governmental ownership and opera¬ 
 tion of the railroads, dangerous as that would be to the 
 maintenance of our liberties, because operation without 
 ownership not only destroys the initiative by destroying 
 the hope of reward to the individual officers and dries up 
 the fountains of money supply, which are necessary to 
 keep the railroad development abreast of the traffic re¬ 
 quirements, but also because of the fact that the Com¬ 
 missions which operate the railroads have no financial re¬ 
 sponsibility and are not held accountable for results. 
 Therefore, extravagance and graft and ruin must even¬ 
 tually ensue; whereas, if the Government bought the rail¬ 
 roads and paid for them, it would of necessity be respon¬ 
 sible to the people for a fair return on the investment, and, 
 unless our whole theory of government should prove a 
 failure, it would have to hire trained men to operate 
 the properties and place on those men responsibility for 
 such management as would satisfy the people that the 
 properties were efficiently and economically administered. 
 
 There is now no scarcity of money. Millions of dollars 
 
14 
 
 are being loaned in New York every week at 1 per cent, 
 but none of it is going into railroad securities nor for 
 railroad extensions, nor will any of it go there until the 
 holders of it are assured of a fair return on their invest¬ 
 ment with the promise that, under proper regulations, 
 they will be allowed to manage their own business. In 
 other words, the commercial independence of the railroads 
 •can not be interfered with nor any of the technical 
 details of operation assumed unless the vital interests of 
 the public are jeopardized. 
 
 Do not misunderstand me! I believe in supervision or 
 regulation by Commission. I think that the welfare of 
 the country and the welfare of the railroads demand the 
 existence of such bodies and that they be clothed with 
 powers sufficiently broad to enable them to effectually 
 protect the public welfare, so 1 that nothing I say herein is 
 a reflection on the doctrine of regulation by Commissions; 
 but, as I have said, the great danger lies in those sections 
 of the laws which go beyond the point of regulation and 
 place the physical operation of the railroads in the hands 
 of men, who, however honest and high minded they may 
 be, are wholly lacking in the training and experience 
 which such authority demands. 
 
 There is no one who has greater confidence than I in 
 the high purpose of the members of the Interstate Com¬ 
 merce Commission, yet, as showing the effect on commerce 
 of untrained men when they go too' far into operating 
 details, it may not be out of place to' briefly review the 
 two most important acts of that Commission. Its first 
 important order relating to international trade required 
 that freight rates from Asiatic ports to inland American 
 points should be published for thirty days before they 
 
15 
 
 went into effect. When a shipper in Shanghai or Hong 
 Kong asked for a rate on a consignment of goods to 
 Chicago or St. Louis he wanted it that day; he would not 
 wait until the next day or next week, and certainly not 
 until next month. The effect of this order of the Com¬ 
 mission, in place of widening the markets of the world to 
 our manufactures and thus aiding the railroads in devel¬ 
 oping the commerce of the country was to practically 
 drive American ships from the waters of the Pacific and 
 to drive American railroads from the rapidly growing 
 markets they were developing and serving. 
 
 The first important order of the Interstate Commerce 
 Commission having to do with the making of domestic 
 rates directed a reduction of 15 per cent in the rates from 
 the Atlantic seaboard to> Kansas City. Immediately on 
 the issuance of this order, Chicago, St. Louis and other 
 Mississippi River common points took it up and objected 
 vigorously to having the seaboard moved 15 per cent 
 nearer to Kansas City unless they received a propor¬ 
 tionate advantage. The next development was the dis¬ 
 covery that the State of Missouri had a Railroad Com¬ 
 mission of its own, that Kansas City and St. Louis were 
 both in Missouri and that not only all traffic passing 
 between those two cities locally, but also^ all traffic pass¬ 
 ing between the two rivers was affected by the orders 
 of the Missouri Commission. This Commission said to 
 the railroads: “If you obey the order of the Interstate 
 Commerce Commission and bring the Atlantic seaboard 
 15 per cent closer to Kansas City, thus upsetting the geo¬ 
 graphical line established by nature, we will immediately 
 order a 15 per cent reduction in rates between St. Louis 
 
16 
 
 and Kansas City so as to keep the cities relatively where 
 they have been since the first railroads were built.” 
 
 This fact being reported to the Interstate Commerce 
 Commission, that body informed the railroad representa¬ 
 tives that the attitude of the Missouri Commission was 
 something with which they had nothing to do, and that 
 it was the business of the railroads to fight it out with the 
 local Commission, adding however, that if the Missouri 
 Commission carried out its threat and reduced the rates 
 between St. Louis and Kansas City, the Interstate Com¬ 
 merce Commission would again reduce the rate from the 
 seaboard to Kansas City by 15 per cent. Now, what will 
 happen ? If the Interstate Commerce Commission holds 
 to this attitude and the Missouri Commission stands on 
 its rights the result will inevitably be that every line east 
 of the Missouri River will be forced into bankruptcy, and 
 in the last analysis the rates to these cities will be rela¬ 
 tively where they are today because they are now based on 
 geographical and commercial conditions, which always 
 have and always will control and prescribe them. 
 
 The truth is that the railroads of this country do 1 not, as 
 a matter of fact, make the rates. They are permitted to 
 promulgate them but the rates to and between commu¬ 
 nities are established by the commercial interests of those 
 communities, which are constantly watching to see that 
 no other community secures an advantage over them in 
 the matter of freight tariffs. 
 
 If this country is to continue to grow, transportation 
 development must at least keep abreast of our industrial 
 progress, and transportation by water cannot be wisely 
 extended except as transportation by land advances. No 
 way has been discovered of building real railroads except 
 
IT 
 
 with money, and money will not go into railroad construc¬ 
 tion at the behest of legislation, nor from patriotic or 
 political promptings nor for any other reason than that 
 it is a secure interest bearing investment. If the invest¬ 
 ment is not attractive the money will go elsewhere, into 
 fields where it will be welcomed and not interfered with. 
 The solution of the problem of continuing railroad devel¬ 
 opment and creating additional facilities which should 
 now be under active construction therefore rests in giving 
 the railroads a square deal. That means a prohibition 
 of all rate discrimination but full and complete author- 
 ity to fix their own rates , and thus obtain, under nor¬ 
 mal conditions, a fair return on the investment. It also 
 means the right under proper regulation to operate their 
 own properties. That is all that is needed but that is ab¬ 
 solutely essential. 
 
 The trend of thought of those who have studied the 
 question closely and dispassionately favors the repeal of 
 those laws which go into the scientific details of manage¬ 
 ment in providing for railroad operation by Commission 
 and a return to the policy of a sane regulation of the 
 transportation lines. There need be no fear that rates 
 will be too high or that they will be so adjusted as to work 
 any injustices if they are fixed by trained and experienced 
 men. Railroad men well understand that their properties 
 can prosper only when the communities they serve are 
 prosperous. 
 
 Railroads are not entitled to an unreasonable profit, but 
 they are entitled to a reasonable return for the service 
 they render. The law of service and compensation, as 
 regards the railroads, is as inexorable as the law of supply 
 and demand. When good citizens buy silk, they expect to 
 
18 
 
 pay silk prices. If yon insist on getting silk for calico 
 prices and, through threats of Congressional or legislative 
 influence strong enough to secure the enactment of a law 
 applying the cheaper price to the more expensive article, 
 the effect will be to drive the silk merchant out of busi¬ 
 ness. With his competition removed the price of calico 
 will be advanced and, in the end, you may have to pay silk 
 prices for calico. 
 
 The moral is that we should be willing to< pay for what 
 we demand in transportation as well as anything else. 
 The railroads should be, and generally are, willing to ren¬ 
 der good service, proportionate to the population and its 
 demands, and the public should be willing to pay a fair 
 price for it. If this doctrine of live and let live was the 
 universal rule of conduct, many of the ills from which we 
 are now suffering would disappear. 
 
 Statistics show that the manufacturers' profit runs from 
 15 to- 40 per cent and that the average profit from agri¬ 
 culture is 10 per cent. The records of the Interstate 
 Commerce Commission reveal the interesting fact that 
 during 1906, the last year for which these figures are 
 available, 33 per cent of American railroad securities paid 
 no dividends at all, while the average dividend rate on 
 the remaining two-thirds was 6.03 per cent, which is an 
 average of 4 per cent on all outstanding railroad securi¬ 
 ties. How many manufacturers would continue in busi¬ 
 ness if their margin of profit was not greater than that? 
 In this connection, it may be well to state that in the 
 opinion of the most fairminded experts, the railroad sys¬ 
 tems of the country as a whole could not be duplicated 
 for their present outstanding securities, so that whatever 
 
19 
 
 the conditions may have been in the past the average re¬ 
 turns which railroad securities may earn today are on a 
 fair basis of values. 
 
 Let me make it plain to you, however, that what I 
 have said has not been spoken in any spirit of querulous¬ 
 ness, nor of retaliation, I have simply stated a few facts 
 with the idea of calling your attention to the injustices 
 and dangers of railroad operation by Commissions and 
 showing you where this tendency will lead if not checked. 
 We are all in the same boat. Your first love is the water¬ 
 ways, mine is the railways, but our interests are identical, 
 and we will finally stand or fall together. You desire to 
 raise money to build this great inland harbor, which will 
 serve the billions of people who will come and go on this 
 Continent after we slumber in earth’s bosom, and which 
 will prove an eternal monument to> your courage, wisdom 
 and foresight, and, as a railroad man, I wish you God¬ 
 speed in your efforts. 
 
 We desire to< raise money to develop a system of inland 
 highways unparalleled in efficiency and cheapness of cost 
 for service rendered anywhere on earth, to serve the same 
 great mass of: humanity, which your enterprise will serve, 
 and we ask your aid and co-operation in our efforts. 
 
 I do not believe that this tendency toward operation of 
 railroads by Commission which now threatens is deep- 
 rooted in the public mind, nor do I have any fear that it 
 will long remain after the subject is thoroughly studied 
 and understood. The man with a worthy cause who has 
 pinned his faith to the sound common sense and the high 
 moral sense of the American people has never in the end 
 been disappointed. 
 
20 
 
 There are many signs that our people are beginning to 
 ask themselves what is the matter with the transportation 
 situation ? Is it not possible we have gone too far in our 
 efforts to correct obvious abuses? Is there not danger 
 that necessity of control has not given way to mere love 
 of control? Has not the attempt to divorce the railroad 
 business from economic principles begun to paralyze the 
 vital nerve of progress? Had we not better face about 
 and get back to sane regulation, which, under general 
 laws, will leave to the Railroad Manager a free field and 
 an unfettered hand ? All these are hopeful signs—and so, 
 when the facts are all presented and the arguments are 
 closed, I, for one, am willing without fear of the result 
 to leave the verdict to the court of last resort, which is 
 located, not in the chambers of any Commission, or in 
 any temple of justice, but which is lodged in the minds 
 and hearts of the 90,000,000 of people who constitute the 
 great American Republic. 
 
I 
 
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