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November 23,i906
The Commoner.
5
ome Mistakes as to Government Ownership
Commoner readers will remember a series of rItip-Ia nfin..im..i. . . ... ..
Commoner readers will remember a series of
Icles relating to railway regulation, printed in
vis paper and written by a gentleman who had
bade a special study of railroad questions. The
lame gentleman contributes for this issue an
iteresting article on government ownership. This
tide should bd read carefully by every one
lto whose hands this copy of The Commoner may
sll. It follows.
K Thorn RPPrrin to ha n rHffnnnTHnn nn ihn nnrf
t - - i- ..- .- y."
if many people to smric tne responsibilities which
citizenship imposes. Governmental questions of
frreat import are dismissed without any consid
eration whatever. A few made-to-order catch
)hrases are repeated and that settles the ques-.
ion. Thousands of successful business men, too
b'usv making money to study the merits of the
money question in 1896, rolled such phrases as
i" fifty-cent dollars" and "national honor" under
'their tongues and let it go at that. This same
class of men want to settle the railroad ownership
question the same way. President J. L. Hamilton
fof the American Bankers' association Is a good
example. Addressing the national meeting of that
ibody at St. Lewis recently, he said:
"There is considerable agitation for fed
eral, state and municipal ownership of public
utilities. Just what Is meant by this or what
"institutions would come under this head, I
have not yet seen clearly defined. I am op
posed to all such political buncombe, no matter
where it may originate, and favor only such
laws as will give to every man a right to suc
cessful competition, at the same time prevent
ing the creation of a monopoly in any busi
ness or profession."
Siirh rrass Icrnoranoe as Mr. Hamilton dis
plays is not unusual. He favors ' competition and
is against monopoly, yet ne dismisses tne ques
tion of public ownership of railroads as "political
buncombe." Let us see what men say who have
investigated" these questions and see how impos
sible it is to have competition in transportation
by Tailroads owned and operated by private cor
porations. In 1,885 the United States senate ap
pointed a select committee on interstate com
merce, and this committee made its report to the
senate January 18, 1886: Senator S. M. Cullom
of Illinois was chairman of the committee, and
the other members of the committee were Warner
Miller of New York (rep.), O. H. Piatt of Con
necticut (rep.), Isham G. Harris of Tennessee,
(dem.), and. A. P. Gorman of Maryland (dem.),
three republicans and two democrats. After a
most exhaustive investigation of the railroad
question, bpth at home and abroad, they made
their report from which the following is taken:
"When railroad construction began in
England that country already had quite a
complete system of canals, with which the
new methods of transportation came immedi
ntoiv into activo comnetition. By the char
ters first granted the railroads were required
to admit to their lines the cars and locomi
tives of other companies and individuals, ana
the acts usually prescribed the maximum
tolls to be charged for such service. These
were regulations which it had been found
necessary to apply to the canals, in the man
agement of which abuses had been complained
of somewhat similar to those that afterwards
characterized the management -of railways.
Competition- between the different carriers
who were expected to use the route was re
lied on to secure to the public needful fa
cilities and fair rates under these provisions.
But this was not the result, and within ten
years after the opening of the first railway it
was generally recognized that a railroad must
be to some extent a monopoly, because the
service to be performed was of such a nature
that the highest degree of efficiency, would be
attained and the convenience of the public
would be best subserved by committing the
work to but one. carrier."
Over sixty years ago it was generally recog
nized that a railroad must be to some extent a
monopo,.but Mr. Hamilton evidently has not
heard of it. The report continues:
"The new questions raised by this dis
covery of the element of monopoly in railroad
. v ..., ,-,. nnnsidm-ed by a parlia-
Sen ary committee; of which Sir Robert Peel
was a member, and which reported In 1840 . .
Sat the method of compe'iUon which has
Deen bribed was Impraetl caWj;" that mo-
nopoly upon each line was inevitable; that a
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. . Tjw-ww wj. vault lauwuy was ex
pedient, and that theso changed conditions
made necessary the protection of tho public
interests. It was supposed that tho
principles of free trade would apply in the
construction and operation of railroads, and It
was quite naturally expected that this business
would bo subject to the same natural laws of
competition that governed and regulated other
commercial enterprises and operations.
While theso theories held sway parallel lines
were looked to as an effective means of
regulation. Parliament encouraged the build
ing of competing lines, and this policy brought
on a period of great activity in railroad con
struction and speculation. But tho effects
of competition between different linos were
not what had been anticipated, and attracted
so much .attention that in lfril another com
mittee, headed by Mr. Gladstone, was ap
pointed, which took under consideration the
question of competition and management, and
submitted in all five reports."
Among other recommendations made by tho
Gladstone committee was tho purchase of all tho
railroads by tho government In twenty-five years.
When the time came to buy the railroads noth
ing was done except to appoint another commit
tee, of which action the select senate committee
refers to In its report, as follows:
"Finally, in 1872, a joint select committee
was appointed and made a most thorough in
vestigation of the railroad question. The re
port of this committee passed in review the
history of England's legislation during its ex
perience of forty years. It was shown that
little had been accomplished, although thirty
three hundred acts had been passed and an
expenditure of some 80,000,000 pounds (about
$388,800,000) had been imposed upon the com
panies. It was also shown that the process
of amalgamation had gone on with little re
gard, to the recommendations of committees,
commissions, and government departments,
and the result was that 'while committees and
commissions carofully chosen, for the last
thirty years, clung to one form of competition
after another, it has, nevertheless, become
more and more evident that competition must
fall to do for railways what it does for ordi
nary trade.' "
After thoroughly investigating England's ex
perience of attempting to regulate railroads, tho
rnmmlttGG referred to the fact that nractlcally all
lyallroads in Europe were owned by the govern-
ents, and auueu:
1 "Retaliation throuch state ownership has
een nracticallv unknown in the United States.
fct is of foreign origin, and is foreign to the
character of our Institutions. Tne time may
come when the people of the United States
will be forced to consider the advisability of
placing the railroads of the country completely
under the control of the general government,
as the postal service is, and as many believe
the telegraph service should be. This would
seem to be the surest method of securing the
highest perfection and greatest efficiency of
the railroad system in its entirety, and tho
best method of making a harmonious whole
in its operations, and of bringing about that
uniformity and stability of rates, which is the
greatest need of trade and commerce."
This committee of three republicans and two
democrats, .with. Senator Cullom at its head, re
ported unanimously in 188G that government own-:
ership of railroads "seemed to be the surest
method of securing the highest perfection and tho
greatest efficiency" and "of bringing about that
uniformity and stability of rates, which is the
greatest need of trade and commerce," and in
1906 the president of the American Bankers' asso
ciation, admitting that he knew nothing about
the question, says that he is opposed to all such
political buncombo. No man of common sense
can read that report and arrive at the conclusion
that we can have competition in rail transporta
tion that will give to every man equal opportu
nities. Rates can be regulated to some extent
but competition can not be maintained while com
binations are possible. Not considering the rail
road influence in politics, which is, perhaps, the
worst feature of private ownership, the fact that
there is an element of monopoly inseparably con
nected with transportation by rail, ought to make
every democrat, and every other citizen who is
opposed to private monopoly of any kind, ao
41 v
ardent champion of public ownership. The pica
V f . uc"l"Q mo powers of government
at Washington can not bo brought ngalst Mr.
Bryan s plan, becauso each state would control
moro miles of railway within its borders than
tho national government would control. Much
is said of tho tremendous powor public ownership
would glvo to public officials, but becauso tho
power Is great is one of tho best reasons why it
should bo placed In tho hands of officials elected
by tho people rathor than to lenvo It In the hands'
of private corporations which acknowledge no
responsiblli'y to tho people. It is bettor to con
centrate powor within tho government than to'
pormit it to concontrato outside tho government.
becauso If tho powor Is so groat that it will control
the government in any ovont, it is tho bettor
policy to glvo tho people an opportunity to elect'
the governing officials than to pormit selfish In
torcsts to solcct them. Privato monopoly was hold
to bo indofonslblo and intolerable In tho demo
cratic platform of 1000, and if that platform was
democratic the public ownership of railroads Is
democratic. Privato ownership of railroads Is
privato monopoly In Its worst form becauso thoro
Is only one cure for it and that Is public owner
ship. Every natural monopoly must eventually
bo owned by tho public or tho public will bo owned
by tho monopoly.
In his Harrisburg speech President Roosovelt
unwittingly showed that public ownership was
necessary, although he Intondod to make a point
agninst that policy. Still clinging to tho hope that
railroads can be rcgulatod and tho abuses of prI-
vato ownership abolished ho said:
"To exercise a constantly increasing and..
constantly more effective supervision over tho c,
great common carriers preyents all necessity.
for seriously considering such n projeot as tho .
government ownership of railroads." f-
Here Is an open acknowledgment by Prosldont
Roosovelt himself that tho new rate regulation,
law will not afford relief, othorwiso he would",
not refer to the necessity for "a constantly In-;
creasing and constantly more effective supcryi
sion." What hope havo wo for "a constantly In
creasing and constantly moro effectlvo supervi
sion." when tho new law is tho best that could
bo secured undor most favorable conditions? With
an overwhelming majority In both houses of con
gross, and with the democratic minority support
ing him with more unanimity and zeal than his
own party, President Roosevelt was unable to
secure more for tho people than the new rate
law represents. And now ho virtually acknowl
edges that tho law will have to be constantly
strengthened to be effective. The transportation
of passengers and freight is of vital importance
to every man, woman and child In the United
States, and for that reason Is primarily a govern
mental function.
But grant it that the railroad Interests will
permit the passage of laws which will make super
vision constantly more effective. What will be
the inevitable result? Tho answer is to be found
in tho experience of European countries, as re
lated by Prof. Frank Parsons, in the April, 190S,
number of the Arena, as follows:
"England, with her rigid control, has not
been able to stamp out abuses, and the lesson
of English railroad regulation Is that the. sub
jecting of private railways, to a public con-,
trol strong enough" to accomplish any sub
stantial elimination of discrimination and ex
tortion takes the life out of private railway
enterprise along with Its evils. Even Ger
many with alL the power Its great government
was able to exert, could, not eliminate unjust
discrimination until it nationalized the rail
ways, awii so destroyed the root of the evil.
In this country, where the railroads
exert much more control over the government
" than the government exercises over the rail
roads, there Is not much hope of eradicating
fundamental evils with the toy-wbip of tho
regulative measures now pending and likely
to bo enacted by congress."
Some people are frightened by the cry of
"socialism" into opposing government ownership
of railroads, but it Is not socialism. Socialism
has to do with the production of wealth and tho
public or common ownership of the tools of pro
duction, not with the transportation of passen
gers and commodities. Socialism would eliminate
competition In the production of wealth. Public
ownership of public utilities, which are natural
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