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VOLUME 7, NUMBER 3t
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.. Washington Letter
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1 Washington, t). G.; May 27. Ono'wduTd .
I- think' thai onbugh had' happened in Mr. E? if;
tfiffrlman'B HfbrcTtforitly to prompt him not to
test tho public patiencb too far. Ills rovolatlons
f boforo the Interstate commerce commission just
ified tho denunciations that followed his testi
mony. Now ho adds insult to injury. He is
I- about to issue $281,000,000 in stock and bonds;
specifically $30,000,000 in Southern Pacific pre
ferred, $75,000,000 in Union Pacific convertible
four per cent bonds, $100,000,000 in Union Pa
cific common stock, and $70,000,000 in first
mortgage bonds on 1,028 miles of unmortgaged
Union Pacific property.
"What is tho avowed purpose of this tro
mondous increaso in the capital of these roads?
It was Issued to "care for floating indebtedness
incurred in now construction and in tho acquisi
tion of new property, Including a portion of tho
stocks in other railroads purchased last fall."
This last phraso is slgnficant.
Mr. Harriman is Btill up to his old tricks.
TJio castigatlons of tho interstate commerco com
mission havo taught him nothing. The public's
indignation against, tho Alton deal is unheeded.
So much so in fact that the Alton deal is to be
repeated. The Union Pacific and Southern Pa
cific are to bo used to get control of other
roads, just as the Illinois Central was used to
Set the Alton.
It is an easy system Mr. Harriman works.
FH6 grossly over-capitalized tho railroads ho cpii-
Ltrois, selling tne new issue or stocKs ana oonas
of these roads to tho lambs in Wall Street. By
running the bonded roads on a parsimonious
policy ho Is able to keep up with tho interest on
tho stocks and bonds thus issued. This par
simonious policy results in creat danger, and
continual inconvenience to tho nubile. But whv
loohsider the public? With the money he can
jet irom liuiucuni speculators, Mr. iiamman
uys a new road which he promptly "bonds up
to' its interest paying capacity and starts in
meet of some new railroad property to buy. In
this way ho is building up a tremendous mon
opoly or ovor-capitanzoa roaas. when the bub
ble of over-capitalization bursts thousands of
speculators, "widows and orphans," will be left
without a penny. In the meantime real imnrovp.-
mbnts of railroad properties are indefinitely de
layed because of the parsimonious policy the
roads are forced to pursue in ordor to pay in
terest on watered stock. New inventions that
lessen the dangers of railroad travel are not
installed. The interest on tho watered stock
is' paid, but railway disasters steadily increase.
wnen will this gross over-canitalization of
lAmerican railroad properties of financiers, of
wnom i-iarriman is but a typo, be stonned bv
federal statute? In tho last comrrnRn Sonnfnr
I LaFolletto introduced an amendment to the rail-
rroau rate oni wnicn was the Initial step against
the over-capitalization evil. His amendment
cauea tor a pnysical valuation of our railroads.
This real valuation, if , allowed, would hnv
i shown the cross watered stnnir onnMHvna i
railroads. Legislation must have followed on
uiu neeiB oi an aroused public opinion. The
.railroad kings knew this. The LaEolletto
amendment was defeated by practically a
straight republican vote in the senate, the dem
ocrats supporting the measure. And Harriman
is now repeating the Alton deal.
'i lie Chicago, Milwaukee & St. Paul rail
road is the latest corporation to. pay a fine for
rebating. The case is an old one, but after
SQme sparring in the courts the rniirnnd nnm.
l-pany pleaded guilty and was fined $20,000.' It
ift usuwuiea Dy competent students of tho rail-
roau pro Diem tnat tills penalty brings tho total
of, fines Imposed upon rebating corporations un
L41L,000 Th0 Standard Oil company, which
.differs from the railroads onlv in Ua Mmmnrta.
Etips as a mercantile monopoly has just been
fqund guilty in the federal court in Chicago on
.enough counts to warrant fines, if the law should
-Mtf Ami cjiiuiuuu, uBgregaung over ?29,000,000
,Qf course the law will not be fully enforced'
Among the railroads still awaitinc trini n i,
Lthe Northern Pacific, the Rock Island, the New
fV4i wuwuu uuu western.
;r. There are two matters of interest with re
spect to these railroad cases. None has been
brought under the much advertised rate refla
tion law of the Fifty-ninthor Roosevelt--con-
ress. All have been brought under legislation
which was in effect before that law was enacted
Indeed the law officers of the administration
The Commoner.
that has boasted ,so strenuously of JCoVclng this
bill through congress hesitates io HaKe action
under tho power it confers. That, however, is
a matter of comparatively little importance. If
a remedy can bo found and substantial justice
done it Is immaterial whether tho remedy is
produced by jLhis or that public man, or this or
that political party. But Is tho remedy here?
The Chicago, Milwaukee & St. Paul rail
road has been fined $20,000 for violation of the
law. Other railroads have been fined, roughly
speaking, $300,000. Who paid tho fines? Im
mediately they were paid by checks drawn by
their officials, but ultimately they are paid, of
course, by tho people doing business with the
roads. They are paid by tho merchant east or
west who has freight bills to meet; by the west
ern wheat or corn grower who must ship his
product to the east; by the passenger who must
travel, and who must pay the price fixed by "the
railroad, ' a price which is always "what tho
traffic will bear."
Fines leviod upon public service corpora
tions are absolutely useless as correctives. They
are simply assessed upon tho public. - They are
lumped in with other operating expenses and
help to make stronger the corporation's argu
ment against the reduction of either freight or
passenger rates.
Within the last eighteen months many
states of this union have, through legislation,
attempted to control the power of the railroads
to tax tho people. For the unrestricted power
of tho railroads to charge what they will for
carrying food and furnishings, household goods,
agricultural 'machinery, all the necessaries of
life, including the persons to whom they are
necessary, is nothing whatsoever but a taxing
power almost as complete as that of. the gov
ernment itself. It falls short of thegovern
ment only as the government itself intervenes
to protect the people against the railroads. In
a recent magazine Prof. William H. Glasson, of
Trinity College, North Carolina, summarized the
legislation begun, or completed, for this pur
pose 4n various states of the union. His sum
mary is here printed, but it should be borne
in mind that after the railroad lobby has been
defeated in a state legislature, tho railroad law
yers must be beaten in every state court and
finally in the supreme court of the United States.
And it must furthermore bo remembered that
the greatest arguments made by the railroads
against two-cent fareB is that they can not afford
to conduct the roads at that price. Wherefore
it seems unwise to Increase the expenses of the
the railroads by fining them heavily for offenses;
it might bo more effective and also more logical
to send a few of their traffic managers or direc
tors to jail.
Professor Glasson's summary of legislation
follows:
In 1896 Ohio enacted a law now in force
nine months fixing the maximum railroad pas
senger fare at from two to three cents per mile.
In the same year Virginia authorized her state
corporation commission to take evidence on the
advisability of enacting a two-cent passenger
fare law, and its report is nearly completed,
Maryland passed a law compelling her rail
roads to sell mileage books at two cents per
mile.
Since the beginning of the present year the
legislative record is even more pronounced.
Alabama has adopted a two and one-half
cent fare per mile.
Arkansas sent a two-cent, bill to its gov
ernor for signature.
Arizona passed a three-cent bill in the
house, which was defeated in the council. A
four-cent bill is now before both bodies. ,
Georgia asked her state railroad commis-i
sion to order a two-cent paesenger fare per mile.
Illinois passed a two-cent fare bill in the
house. The senate seems to favor the measure,
with a schedule allowing a higher rate to roads
of small earning capacity.
Indiana passed a two-cent fare bill and
greatly increased the powers of her state rail
road commission.
Iowa passed a two-cent fare law applicable
to roads earning $4,000 a year gross per mile,
and a two and one-half cent and three cent bills
for roads with, smaller earnings.
Kansas has passed- a two-cent passenger
fare law.
Maine is considering- a two-cent fare bill
which probably will not pass.
Minnesota passed a twocent fare bill in the
house which will probably be passed by the
senate.
In Mississippi the railroad commission or
dered two-cent fare books on the interchangeable
mileage basis; a two-cent fare bill is before the
legislature.
Missouri passed a two-cent fare law.
Nebraska passed.a two-cent fare law, which
the railroads are fighting by retaliatory
measures.
Nevada created a state railroad commission -".
and the house passed a five-cent fare biiL, - V,
In New Jersey two-cent fare and ttntsti ..-
railroad commission bills are pending. ' - -l!, .
Now Mexico passed a three-cent faro bill.
New York has 110 railroad bills before' .
the legislature. Half a dozen of these are two-k
cent fare bills. , t
North Carolina passed a two and one-quar-ter
cent fare law, exempting roads of sixty miles
or less in length. Freight rates were lowered;
and interchangeable mileage tickets ordered, .
North Dakota passed a two and one-half
cent fare law and ordered one' thousand, mile '
books to be sold for $20. ..
Oklahoma drafted the two-cent fare law in I
its constitution. ,
Oregon passed a sweeping railroad,, com
mission act giving the commission the right to ,,
regulate rates. . :' ,
Pennsylvania passed a two-cent faret bill in -..-:
the house, jeering President Baer's protest
" against it. ,
In South Carolina a two and one-half cent1--;
fare bill that passed the house was defeated : - ?
in the senate, 25 to 14. 7r-?r.y
South Dakota authorized its state railroad 'V
commission to make a passenger rate schedule ""
not to exceed two and one-half cents per mile. ... '.$r
Tennessee has a legislative investigation. .
committee at work and reductions of fares per .
mile to two and one-half cents is rumoredr --.
Texas has eighty-three railroad measures -pending,
including a two-cent fare law. ';-;!
Wisconsin ordered several roads to reduce -.
rates from three to two and one-half cents pep I
mile. . '
Elihu Root is delivering a course ,qf lee- -,
tures at Yale University on "The Responsible "
ties of Citizenship." The most significant part ..
of his address was some remarks on campaign ". ,
contributions. Stripping his statement of the
verbosity of the trained diplomat, he holds that ;
campaign expenditures are in the main the -most .,
useful from a public point of view of any in v
which our nation indulges itself., He speaks
with great show of pride 'of the 16,000,00 -,
voters educated every election by these con- -"?
tributions, at a cost of about three and a half "
cents per capita to all the people of the United i
States. This is certainly a charming display of "n"
innocence, but it would come with better grace
from somebody else-than Elihu Root,.
x I would like to preface a few straight ques
tions which Mr. Elihu Root, or anyone else can
answer, with a few general remarks on cam-
paign contributions. There are two distinct :
abuses connected with campaign contributions.
First, in the way they are raised; second, in the
" manner in which they are applied. Campaign
funds used to circulate truthful arguments or to
pay honest speakers are all right. But how
much of the enormous contributions of the last
dozen years does "Mr. Root imagine was used in
that way. How much of the $16,000,000 raised "
from national banks, insurance, public service
and other corporations in 1896 to defeat Bryan
was so used?. Isn't it something of a disgrace
to the republican party that has had absolute
control of our national government for over ten
years, that there is no national publicity law .'
which would cause these facts to be' known? -
How much of this money was paid to the ward
heeler to buy up the rotes of unfortunates?,
How much of these contributions was used to" '
corrupt the count? Does, Mr. Root know? If
not, why not? r- h
. Because a republican congress has con- .
slstently refused to pass a national publicity
bill by which such facts might be known.
Bad as .campaign funds may be in their -application,
they are even worse in their in-
ception. Does Mr. Root think the great insur- T
ance companies contributed the funds they held
in trust for widows and orphans because they
wanted the public educated on political ques
tions? Does he think Mr. Harriman gave J
$250,000 to the republican campaign fund in -1904
for the same reason? What does Mr, '
Root think Mr. Harriman meant when he said" '
v "Where do I stand?" How much of that $16 -000,000
raised to defeat Bryan in 1896 does '
ivir. Root think was raised by an assessment
of three and a half cents per capita? How
many of our 80,000,000 people does he think
,were responsible for that enormous corruption
fund? Mr. Root with all his show of innocence "
knows that a" comparatively few special privi- '
- leged corporations gave the great bulk4 of it
,anl that theso corporations expected ,. return -
to preferential legislatioA for what ,iw con
tributed to the party in which he is such a
luminary. .Otherwise, with "M. Harrinian, tlibv
ould have wanted to know where they stood:
WILLIS J. ABBOTT. .
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