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About The commoner. (Lincoln, Neb.) 1901-1923 | View Entire Issue (May 1, 1917)
w ..& r w: The Commoner 10 VOL. 17, NO. 5 It'Ci" . K-i-uj'r fFS5" f V '" states, constitute leas than 10 per cent and pos sibly not more than 5 per cent of the total amount of business done by common carriers. This is the statement of railroad representatives. Therefore if tho regulation of state rates causes disaster, this disaster is the result of Rlato commissions reducing intrastate rates with such moderation that the state rates can not bo established by tho carriers as being confiscatory;, for if a rato is reduced so low that It is confis catory tho courts will set it aside. Therefore, only nonconfiscatory rates, established by state commissions comprising not more than 2 per cent of tho carriers' business, (lor more than 60 per cent of tho state rates are voluntarily established by carriers) are charged with being responsible for car shortago, , inadequate ser vices and facilities and a cessation of railroad construction. To state tho proposition refutes tho claim. SOME MORE OF COLONEL THOM An impressive statement made by Oolonel Thorn in his argument before the senate and house committees and frequently repeated in his public addresses and magazine articles is to tho effect: "That tho present system of governmental regulation of common carriers hud its genesis in tho abuses of the past and is based on the principles of repression, correction and punish ment, rather than on constructive principles. The conflict between the theory that railroads were private enterprises and the theory of the public character of tho instrumentalities of com merce was a victory won in anger and the terms which were imposed were the terms of the victor upon the vanquished." The terms imposed "by tho" victor over the vanquished," so dramatically described by Col onel Thorn, were contained in the interstate commerce act of April, 1887; but the dramatic effect of the statement is lost by being unfor tunately staged; for the act of 1887 was so emasculated by the federal courts that it neces sitated the comparatively recent amendments of the Hepburn act of 1006 and the Mann-Elkins act of 1910 to clothe the interstate commerce commission with sufficient authority to justify its existence as a regulating board. RAILROAD CONSTRUCTION State regulation of common carriers has been charged as the direct cause of a lack of railroad construction. From Bulletin No. 2, issued by the railway executives' advisory committee we lift tho following extract: j "Mr. Thorn showed that while NeV Jersey has 31 miles of railroad per 100 square miles of territory, the average for the United States is only 8.53 miles and in Idaho there are only 3.35 miles por 100 square miles. Pointing to a large map of Idaho, he showed tho territory' in that state containing a vast wealth of agri cultural and mineral lands as yet untouched. " 'Less than 33 per cent of the resources of the state now have railroad facilities,' Mr. Thorn said.' " ' All such statements must be analyzed with their relation to the demand of common carriers, to-wit: The elimination of state control and regulation; for conditions complained of are not pertinent, unless they are the result of "the dual system of regulation." Now, Wyoming, which joins Idaho, is one of the states that never had a railroad commission until 1916; and which has never attempted 'to exercise any regulation or control over common carriers. Idaho (with state regulation) has 2,748 miles qf railroad and 83,888 square miles of territory; while Wyoming (without state regulation) has 97,914 square miles of territory and only 1,820 miles of railroad. Carriers advertise the fact that in 1916 there were only 1,000 miles of railroad built in tho United States, If this is true, the state of Cal ifornia, which has the most complete and effec tive system of state regulation of any state in the nation, can claim the credit of having con structed within its borders one-fifth of the en tire mileage bu!lt in the United States in the year 1916. INSOLVENCY OF TtAILROADS The carriers have widely advertised the. in solvency pt the railroads as a basis for demand ing the1 el'm'nation of state regulation. Argu ments before the senate and house committees and- articles' in newspapers and magazines, friendly to railroad companies, proclaim that the insolvency of tha railroads of tha comntry is conclusive evidence that "th dual system of regulation" must cease and that freight rates must bo increased. On June 30, 1915 (tho latest statistical re ports available) 85 railroads, representing 23,834 miles pf road, were in tho hands of the receiver. The total railroad mileage In the United States is about 253,000. Some of these roads which are in the hands of the receiver have been, in vestigated and the cause of their insolvency ex posed; notably the Rock Island with 5,366 miles and the Frisco with 3,522 miles of road. These two roads, comprising onenthird of the mileage of the insolvent railroads in. the United States, met their disaster under such circumstances that the public conscience was shocked by the exposure of tho fraud and corruption which brought about their ruin. No railroad representative can cite, or has cited, to a single road that is now in the hands of the receiver in which a public investigation was held where any testimony was produced to the effect that the insolvency of the road was due to state or federal regulation of control. The two largest roads in the hands of the re ceiver above mentioned became insolvent man ifestly from lack of governmental regulation and supervision. .Of the 85 roads in tho hands of the receiver there are 55, each of which is less than U miles in length. If to the roads above mentioned there is added the mileage of the Fere Marquette (1,792) which had issued $28,500,000 in stocks, common and preferred, and which in addition thereto had created an indebtedness of $90, 854,809 at the time it went into the hands of the receiver; and the mileage of the Chicago $t Eastern Illinois Railroad Company (1,005) which had outstanding common and preferred stocks of $2$, 817, 800 and had incurred an in debtedness of $70,072,200 at the time it went into the hands of the receiver; and the mileage of the Wabash Railroad Company (1,951) which had outstanding common and preferred stock of $92,400,427 and had incurred an in debtedness of $126,110107 at the time it went into the hands of the receiver; and the mileage of the Western Pacific Railroad Company (942) which had issued common and preferred stock to the amount of $75,000,000 and had incurred an indebtedness of $92,923,370 at the time it went into the hands of the receiver; we find that only 23 roads will remain, representing 7,178 miles. The success of a short-line road usually depends upon its contract with the trunk lino with which it connects, hence the receiver ship of so many of the short-line roads. With this record can "the dual system of regulation" be charged with the insolvency of the roads in the hands of the receivers? THE REVENUES OP THE CARRIERS -In Colonel Thorn's statement before the joint committee of congress his atti'tude concerning freight rates, as the subject relates to the de mand of common carriers to be relieved from state regulation and control, is not quite clear Prom Bulletin No. 6 we lift the following ex tract .taken from Mr. Thorn's statement: "Not one cent of revenue is to come to the railroads from this investigation. This is not a rate hearing. This is a question whether you are to allow a reorganization that will allow us to meet unprosperous years as well as the pros perous. We ought not to wait for a time of dis aster to seek a method of relief from disaster " Prom Bulletin No. 3 we lift the following: "We all know," said Colonel Thorn, "that the courts haVe been full of cases where state-made Bystems of rates have been attacked because the railroads regarded that they did not escape the line .of confiscation, but thaftbey were actually confiscatory in their character. We all recog nize the fact that the cases which have chanced confiscation in this country have been almost entirely cases in regard to state-made systems of rates and seldom in regard to nation-made systems." THE CARRIERS' SHELL-GAME For a definition of shell-game the reader is referred to Webster. Itg victims are secured by the apparent fairness of the game, but the ball is always under the other shell, to the profit of the operator. Through the skill of the best tal ent obtainable the railroads' pleas to tl public are always plausible, assuming their stateme s to b correct Nevertheless, if the facts Wi a aontrary premise they still insJt "on 1P sama conclusion, tc-wit: That freight J should be raised." As in the sheU-game it ,?tes not matter which shell you choose, Vou in e ? with tha railroads, it does not matter whSa? facts are developed, rates should be raised. Just' prior to tho. European war the eastern carriers made a demand before the federal com mission for an increase in freight rates bS upon the allegation that they needed more w? enue to purchase sufficient equipment to hamiin the enormous business which the growing com merce of the country required. Their demands did not meet with success. Within a Bhort time thereafter the European war arose and their demands were renewed, based upon the allega tion that business depression created by tho war had stopped traffic and depleted their rev enues. Thus we see the carriers alleging that they had too much business; subsequently, that they had too little business; and yet both alle gations resulted in the same demand for an increase in freight rates. Their second demand proved quite profitable; but was granted under conditions" aptly described- by Commissioner Clements in his- dissenting opinion found in Volume 32, page 337, interstate commerce com mission reports: "t am not aware of any prior case in which this commission, or any 'court has held that tho need by a carrier of money was of itself proof of the reasonableness of a specific rate, or body of rates, increased to meet, such deed. The com mission has repeatedly held that the commer cial necessities or interests of a particular shipper, community, or kind of industry,, con sidered alone afford no basis for the reduction of rates,, and that it can not in any case reduce the same except upon an affirmative showing of unreasonableness, after full hearing. In any considerable group of carriers there are prob ably always some "that are in need of more money than they earn, when such need is tested by their obligations, or the disposition of the proceeds thereof. If the basis of the conclusions of the majority of the commission sanctioning these rates in trunk line territory is sound, and points to the rule, of action for the future, the .'burden placed by the law upon the carriers to justify increases in rates is indeed made light and easy to carry, especially when by concerted action, a group of carriers, some strong and some weak, simultaneously propose to increase the great body of their rates. "If' the legislative authority of the commission is as broad and unrestricted as this, then I must confess that I have gravely misunderstood the limitations, upon our statutory authority as well as the constitutional power of congress to dele gate its legislative power." THE PROSPERITY OP THE CARRIERS The prosperity of common carriers is elo quently proclaimed by the following table which shows tho incomes available for dividends earned by the railroads named in the fiscal years of 1915 and 1916. ,. Union Pacific, 1915, "11 per cent; 1916, 15.65 -per cent. This road has 11 masters; it runs .through, 10 states. ir Southern Pacific, 1915, 7.2 per cent; iw, 11 per cent. This road has 9 masters; it runs through 8. states. Atchison, 1915, 9.2 per cent; 1916, U.6 per cent. This road has 14 masters; it runs through 13 states. 1Q1fi Northern Pacific, 1915, 7.58 per cent; lij. 10.47 per cent. This road has 8 masters, runs through 7 states. 1Q1fi Chicago & St. Paul, 1915, 7.71 per cent; l. 11.97 per cent. This road has 12 masters, runs through 11 states. 1Q1G North Western, 1915, 7.55 per cent; i- 11.4 per cent. This road has 8 masters; it ruua through 7 states. ., rhj. The "Soo Line," otherwise known as tiio uu cago, Milwaukee & St. Paul, 1915, ' vn cent; 1916, 16.3 per cent. This road has masters; it runs through 10 states. . Illinois Central, 1915, 6.27 per cent; is 10.8 per cent. This road has 14 masters; it mi through 13 states. 19 4 per L. & N., 1915, 6.8 per cent; 1916, i. v cent. This road has 13 masters; it runs throws 12 states. ' A ioir, 11 Pennsylvania, 1915, 8.5 per cent; 1J (Continued on Page 20.) ir