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from the people, with the best legal and other talent of the country at their command, is a standing menace to free government, and should not be tolerated for one moment among a free people.
Free from all restraints of law, responsible to nobody as they are now, and are seeking to continue, by the most des te efforts to defeat this bill, the domination of corporate power must be broken now, or its admitted mastery in many States of this Cnion now will extend over the whole country. It can not be otherwise if the power remains with them, as it exists now, at pleasure to build up and pull down the prosperity of communities and individuals, pouring wealth into the laps of some and visiting others with bankruptcy and ruin. The direct tendency of this bill, and especially of the long and short haul clause, will be to decentralize the wealth of the country by taking away the opportunities for illegitimate speculation and diffusing the henefits of railroad transportation more equally among all the people of all sectious of the country instead of concentrating them as is now done in a few localities at the expense and to the sacrifice of all others.
Railroads are, in their nature, essentially monopolistic under the freest possible system of competition. Competition such as obtains between merchants, mechanics, traders, and others, which regulates prices, is not possible in its fullest sense among railroads. They exclude all other methods of carrying. The vast amounts of capital required to build and maintain them, and the large areas of territory necessary to support them, and over which they are supreme in all matters of transportation and commerce, exclude the numbers which in other cases are necessary to promote active competition; while their terrorizing influence over those whose business is within their power—their power to punish enemies and reward friends-creates such a monopoly as should not be permitted to exist except under the regulating control and active, vigilant supervision of the Government for the protection of the rights of the citizen.
The States are powerless. Congress alone can respond to the great popular demand for relief. The repeated passage through the House of the well-known Reagan bill, a much more radical measure than that now before the Senate, establishes beyond doubt or cavil the will and demand of the American people who support and maintain this Government, and in whose interest it is supposed to be administered, that a law regulating interstate commerce shall be enacted. The Senate has heretofore defeated this plainly expressed popular demand. It remains to be seen it corporate power is so intrenched in this body that the pending bill is to share the fate of its predecessors.
Mr. HARRIS. Mr. President, I wish to state very briefly some of the conclusions which I have reached from such investigation as I have been able to give this question.
Next to production, the carrying trade is the most important factor in the business of the country.
In addition to the water-ways, we have, at this time, over 130,000 miles of railways engaged in this trade, and year by year the mileage is increasing, a very large percentage of the capital of the country being invested in them.
Remote from water-ways, railroads have monopolized the carrying trade, and have regulated, in their own way, and generally with an eye to their own interest, the freight rates throughout the country.
Transportation being an element which enters into the cost of most of the necessaries and luxuries of life, every citizen is interested in the question,
Every man who produces a surplus of any commodity is interested in cheap transportation to the best market; and every consumer is interested in cheap transportation, because it diminishes the cost of the article consumed.
Every merchant and trader is interested in uniformity and stability of rates, whether they be bigh or low; while the carrier is interested in the highest rates he can obtain, because the higher the rate the greater are his profits.
These facts present a sharp and direct conflict of interest, between the carrier on the one hand and the producer and consumer on the other.
For more than ten years the country has complained of what is alleged to be the unjust and unreasonable exactions of carriers, especially upon shipments made from and to non-competitive points; and not less loud and emphatic, or with less cause, have been heard the complaints of unjust and unreasonable discriminations between persons and places, by a system of rebates, drawbacks, private contracts, and the various devices which ingenuity could invent.
In view of these complaints, for which, unfortunately, there has been but too much cause, the country has for more than ten years demanded, and with great unanimity it still demands that the carrying trade be fairly and justly regulated by the Government. The power to regulate that which is interstate by Congress, and that which is State by its Legislature, has been too long and too well settled to admit of debate. The question is, shall Congress exercise the power?
The overwhelming majorities by which the Senate and House passed their respective systems of regulation gives an emphatic affirmative answer to this qnestion, if the two Houses can agree upon the same system of regulation.
The conferees of the two Houses have agreed upon the bill now before the Senate, and I think the conference committee may congratulate itself upon the fact that in dealing with a question so vast, so important, and so complicated as this, the shafts of criticism have been levelestat but two of the provisions of the bill. What is known as the short-haul provision, which is section 4, and the prohibition of pooling contracts (section 5); but the short-haul provision has been the subject of severest criticism, and the most alarming predictions of great injury, if not absolute ruin, to the commerce of the country, if it shall become a law, but, singularly enough, I have not seen a single criticism upon it which was not based upon a misconception or a misrepresentation of its provisions and its effects. Let it speak for itself:
SEC. 4. That it shall be unlawful for any common carrier subject to the provisions of this act to charge or receive any greater compensation in the aggregate for the transportation of passengers or of like kind of property, under substantially similar circumstances and conditions, for a shorter than for a longer distance over the same line, in the same direction, the shorter being included within the longer distance; but this shall not be construed as authorizing any common carrier within the terms of this act to charge and receive as great compensation for a shorter as for a longer distance: Provided, howerer, That upon application to the commission appointed under the provisions of this act, such, common carrier may, in special cases, after investigation by the commission, be authorized to charge less for longer than for shorter distances for the transportation of passengers or property; and the commission may from time to time prescribe the extent to which such designated common carrier may be relieved from the operation of this section of this act.
Most of those who oppose this section, claim that it fixes the same rate per ton per mile for the short as for the long haul. If it was respectful, I would say that such construction is absurd, as language
could not be selected which would more clearly negative that idea than the language of the section does.
The plain meaning is, that the carrier shall not demand a larger gross sum for hauling a car-load of grain or other freight over a part of its line, than it demands for hauling a similar car-load of the same class of freight over its whole line.
Section 6 provides, among other things: That every common carrier subject to the provisions of thi« act shall print and keep for public inspection schedules showing the rates and fares and charges for the transportation of passengers and property which any such common carrier has established and which are in force at the time upon its railroad, as defined by the first section of this act. The schedules printed as aforesaid by any such common carrier shall plainly state the places upon its railroad between which property and passengers will be carried, and shall contain the classification of freight in force upon such railroad, and shall also state separately the terminal charges and any rules or regulations which in any wise change, affect, or determine any part of the aggregate of such aforesaid rates and fares and charges. Such schedules shall be plainly printed in large type, of at least the size of ordinary pica, and copies for the use of the public sball be kept in every depot or station upon any such railroad, in such places and in sueh form that they can be conveniently inspected.
This section requires every interstate railroad company to fix and publish the rates at which passengers and property will be transported between the various points upon its road.
Now to illustrate the operation and effect of the short haul provision. We will suppose that the Pennsylvania road, extending from Chicago to New York, bas tixed and published its rates upon a car-load of grain at $50 from Chicago to New York, $40 from Fort Wayne to New York, $30 from Pittsburgh to New York, and $20 from Harrisburg to New York.
The rates being so fixed, section 4 prohibits the company from charging more than $50 for a car-load of grain from any point between Chicago and Fort Wayne to New York, or more than $40 from any point between Fort Wayne and Pittsburgh to New York, or more than $30 from any point between Pittsburgh and Harrisburg to New York, or more than $20 from any point between Harrisburg and New York, circumstances and conditions being substantially similar in the shipments.
The justice of demanding a larger gross sum for hauling a car-load of freight from Pittsburgh to New York than is demanded for haaling a similar car-load of the same kind of freight from Chicago through Pittsburgh to New York can not be defended.
The chiet' object of the short-haul provision is to secure, at least, a measure of protection to shippers from non-coni petitive points. Shippers from competitive points find a degree of protection in the competition that exists; but the shipper froni a non-competitive point is left to his election to accept the terms demanded by the carrier, however hard and unjust they may be, or allow his produce to perish upon his hands.
Another, but a secondary, object of the short-haul provision is, to restrain undue, reckless, and ruinous competition at competitive points, known as rate wars.
The history of the last ten years is not wanting in its many occasions upon which, in rate wars at competitive points, rates have been run down to a ruinously low figure on through traffic, when the only alternative of the carrier was to make up the losses thus sustained by imposing an unjust and exorbitant tax upon the local traffic from noncompetitive points which were at his mercy; but when he is made to
understand that the law prohibits him from demanding a greater sum for carrying the same kind and quantity of freight over any part of his line than he demands for carrying it over his whole line he will be somewhat reluctant to commit the financial suicide which is involved in the through rates, which are not unfrequently fixed by angry, unreasoning, and reckless rate wars, and will allow a fair, reasonable, and healthy competition to fix a fair and reasonable rate for through traffic, which will fix maximums for local traffic on his line.
So far as I remember, every railroad man that was examined by the Interstate Commerce Committee expressed the opinion that, as a general rule, a larger sum should not be charged for the short than the long baul over the same line and in the same direction, but with equal unanimity they said that there were cases surrounded by exceptional circumstances which would justify the carrier in charging less for the long than the short haul on the same line, in such cases.
The bill admits that there may be such exceptional cases, and it provides for them. It fixes the general rule as the railroad men said it should be, and authorizes the commission to relieve the carrier from the operations of the general rule when exceptional cases are shown to exist.
This is the rule as applied to each common carrier upon its own road, but the bill authorizes and contemplates the creation of other carriers by the combination of connecting roads by contract for the purpose of establishing long lines for the transportation of through freights between points remote and distant from each other.
When such lines are established they may fix their own rates without reference to the rates fixed by the several carriers whose roads compose the long line.
To illustrate. You may connect New York and San Francisco by the combination of the following four roads: The Pennsylvania to Chicago, the Chicago and Northwestern to Omaha, the Union Pacific to Ogden, and the Central Pacific to San Francisco.
Each of these four roads may have fixed its through rate over its own line at $100 a car-load, the rates of the four aggregating $400 a car from San Francisco to New York, but the through line composed of these four roads may fix a rate through from San Francisco to New York at $200, or just one-half of the aggregate of the through rates of the four roads.
It may fix a rate of $150 from Ogden to New York and a rate of $100 from Omaha to New York.
If rates should be so fixed the through carrier could not demand more than $200 from any point between San Francisco and Ogden, to New York, or more than $150 from any point between Ogden and Omaha, to New York, or more than $100 from any point east of Omaha, to New York, or in other words, the maximum short-haul rate of that through line would be fixed by its long-haul rates and not by the rates of the several roads composing the through line.
When all the provisions of this bill are considered, and each fairly construed in the light of all the others, I can not see the possibility of injury to any carrier who proposes to deal fairly and justly with the public, and be satisfied with the reasonable income of a legitimate business.
Every carrier should be permitted to earn legitimate fixed charges, operating expenses, and a reasonable interest upon the actual value of its plant, but the public should not be required to recognize or pay interest upon either stocks or bonds which originated in the process known as watering, and which represent nothing but the avarice and cupidity of the speculator.
The producerand the carrier are dependent upon each other,and neither can afford to cripple or embarrass the other in a legitimate business, but each has the right to demand justice at the hands of the other.
The other provision of the bill objected to is that which prohibits pooling contracts.
I have always understood and still understand the object and purpose of a pooling contract to be the destruction of competition-a contract by which competing parties agree upon rates and a division of the business, or the proceeds of the business.
If this be true, as I am satisfied it is, it brings us to the simple question: Is competition beneficial or injurious to the business of the country?
If beneficial it should be encouraged, but it injurious to the public we should encourage combinations and monopolies and invite them to take charge of and control the various branches of the business of the country.
Why not extend the principle of pooling to fix and maintain rates to the men who sell the common necessaries of life as well as to the men who sell transportation ? If it be a good and proper thing in the one case I can not see why it will not be equally good and proper in the other.
But I have a more serious objection to the freight pools now in vogue than that which is found in competing parties agreeing by contract upon rates.
The freight pool provides for a division of freights in fixed proportions between the pooling carriers, and under such arrangement no shipper can control his own shipment.
He may desire to ship over a road that he knows to be solvent and able to respond in damages for any injury to the cargo resulting from the negligence of the agents of the carrier; but the pool, not the shipper, determines the road that shall have the shipment, and his freight may be against his will assigned to an insolvent carrier.
All the good that pooling contracts can accomplish is accomplished by publicity of rates and adherence to the rates so published; while the evils of pooling are avoided by allowing a fair and honest competition in open market to fix reasonable and just rates and allowing every shipper to control his own shipment.
Being satisfied that none of the many evils which have been predicted will follow the passage of this bill, but that great good will result to the public and to the carriers, I shall vote for its passage.
Mr. MCPHERSON. Will the Senator from Tennessee, who is a member of the committee of conference which reported back to the Senate a bill that is a direct contradiction of the expressed judgment of the Senate when taken upon the bill, in his attempt to show the character of the legislation and its effect upon the country, be so kind as to answer me now one single question? I should like to ask the Senator from Tennessee if, in his opinion, the natural and inevitable effect of the legislation of the fourth section of the bill will not be to increase through rates ?
Mr. HARRIS. I am satisfied the effect of the bill will prevent what are known as rate wars, which sometimes reduce through rates to a ruinous point, and they ought to be prevented. But as to legitimate, honest, fair, and square through rates, there is not, in my opinion, a single feature in the bill which will necessarily increase them. Upon