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the contrary, I think the probabilities are they may be lowered, but at all events they will be uniform and stable.
Mr. MCPHERSON. I am very much obliged to the Senator for that answer. He says if I understand him aright—and I think I do that the tendency of the bill will be to establish equitable through rates and prevent rate wars. The bill confers upon a commission of five members the determination of the question as to whether a rate is a reasonable rate or not. The railway company may fix such rate as they please, but the commission have the revision of that rate, and they may make it such rate as in their view is reasonable. This, I take it, the commission will do; in short, the power to make reasonable within a certain limit is the power to make rates.
Very well, having fixed that through rate, which must be a reasonable rate, how then are the intermediate rates fixed? The bill declares that the intermediate rates shall not exceed the through rate, but are not the intermediate rates subject to revision by the commission also ?
I wish to ask the Senator if the good people who demand this legislation would be satisfied that a rate fixed for a thousand miles and deemed reasonable by the commission would be accepted by the shipper as a proper and just rate for half the distance ?
The inevitable result, therefore, is that unless every railroad company in this country goes into bankruptcy the through rate must be fixed at a point which will give a fair and equitable compensation. In other words, the through rate must be equitable and compensating to the railroads.
Now, let us apply it in practice. The Senator knows that, to-day, 90 per cent. of all the export product of this country is carried at rates which scarcely pay the cost of doing the work. That is the thing the Senator complains of—that the through rates are very low, and that the local rate is made correspondingly high to pay dividends. If the local rate is made reasonable in the same sense that the through rate is made reasonable, the natural and inevitable consequence is that the through rate must be made greater.
Now, what is the result as to our export product? The Senator very well knows that the question of the possibility of exporting products from this country depends upon the market. Who controls the market? India controls the wheat market and the grain market of London, where all our goods are marketed. England has spent $500,000,000 in a few years past to move the grain from the wheat-fields of India to the seashore. It has given cheaper food to England, and it has compelled in this country a reduction in the cost of transportation which was never deemed possible by any people.
In 1873 the rates were 2} cents a ton per mile. In 1886 they were reduced to half a cent a ton per mile, and without any restrictive legislation whatever, but solely owing to the demands and the nature of commerce. The plan which the railroads have adopted to charge no more than the product would bear has moved the grain from the great grain fields of the West and put it in the London market in competition with India. Not to have reduced that rate would have been to put your corn in your stoves for fuel in the West, and leave India without a competitor in the London or other markets.
Mr. CAMDEN. Will the Senator explain one point? The PRESIDING OFFICER. Does the Senator from New Jersey yield to the Senator from West Virginia ?
Mr. MCPHERSON. Certainly.
from the seaboard to the great West. Take a farmer in West Virginia who raises wheat for export, take a farmer in Ohio who raises wheat for export, take one in Indiana who raises wheat for export, take one in Illinois, and so on until you get to Omaha. The bill does not ask or require railroads to charge any more to the tar shipper than it does to the near shipper. Is there any reason why in regard to the product of all these several farms, being carried fifteen hundred or two thousand miles to reach the markets of the world, the near shipper should be discriminated against in favor of the far shipper, when they are all sending to the same market and for the same export purpose ? It occurs to me that the fact is lost sight of that there are other sections of the country which make up the amount of product for export besides the border and the far Western States.
Mr. MCPHERSON. That is exactly what I want to aid the Senator from West Virginia and his constituents in securing. I say that no intelligent or wise commission would say that a rate from West Virginia equal to that charged from Chicago would be a reasonable rate. Hence it is that I say the natural and inevitable consequence must be that the bill must increase through rates in order that there may be an equitable and a reasonable rate charged for the shorter distance. Mr. CAMDEN. I think the bill will increase through rates. Mr. McPHERSON. That is exactly the point.
Mr. CAMDEN. It will increase them from the very fact that the through rates have been too low in proportion to local rates.
Mr. MCPHERSON. Then, so far as I have gone there can be no argument between the Senator and myself. He admits that the enforcement of this policy will compel high through rates.
Mr. CAMDEN. Let me ask the Senator a question. There is nothing in the bill which will require railroads to do otherwise than they are doing now. The bill does not prohibit them from charging as much for the short rates as they do for the long. But that is outside.
Mr. McPHERSON. No; but you give the commission the power to fix rates. It is not only a power that is placed in their hands, but it is a responsibility which they must exercise.
Mr. CAMDEN. I beg pardon. The commission is not given the power to fix rates. I contend that Congress can not give to anybody the right to fix rates; but the commission can decide whether a rate is reasonable or unreasonable. That is the only point in the creation of a commission.
Mr. MCPHERSON. Very well; let me illustrate. Mr. A is the president of a great railway corporation
Mr. CAMDEN. Let me add one word further in reference to that point. The commission has no power to enforce and control that question. Their decision is not final and they can not impose any penalty.
Mr. MCPHERSON. I think the duty of the commission is to make rates reasonable. If a rate is fixed for 500 miles which is the same rate as that fixed by the commission and declared reasonable for 1,000 miles, the intermediate shipper would have a right to complain to the commission. The commission is vested with quasi-judicial power. If the shipper fail to secure his rights from the commission he would make an appeal to a higher tribunal, the court which the bill provides for, and the natural consequence of that would be that no court on earth could decide that the shipper should pay the same rate for 500 miles that was paid for 1,000 miles, and still declare both to be reasonable.
Mr. CAMDEN. I ask the Senator whether that is not the law now. If a shipper should resort to the courts would he not get the same decision under the law as it stands now that he would under the bill?
Mr. MCPHERSON. I understand that there is no law now except the law which the carriers make for themselves. You propose to make a law, and you propose to put the power in the hands of five commissioners to change a rate which is equivalent to fixing the rate.
Now, let us see about a reasonable rate. For instance, the president of a railroad, or a number of them, in the city of Chicago declares that a reasonable rate shall be a rate of $100 per car-load of 10 tons from Chicago to New York. Now step in the commission, and they have the power under the bill to declare that that would be an unreasonable rate. Why an unreasonable rate? Because I take the evidence that you have given to the world here for the past five years, that you have been carrying like cargoes of freight, 10 tons each in a car, for $25 from Chicago to New York.
I wish to know by what right you charge a fixed rate of $100 a car for a like service which you hitve been giving for $25 a car.
When that rate is fixed by the railroad company, the commission say, no, it must be reduced. The railroad company have the right to appeal to the courts. What would the courts say? You are entitled, as a reasonable rate, to the cost of doing the work plus a fair compensation for the use of the capital invested in the plant. Now, what would that be? That would increase the through rates to a point that the through rates would be paying a share and part of the general fund of the railroads which was applied to the liquidation of debts and paying dividends.
Your through rate is fixed and your local rates must be fixed from it. I say that the inevitable result would simply be to increase through rates, and if the Western producer can stand that in the face of present competition then they can stand almost anything.
Mr. President, while I am on my feet there is one other point which I should like to ask the Senator from Tennessee to explain. I understand from him that there can by no possibility be any such thing as an invidious distinction between railroads under the operation of this bill. Let me cite an illustration to the Senator and ask him to solve the difficulty sure to confront him. The city of Buffalo is at the eastern end of Lake Erie, which is the terminal point for the great lake transportation of the West. Cargoes of grain come from different points of shipment in single vessels, by single owners, to Buffalo. That grain is discharged into a single elevator in bulk often and always. That is the end of the transportation so far as the lake is concerned and so far as the carrier to Buffalo is concerned.
At Buffalo this grain is met by six great lines of railroad, reaching Baltimore, Philadelphia, New York, Boston, and Montreal. The shipper from Buffalo elects to take the line of railroad which will reach any of those points of shipment, depending as it will be largely upon the best rates of transportation obtainable from those seaports to London.
This grain at Buffalo is the original point of shipment in its relation to those six railroads, as any point in the United States can be. Two of those roads are Canadian roads, lying within the Dominion of Canada, and beyond our jurisdiction. One of them is a State railroad, running within the borders of a single State, from Buffalo to New York. Therefore, we can neither fix through rates nor local rates upon any of these roads. They are outside our coutrol under this bill.
Now, what of their competitors? Three lines of road, the Erie, the Delaware and Lackawanna, and the Lehigh Valley are interstate railroads laid upon the territory of three States. In the first place, the commission from Buffalo eastward will make the rate from Buffalo reasonable. That determines the rate from all intermediate points. As to the other three lines it can not say a single word. They may make the most unreasonable rate imaginable. They may pursue the present policy pursued by railroads, which is simply to take the product for what it will bear. The through rates from Buffalo eastward by the Canadian lines and the New York Central are beyond anybody's control except their own, and whatever they may do touching a through rate it does not interfere with their local rate. Hence they may drive the three interstate railroads out of the competition at Buffalo.
First, I say that the Canada railroads would have the power under this bill to take the products at Buffalo and carry them to Montreal, and thus oppress the three interstate railroads on this side to such an extent that the securities of these roads would depend on the will of a foreign corporation; their securities would become the foot-ball of Wall street, and the quotations or values from day to day be dictated from Canada. That would be the practical operation of it, and without the proviso in the fourth section would destroy half the railroad property in this country. If, however, the commission shall find in this proviso a grant of power to them sufficieat to meet such a case as I have described and to meet all cases when its exercise is needed-and I am sure this proviso fairly construed goes this far-and believing that the commission will apply this proviso power unsparingly, I am content to give the section a trial.
Mr. HARRIS. The proviso of the fourth section confers upon the commission full and complete power whenever application is made to the commission and the commission has become satisfied after investigation that this is an exceptional case under exceptional circumstances which require that the railroad in question should be relieved from the general role prescribed by the fourth section.
Mr. MCPHERSON. Very well. Then, I take it, the commission would find this an exceptional case and would relieve these three through railroads from the general rule. Having done that, then what becomes of other rivals, the Pennsylvania, the Baltimore and Ohio, and othur great lines which would not be relieved because the special case did not apply to them? They would be under the general interstatecommerce law, while the commission would have relieved the three interstate railroads from Buffalo, and they would be outside the interstate-commerce rule.
No, sir, it will not be possible to conduct the commerce of the country under the fourth section without the fullest exercise of the power granted in the proviso. What a commentary upon this Senate upon the ill-advised, reckless character of the legislation we make, that a law must contain the power within itself to annul or make void its enforcement.
Mr. GEORGE. Will the Senator allow me to ask him a question? Mr. McPHERSON. Yes, sir.
Mr. GEORGE. I understood the Senator to say a while ago that the case of some carriers might be special owing to peculiar circumstances. If that be true what harm would occur if the Pennsylvania Railroad and the other railroads engaged in through travel were not interfered with? They do not lose anything by it.
Mr. MCPHERSON. The Senator will understand in that event they would lose all their through traffic. That, as a matter of course, a line of railroad between given points, say, the Pennsylvania Railroad between New York and Chicago can afford to carry through freight cheaper than local freight.
The majority of the freight brought from Chicago to the seaboard scarcely pays the cost of moving it, but at the same time I think it is a decided advantage to the railroad to have it, for reasons so often stated I need not repeat them. I wish to say a word about the pooling section, but will not do so now, as I seem to be occupying the time of the Senator from Delaware (Mr. SAULSBURY).
Mr. ALDRICH. Will the Senator from Tennessee allow me to trespass on his good nature, and ask him one question ?
Mr. HARRIS. Most certainly.
Mr. ALDRICH. I should like to ask him the same question which was asked of the Senator from Illinois (Mr. CULLOM) yesterday in regard to the case of the Boston and Albany Railroad, freight being delivered to it at Albany of the same character and in the same qualities from half a dozen different places. Take the case, for instance, of a ton of freight from California at a low through rate. Would the portion which the Boston and Albany Railroad should receive on account of that freight fix any limit for freight delivered at Albany by a local shipper, or freight shipped from Buffalo or from Syracuse to go over the Boston and Albany road ?
Mr. HARRIS. This bill authorizes two or more common carriers to unite to make an extended long line of transportation, and that long line becomes a carrier independent of and separate from either of the lines and all of the lines that compose it. That common carrier so created by contract has the right of all other carriers to fix and publish its rates from one end of the line to the other, from the intermediate points to the end of the line as long as two or more carriers or companies are involved in the carriage.
Now, take the case that I put where the combined carrier composed of four independent roads fixes a rate of $200 from San Francisco to New York, of $150 from Ogden to New York, of $100 from Omaba to New York. Then the rule would be, as I understand it, that that carrier can not charge for a car-load of freight from any point between San Francisco and Ogden to New York more than $200. It may charge that much under the fourth section. It can not charge more than $150 from any point between Ogden and Omaha to New York. It may charge that much under the fourth section. It can not charge more than $100 from any point east of Omaha to New York. It may charge that much under my construction of the fourth section.
Mr. ALDRICH. I fear that I failed to make myself understood in my question to the Senator from Tennessee. The question I will repeat in another form. If the Boston and Albany Railroad receives a certain sum as freight in the aggregate for the transportation of a barrel of flour from Albany to Boston, that flour having been shipped from Chicago, is that a measure of the compensation which it must charge and receive for a local shipment from Albany to Boston?
Mr. HARRIS. That would depend entirely, in my opinion, upon whether this was a continuous and through shipment from San Francisco to Boston, or whether it was a shipment to Albany and then reshipped to Boston.
Mr. ALDRICH. Suppose it to be a through shipment ?
Mr. HARRIS. That I have already answered by what I have already said. The short-haul provision would only affect that shipment, as I have already explained. It would fall within the last ard lowest