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Nor has it been made to appear that the establishing of a minimum rate would be of advantage, while consideration has made it clear that the difficulties attending the adjustment of such a rate would be no less formidable than those encountered in establishing complete schedules for every interstate road, and that the only etfect of a minimum rate would be to increase the charges for longdistance transportation,
It is difficult to understand how a Senator who could enunciate sound' principles with such force and clearness could support the provisions of this section as reported from the conference committee.
Second, it is clear from the most casual examination of the transportation problem that distance does not furnish a correct or practicable basis for transportation charges.
The provision that no more shall be charged for a shorter than for a longer haul must be based on the theory that distance furnishes a proper measure of the value of transportation. Against this theory it may be conclusively urged that it rejects all the elements of cost or value except that of the length of the haul, and upon this, which is by no means the most important element--oftentimes it is the least important-it proposes to base all traffic charges. It does not take into consideration the difference in the cost of construction or maintenance of the line, the difference in the actual cost of carriage, or the difference in the value of terminal or other services rendered. It ignores the natural advantages of locality, and disregards competition by river, lake, and ocean carriage. It fails to notice the most important fact of all, that a considerable portion of the business of railroads must be done, if done at all, at a rate which the traffic will bear, and that it is constantly necessary to fix rates for this kind of business much lower than those charged for the regular business of the line.
The objections to long and short haul legislation were also forcibly stated in the report of the select committee (page 195), as follows:
And when the effect of the proposed prohibition principle-i. e., that no greater charge should be made for shorter than for a longer distance--is considered with reference to the whole internal commerce of the United States, and especially with reference to the necessity of preserving the prevailing cheap rates for longdistance transportation, there is reason to fear that the result of rigidly enfora ing the proposed regulations would be to stifle competition in numberless cases where it now exists, and is to the general public interest, and perhaps to deprive the country of the benefits of the low through rates now and for years given to and from tide-water, without practical or appreciable advantage to intervening points.
Third. The adoption of a distance basis in the manner now proposed is an untried experiment in railroad legislation.
The necessity for making lower rates on competitive than on local traffic is recognized in railway management in every country in the world. The Senator from Vermont has alluded to the legislation of England and some of the continental countries. Neither England nor any of the European countries has any legislation analogous to that contemplated by this act in regard to the long and short haul. In England, Germany, and France the subject has been exhaustively investigated by commissions and elaborate reports have been made, and the practice of making lower charges for long hauls in particular cases fully justified.
The so-called long and short-haul laws of Massachusetts, Connecticat, and other States are similar to this only in name. The use of the words "from the original point of departure" in the statutes of those States restricts their operation to very narrow limits, and the natural advantages of competitive points are effectually preserved.
Fourth. The fourth section does not establish an equitable rule 'which applies with equal force to the freight traffic of all roads. Difference in the length of the roads which different carriers operate would necessitate differences in rates for similar and contemporaneous service between competing cities and sections. The traffic of an interstate road is placed at the mercy of a competitor whose line is entirely within the boundaries of a State.
A carrier with but one line between great trade centres could not "compete with a rival controling two lines, one of which could be used for local and the other for through business.
Fifth. If we are to legislate upon a matter of this importance the rights and obligations of the public and the railroad companies should be clearly defined and understood; and yet if this bill is adopted by the Senate and the fourth section is retained, three-fourths of the Senators who vote for it will do so with an understanding that it has one meaning, and the other quarter on the understanding that it has an opposite meaning.
If the section has the significance given to it by a large majority of its supporters, its adoption will result in the reversal of the policy which has been pursued by the railroad managers of the country with the acquiesceuce and approval of the people. We have heretofore sought, by means of vast expenditures and valuable grants from the public domain, to rapidly extend our railroad system that competition might be increased and rates reduced. We now propose by law to restrict competition and to increase rates.
New roads have been constructed across barren plains and over mountain ranges in answer to an imperative public demand. Our rapid railroad extension, which had no warrant in the experience of other nations, has borne fruit beyond the wildest hopes of the most sanguine. Wherever the railroad has penetrated, thriving communities have sprung up as if by magic. The prosperity and development of the fertile trans-Mississippi States have been rendered possible by the fact that modern transportation methods allowed lower rates for a long haul. The wonderful effects which have resulted from this policy, and the evil effects which must result from its reversal, have never been more clearly, cogently, and eloquently described than hy a gentleman now a member of this body, the Senator from Iowa (Mr. WILSON].
In an address which was made before the Committee on Commerce of the House of Representatives January 20, 1880, he said:
This section has a knife in it. Its blade is sharp and long. It cuts clear through the railroad corporations and reaches the people, especially those remote from the great market centers. It is hurtful both to the railroad companies and their patrons. It isimpracticable, unphilosophical, opposed to the best interests of the
country, and strikes the West a fearfully discriminating blow.
Another has well said that the unit of profit in railroad management is a carwheel in motion, and that the unit of loss is a car-wheel at rest.
The wheel which carries freight 1.000 miles has more steady employment than the one that traverses 10 miles. Therefore it can afford to work for a lower rate of wages.
This means a low rate for a long haul and a higher rate for a short haul. This is the whole story. It discloses the principle that develops regions remote from market and converts waste places into gardens..
The principle of the low rate for the long haul is the true one. It is the only one through which the advantages of railroad transportation can be equitably distributed. The cquitable distribution has made the West what it is, in spite of frequent violations of the principle involved. It has encouraged emigration, opened farms, built towns, created cities, developed States, equalized the values of property, made business for the roads, opened markets for manufacturers, and brought prosperity to the people. It is this that makes the Eastern Iowa farm substantially equalin value to ihat of the Central and Western Illinois farm, and enables the Western Iowa farmer to count the returns from his crops almost equal to those of the one in the eastern section of the State, and still gives him but little advantage over the cultivators of Nebraska fields. It tends to equalize the values of real estate throughout the State, enhances the price of all products sent East to market, and reduces the cost of all articles carried West for use and consumption. It assures good prices for all Western products, and consequently enhances the prices of the farms from which they are derived. Whatever udvantage the West gets from railroad transportation comes through the low rate for the long haul.
It was stated before this committee the other day that flour is carried from Saint Paul, Minn., to New York for $1.15 per barrel, and that in the recent past it cost $1.20 per barrel to transport it from Buffalo to the same destination. This is the low rate for the long haul. What has it done for Minnesota? Or, rather, what has it not done? See how that State has grown into one of the great wheatproducing sections of the Union! Her merchant mills are equal to any in the world, and are the pride of her people. The flour which they manufacture places the best of bread upon the tables of Europe and South America. The State has been covered with farms, beautified with towns and cities, and filled with population. As it is in that State so it is in all the West.
Who has been wronged by the application of the low rate to the long haul? Has harm come to the East by it? Why, the millions of people of the Western States, who depend upon the practice of this rule to get their vast products to the world's markets, are most generous contributors to the prosperity of the East. They are liberal consumers of everything which the East manufactures. The low rate for a long haul of the manufactured articles of the East promotes consumption in the West. This keeps the Eastern spindles in motion, and they consume the cotton of the South. It keeps the looms in action, and they use the wool of all sections of the country. It fills the furnaces and forges and rolling-mills with orders. It deepens and extends the mines and creates a market for the product. It fills manufacturing localities with dense populations, and thus secures to the Eastern agriculturist a home market and good prices for all of the products of his farm. In every way it benefits the East. Does it harm the country at large! Look at the balance of trade against Europe in our favor. What would it have been but for the enormous crops of the West and the low rate for the long haul which carries them to market? This it was that brought the cattle, sheep, hogs, whent, flour, corn, and other products from the remote West, and sent them abroad to feed the people of the Old World. This it was that largely made up for our balance of trade, and brought home your bonds and gave us the coin of Europe. No such results would have been realized but for the wondrous development of the West, and that development could not have occurred under the fourth section of this bill.
If section 4 should be given the force of law and received the construction which I have, with others who have addressed the committee given to it, it may be asked “Will the railroad companies be so unwise as to destroy the great business from and to the West?" "Certainly not, so far as they have any election in the premises by which they can foster that business. But they could do but little in the way of aiding the West. They will do the best they can. But that best must be oppressive and depressive in the West. The people are there and they must stay. They will go on planting and harvesting and sending to market, but the cost of transportation will eat out their substance. A check will be put upon the development of that section, now going on so rapidly and satisfactorily. Prices of both land and products must recede. What high rents are to the people of Ireland, the rates under section 4 will be to the people of the Western States. Low rates of transportation are like low rents. Those who pay them can prosper. High rates of transportation, like high rents, foster discontent and distress. This will be the mission of section 4 should Congress give it the force of law. Its enactment certainly is another of the things that ought not to be done concerning commerce between the States.
That there may be no misapprehension as to the provisions of the section to which the Senator from Iowa was then alluding, I will read the fourth section of the Reagan bill, then pending in the House:
That it shall be unlawful for any person or persons engaged in the transportation of property, as provided in the first section of this act, to charge or receive any greater compensation per car-load of similar property for carrying, receiving, storing, forwarding, or handling the same for a shorter than for a longer distance in one continuous carriage.
It is not alone the farmers of Iowa and the West who are interested in maintaining a low rate for the long haul. The cattle growers, the producers of sheep and wool in Colorado, Montana, and Missouri, the cotton planters of Arkansas, Mississippi, and Texas, the men who are struggling so manfully to build up the new South in Georgia, South Carolina, Alabama, and Tennessee, and the operatives, artisans, and mechanics of the East have all felt the beneficial effects of this wise policy, and their prosperity is largely dependent upon its continuance.
To change this beneficent policy by enforcing any considerable advance in through rates on cotton, grain, and provisions, would not only restrict traffic so as to impair the income of existing roads, but the reduction in volume of business would have a decided tendency to check the building of new roads. Such an advance would embarrass if pot paralyze our foreign commerce. It would exclude from the markets of the world the agricultural products of the great States west of the Mississippi and Missouri Rivers.
The prices of cotton and wheat are fixed in Liverpool and not in Memphis. Minneapolis, or Chicago. The price of wheat is fixed in competition with India, Russia, and South America. Great Britian has manifested in many ways her anxiety to develop the wheat-producing capacity of her colonies, that they might be able to furnish the large annual deficiency in her food supply.
She has expended about $800,000,000 in building up the railway system of India. She has succeeded in effecting such a reduction in the transportation rates of that country that wheat is now carried over long hauls at half a cent per ton per mile.
We now propose to do for India, Manitoba, and Australasia what Great Britian could never do for them. We propose to enchain the too vigorous forces which have given to American enterprise the undisputed lead in British markets.
The time selected for this radical change of policy is inopportune, as we have to meet reduced rates of freight and improved transportation facilities all over the world. No other nation has in contemplation the stupendous folly of attempting to fix rates or to restrain their downward tendency by legislation.
The amount to be received by an American producer for a bushel of wheat is not determined by the cost of production in Minnesota or Illinois, it is the price in Liverpool minus the freight from Minnesota or Illinois.
To show the close relation of prices of wheat in this country with the British prices, I submit the following table, showing the price of No. 2 spring wheat for a series of years, from 1873 to 1885, in Chicago, the average (Gazette) price in Great Britain, and the average rate of freight from Chicago to Liverpool. This shows that in 1873 the average price in Chicago was $1.19, the freight to Liverpool 48 cents; price in Great Britain, $1.78. There was a constant decline in price until in 1885 the price of wheat in Chicago was 84 cents; the rate of freight was 16 cents from Chicago to Liverpool and the price in Great Britain was a dollar. The decline in English prices from 1873 to 1885 has been 78 cents a bushel, while the decline in prices at Chicago has been bat 35 cents per bushel, the decline in the rates of freight from 1873 to 1885 being from 43 cent; a bushel to 16 cents in 1885:
This table shows conclusively that the American farmer has received the full benefit of the great decline in transportation charges.
To illustrate the effect which an advance in through rates would have on the price of some of our staple agricultural products, I will say, and I desire to call the attention of the Senator from Iowa (Mr. ALLISON), who now favors me with his attention, to this particular feature of the case, that if the charge for transporting corn were advanced to 1 cent per ton per mile, which is, as I have stated, the average rate on all roads in the United States, it would cost to transport a bushel of corn from Council Bluffs to New York 45 cents, a sum about equal to its present value in New York. At 1.20 cents per ton per mile, the rate which I have taken as the average local rate, it would cost to carry a bushel of corn from Council Bluffs to New York 54 cents, 9 cents more than the price in New York. At the rate of 1 cent per ton per mile it would cost to transport a bale of cotton from Waco, Texas, to a New England mill $4.50 per bale, or about four times the present rate. If rates should be restored to the average charges on the trunk lines in 1860—3.07 cents per ton per mile—the cost of carrying a bushel of wheat or corn from Chicago to New York would be 92 cents per bushel, a sum equal to the present value of the wheat and twice as great as that of corn.
Now let us look at the effect of an advance in wheat rates. If the rate for transporting wheat from Dakota to New York were 1 cent per ton per mile, the average to which I have alluded, the cost of the carriage would be 60 cents a bushel, and allowing 10 cents per bushel for carting to station, the farmers of Dakota would
receive 20 cents a bushel for their wheat on a basis of 90 cents in New York. If the cost of transportation were 1.20 cents per ton per mile it would cost 72 cents from Dakota to New York, leaving 8 cents to the farmer for his wheat in Dakota. If 1} cents per ton per mile were the rate, it would cost more than the value of the wheat in New York to transport it from Dakota. An advance of Io of a cent per ton per mile on the rate of freight on wheat means a reduction of 6 cents per bushel to the farmers of the Northwest in the price which they will receive.