sooner Governments will come to that beneficent standard designed by the Creator for the happiness of mankind.

I shall show pretty soon that you cannot stop competition. Pooling arrangements do not tend to stop it. Their only province is to regulate it. The regulation of competition is not only not against public policy, but is really in furtherance of the public welfare. But I wish to verify what I have been saying by reference to the opinions of some other men. As I said, I am not going to quote railroad men, except in one instance, on this subject. I want to quote on the subject of what competition is, this free competition which it is said must not be prevented by pooling contracts-on the subject of what it is and what it accomplishes, I wish to quote some men who I think will be listened to in the Senate even if I am not. I quote from the report of Messrs. Thurman, Washburne, and Cooley, constituting an advisory commission on differential rates by railroads between the West and the seaboard. I think no man will accuse Mr. Thurman of being a subsidized railroad attorney, or Mr. Washburne, or Mr. Cooley, and I think what they have to say on this subject of competition will have some weight.

Mr. EDMUNDS. What is the date of that?

Mr. PLATT. The date of this is 1882. They say:

We have found, however, in the course of our investigations, that a species of competition has prevailed from time to time which has brought satisfaction to few persons, if any, and which has resulted in inequalities and disorders greatly detrimental to trade. Such competition exists when the railroad companies, or those who are permitted to solicit business and to make contracts on their behalf, set out with the determination to withdraw freights from their rivals and secure them for themselves at all hazards and regardless of gain or loss; and when acting upon this determination they throw to the winds all settled rates, and in the desperate strife for business offer any inducement in their power which will secure it. The country not long since had experience of such a season, and everywhere we listened to complaints of the injury which legitimate business suffered from it.

Again

Under such circumstances persons were favored, and localities were favored, when the object to be immediately accomplished seemed to require it-regardless of the just maxims of legitimate business, and of the rules of the common law, which enjoin upon common carriers that they shall deal with all customers upon principles of equity and relative fairness. Legitimate business, it was said, necessarily passes into an unsettled and speculative state while this condition of things exists; safe and close calculations are impossible; transportation becomes cheap, but neither producer nor consumer is certain to reap the profit, for the middleman can not calculate upon the steadiness in low rates. and as he takes the risk of their being raised upon him, so he is in the best position to appropriate the benefit while they continue. Meantime, railroad profits disappear, and dividends cease to be paid, to the great distress of thousands who rely upon them for their living; and every interest in any degree dependent on railroad prosperity must participate in the depression and disaster which accompanies the ownership of railroad shares.

The mere statement of these results is sufficient to show that this is not what in other business is known and designated as competition. Competition is the life of trade, but this is its destruction; competition brings health and vigor, and secures equality and fairness, but this paralyzes strength and makes contracts a matter of secrecy and double dealing.

In the light of that are you going to declare as criminal these contracts, these arrangements, which nobody will deny have been resorted to by the railroads simply for the purpose of preventing this kind of competition described by Judge Thurman and Washburne and Cooley? I am going to venture to quote a little from what Mr. Charles Francis Adams says on the subject of competition. He is a railroad president. Do not believe him if you do not want to, but I quote him because before he became a railroad president he was a most approved student of the railroad problem from a scientific stan point. Now, in

the light of his added experience, if you please, he said, in an argument before the Committee on Commerce of the United States House of Representatives on the bills to regulate interstate railroad traffic:

What, then, is this mysterious underlying cause of which the railroad abuses I have referred to as so notorious are the outward manifestations? With all possible confidence I assert that it is excessive and unregulated railroad competition. This, and nothing else. In saying what I am about to say, let me first premise that I have no intention of making myself ridiculous to you by attempting any general attack on the great laws of trade. I fully recognize their efficiency; and, as respects railroads, I concede at once all the wonderful results that have been accomplished through the free operation in this country of the particular law of competition. But all that has nothing to do with the present question. Competition is a great thing, but it works in rough ways. In other words, every abuse in the railroad system, so far as the interstate commerce of this country is concerned, can be shown to be the direct, the logical, the inevitable outcome of unregulated and desperate competition, and a mere outward skin symptom of it.

Oh, yes, prohibit these arrangements by which the railroads seek to prevent this illegitimate competition, declare them criminal, if you will, but do it with your eyes open.

I wish to take Mr. Nimmo's report and see what he says about it. Mr. Nimmo has made this an eight years' study. If anybody wants to get full information on the history and effect of pooling all he has to do is to read Mr. Nimmo's reports. He will find an almost exhaustless storehouse of facts. Mr. Nimmo says:

During the struggles referred to success waited upon intrigue and false representations. The freight agents deceived the merchants, and the merchants deceived the freight agents. For several years the railroad transportation interests of the country ran at loose ends. The contest, being carried on independently of leadership and without method, lost the name of competition and ended in demoralization.

And to day it may be said that in some parts of this country, owing to the non-observance of apportionment contracts, just that condition of things exists which calls most loudly for the interposition of legislation.

It appears hardly necessary to observe that such a contest, involving results in the highest degree detrimental to the interests of productive industry, of commerce, and of transportation, had in it none of those conservative elements of legitimate competition which attach to ownership and to personal responsibility for results.

Let me quote a gentleman whom I regard to be the most thoroughly informed student of the railroad problem in the United States, a man who is beyond the suspicion of having an interest in railroads, a man who is so close to the industrial interests of this country that he was selected as labor commissioner of the State of Connecticut. I refer to Professor Hadley, of Yale College. I wish to read a little of what he says about this kind of competition. I read from the May number of The Popular Science Monthly, from an article entitled "The Difficulties of Railroad Regulation:"

While railroad competition has been in some respects a beneficent force it cannot be trusted to act unchecked. To the business community regularity and publicity of rates are more important than mere average cheapness. Business can adjust itself to high rates easier than to fluctuating ones. And railroad competition of necessity makes rates fluctuate. It tends to bring them down to the level of operating expenses regardless of fixed charges. If it acts everywhere as in the case of the New York Central and West Shore it leaves little or nothing to pay fixed charges, and means rain to the investor, followed by consolidation. If it acts at some points and not at others, those points which have the benefit of competition have rates based on operating expenses, while the less fortunate points pay the fixed charges. Then we have discrimination in a dangerous form.

As long as competition exists, there is no escape from this alternative. If it exists at all points, it means ruin; if it exists at some points, it means discrimination.

I read from Professor Hadley's book on Railroad Transportation, published in 1886, a book which I commend to every student of the railroad question. Referring to combinations to prevent competition, mainly of combinations among laborers, and incidentally of combinations by way of pools to prevent indiscriminate and illegal railroad competitions, he says:

While the experiments in State socialism have been so often bad, there has been a tendency in a great many cases to go too far to the opposite extreme, and to call everything bad which restricted competition in any way.

That is the only ground upon which you propose to make these pooling contracts illegal.

Courts and legislators have tried to stop the growth of industrial monopoly by shutting their eyes to industrial facts. They have tried to prohibit such combinations altogether, the courts saying that they would not enforce contracts in restraint of trade, the legislators trying to reader it illegal to make such contracts.

They could not stop such combinations because they were a necessity of business. The result of trying to prohibit them was what always happens when you try to prohibit a necessity; the worse features of the system were intensified. Secret combination was substituted for open; short-sighted and arbitrary policy was encouraged. By prohibiting the whole system the courts deprived themselves of the power of dealing with specific evils, such as secret favors or arbitrary discriminations.

I repeat what I said a little while ago: the only competition which these contracts for the apportionment of competitive business seek to prevent is the competition which discriminates between individuals, by which railroads cheat one another, and by which they violate the common law of England and America.

Competition in railroad transportation differs from every other kind of competition in the world. I do not say that it is not to be judged by the same legal rule, but I say in essence and in character it is different from competition in any other business. In the first place, it is not competition in trade. The railroad buys nothing of the producer; it sells nothing to the consumer. It simply carries-it distributes; that is all. Contracts in restraint of trade may operate the same with reference to contracts between common carriers as between merchants; but the two kinds of business differ in character. It differs from every other business, because whatever the result of the competition and the rivalry the railroad stays. kicardo is a great advocate of the doctrine that competition is the life of trade; but he writes from a banker's standpoint. In banking, capital is circulatory. If competition drives it out of the banking business it may go into the manufacturing business. But the railroad stays, whatever the result of the competition. If competition and the survival of the fittest" means the physical removal of the weakest, the pretended law is inapplicable, for you can not remove the railroad. When its iron rails are laid down from point to point, there it stays; and however many companies may be bankrupted by competition, there stands another company ready to take its place and to be bankrupted in turn. It is not so on the highways. It is not so on the water-ways. If two rival coach proprietors disagree and one is bankrupted, the coaches can go elsewhere and run on other roads. If rival steamboat lines disagree and by competition one is bankrupted, the boats can go elsewhere. The world is full of free highways, but the railroad is not a free highway.

IS C- -4

Mr. HARRIS. I desire to ask the Senator from Connecticut if, he wishes to conclude his remarks this evening or would he prefer to finish them to morrow morning.

Mr. PLATT. I would prefer to finish to-morrow if I could do so. Mr. HARRIS. I move then, if the Senator from Connecticut yields for that purpose, that the Senate proceed to the consideration of executive business.

Mr. CULLOM. I move that the Senate proceed to the consideration of the conference report on the interstate-commerce bill.

The motion was agreed to; and the Senate resumed the consideration of the report of the committee of conference upon the disagreeing votes of the two Houses on the bill (S. 1532) to regulate commerce.

Mr. PLATT. Mr. President, I regret that I consumed as much time as I did yesterday, and yet perhaps there is no reason why I should apologize in view of the fact that probably never in the history of governments was a bill under consideration which would inevitably affect, either directly or remotely, so great financial and industrial interests as this bill. It will reach every hamlet, every industry, every laboring man, and every laboring man's family in the United States with its results, either for evil or for good; and therefore I think that I need not apologize for the time which I have already taken and shall take in discussing it. I will endeavor, however, this morning to be brief.

I endeavored to show yesterday that contracts which are called pooling contracts were much misunderstood. I undertook to show that, though abuses may have attended the administration and performance of those contracts, there was nothing inherently wrong in them, nothing inherently injurious to the public welfare. I maintained, that, before the Senate and House of Representatives should stamp and brand them as criminal, somebody should show that they were inherently wrong, and that any evils or mistakes which had arisen in connection with their execution were merely incidental and not a necessary result of the system.

I undertook to show that they were recognized, sanctioned, and enforced by the decisions of English courts, and that it was at least an open question in this country whether they would not be sanctioned by our own courts upon full consideration. I undertook to show that they were not injurious to public policy, not injurious to the public interests, by combating the doctrine that every kind of competition in trade and business is for the public welfare and the public interest. I tried to say-not expressing it as well as I would like to have expressed it—that unnatural, illegal competition is always opposed to the public interests, and that if there is any such law as has found popular expression in the phrase "competition and the survival of the fittest," it is a law which encourages only that competition which results in the best and the permanence of the best. I claimed that these contracts in their nature and in their proper execution were not opposed to the competition which has for its object the encouragement of the best and the permanence of the best.

When I gave way to a motion to proceed to executive business I was speaking upon this proposition: That the business of the railroad carrier was unlike any other business so far as it was governed and influenced by the law of competition. I had shown that the railroad was

not a free highway, not a highway upon which all the citizens of the United States are free to put their carriages and transport goods; that for that very reason the law of competition and the survivalship of the fittest was not applicable to it, for that involves the physical removal of the weakest, and you can not remove the railroad.

You may bankrupt the management of the road, but in other business when you bankrupt the management the capital is destroyed and other capital goes on relieved for the time from the pressure of competition; but when you destroy the business management of a railroad the capital is not destroyed. The capital is mainly invested in the road. There it remains. There comes to take the place of the bankrupt corporation another corporation which utilizes the capital already invested; and the result is, differing from results in any other kind of business (and the history and experience of railroad management in this country shows it), that the newcomer inflates the capital, and after bankruptcy there is more capital upon which dividends must be paid than there was before competition produced the bankruptcy; that railroad capital always grows with what it feeds upon. It is probably not out of place in this discussion to speak of this evil which results from the inflation of railroad capital.

I refer only to the acknowledged fact that when competition has destroyed one competitive railroad corporation another takes the place of the vanquished with a larger capital, to be in turn destroyed or to be in turn the master of the other competitor.

There is another sense in which interstate commerce is not like any other business so far as it is affected by the law of competition. The business is largely of a public nature. As I said yesterday, it is the discharge of a public duty which the railroad engages in, certainly in the building of its road. It follows as a matter of course that the railroad company, in so far as it is discharging that part of its duty which is public, must discharge it as the state would discharge it; that in that respect it is properly limited to the same laws of competition, the same laws of business, the same methods of regulation and of doing business to which the state would in justice be limited and to which it would in justice be subjected.

The railroad company assumes in this business a portion of the power and duty of the state. Now, suppose the United States was operating the railroads, as they are operated in Germany, and to some extent in other countries of Europe, will any Senator say that the United States should enter into the kind of competition which railroad companies are inevitably forced into when there are competing roads and competing traffic and no pooling? Will any Senator say that a state operating railroads should under any circumstances allow rates to be put down to a point where they are ruinously low or practically unremunerative?

I apprehend that the Senator who should claim that it was for the public welfare and the public advantage that a state operating a railroad should carry freight for less than cost or for a sum which barely paid cost, operating expenses, and fixed charges, would be told that while certain favored citizens who wanted to ship certain commodities over the state railroads might be benefited by such a policy, the remainder of the public was taxed for the benefit of the few. And that argument holds just as good when private corporations are managing the railroads as it would if they were managed by the state. There seems to be a great misapprehension in some portion of the public mind as to the question of what are unreasonable rates.

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