ple never apply that term except when the rates are too high. They have no idea that the rates can be too low. I maintain that a rate for carrying freight which only pays operating expense and fixed charges is as much unreasonable as a rate which is too high, and which will pay too large a dividend upon railroad property. We are here to do justice by the railroads and by the people. We are, like judges, to hold the scales of justice with even hand, and not act from prejudice or act wantonly. An unremunerative rate is just as unreasonable and just as injurious, though in a different direction, as an unreasonably high rate.

The railroads of this country must see to it, if the public welfare is to be promoted, that remunerative returns are received from freights and passengers. I do not stop to say what remunerative rates are. I do not stop to speak of the great question which comes up when that is to be considered as to whether remunerative rates mean such rates as will pay dividends upon the inflated capital of the railroads of the country. That is out of this discussion. I mean to say that it is the duty of railroads discharging a public duty as well as a private duty to see to it that it possible the business which they do yields remunerative returns to the capital investment, and that you can not endanger the public prosperity or destroy the public welfare any quicker than to establish rates or to let rates be established by competition which will not give fair remuneration to the capital invested in railroad enterprises. The whole history of the country shows it. I have seen two railroad-rate wars which resulted in such demoralization of business in this country as produced what might have been called two years' continuous panic.

Unremunerative rates injure, first, the investors in railroad securities; next, railroad employés; next, corelated industries; and, lastly, all industries; and it is the last wave of the enlarging circle of disturbance that is most disastrously felt. The injury produced by unreasonably low rates is finally felt by every citizen. The toiler in remote hamlets feels the baneful effects of the general depression, but usually ascribes the result to every cause but the primary one, which is the railroad-rate war and the unreasonably low rates produced thereby. The interests of the people are so closely united that an injury to one branch of business is felt by all. Here, truly, an injury to one is the concern of all. How appropriate in this connection the language of inspiration: "We are many members, yet but one body; and the eye can not say unto the hand, I have no need of thee; or again the head to the feet, I have no need of thee."

I think people misapprehend the question in this respect. It is within the power of one railroad president to practically depress the entire business of the nation; and the West Shore Railroad and its management is a recent example and illustration of what I say. For this reason railroads are not subject to the same law of competition as other kinds of business are.

There is another reason, which is seldom alluded to. The competition, mark you, which it is claimed must not be prevented is the competition between competing railroads for competitive business. The proposition is that no matter what that competition is, no matter what the result of it is as to the lowering of rates or the discriminations which ensue, it must not be prevented, and therefore pooling must be prohibited. It is to that proposition that I desire to hold the discussion of this question.

The reason which I last alluded to is this: When rates are forced be

low the remunerative point, how does the railroad manager and the railroad president attempt to make money? Not from the legitimate business of the railroad, but by stock gambling. Unremunerative rates inevitably substitute stock gambling for the legitimate profit of business, substitute the effort to get money by stock gambling for the effort to earn it legitimately by railroad business. It is inevitable; it is in

the nature of things.

It is not the remunerative railroad that furnishes the business for the stock exchange. It is not dealing in the remunerative railroad securities that produces panic, that makes millionaires and makes paupers in this country. The inducement to this business comes from the fact that by strife for competing business railroad managers are unable to make profit in a legitimate way. And so I say that the law of competition claimed, though it may be just as to other business, is inapplicable to the business of the management of railroads.

But, Mr. President, contracts such as I have described, arrangements such as this bill proposes to prohibit, can not essentially interfere with or prevent competition between railroads. That kind of competition, which it is supposed is prevented by such contracts, is the mere speck which floats upon the mighty current of competition always flowing. There are a thousand forces which compete in rivalry for the reduction of the rates of transportation, and you can no more stop those forces, no more stop the competition that goes on by the clash of rival commercial interests in this country and the world than you can sweep back the ocean with a broom.

The Mississippi River, the Welland Canal, great cities at different parts of the country forming commercial centers with different interests to be subserved, the ocean, the Canadian lines, the transit of the Isthmus, the ever-clashing interests of diversified business-all these are potent factors, continually, by their rivalry competing for the reduction of railroad freights. Cotton in the South, and in Egypt; wheat in Dakota and in India; petroleum in the United States and in Russia; coal in Pennsylvania; iron in Spain, all these things, and a thousand others, form an anti-monopoly league stronger than individuals or boards of trade, or commercial exchanges can form. They make it impossible that this purely competitive business can be done at excessive rates charged by common carriers. These contracts for division of business or apportionment of freight are but a trifle among the great forces which carry on the great war of competition which has so materially reduced the charges for the transportation of freight, and which will go on until the lowest limit possible with remunerative returns is reached.

If I had time I should like to stop here for a moment to speak of my belief that the limit has not yet been reached. The capacity of freight-cars has been increased from 10 tons to 20 tons; Bessemer steel rails have taken the place of iron rails; improvements in machinery, in locomotives-all these things have marvelously reduced the cost of transportation. Sometimes we feel that the end is reached, but I am told that freight-cars are now in process of construction which will carry 25 tons, or 50,000 pounds, in place of the original cars with a capacity of 20,000 pounds; that engines are being built whose ten driving wheels will wonderfully increase the power of locomotion, and that these improvements in engines and cars will necessitate the relaying of the iron rail, substituting a heavier rail, perhaps a 100-pound rail for 60-pound rails The limit of the cheapening of the cost of transportation has not begun to be reached, and these little arrangements between railroad companies, adopted for their self-protection and for

the protection of the public as well, have very little part to play in this great competition which is going on and must go on in relation to this business.

But there is another ground on which I ask the Senate to pause before it declares such arrangements between railroad companies to be criminal. I want them to consider a question which takes hold of the future of this country. These contracts and agreements and arrangements between railroad companies are in the nature of business combinations between different railroad corporations. Admit, if you please, that there is something bad about them, for the sake of argument; they must be tolerated, or the alternative is consolidation of railroad capital. I dread that result. Some political economists, some railroad men, and some men interested in what they think they see in the future, the grand co-operative commonwealth, believe that that is the best outcome of the railroad problem.

I wish to emphasize this point: George Stephenson said that where combination was possible, competition was impossible; and no man ever said a truer thing. This bill leaves open and invites the worst kind of combination which this country may fear; that is, the combination and consolidation of railroad corporate capital.

What are the railroads to do in forbidden from making these arrangements? Experience teaches that the old rate war will begin; the bill encourages it. It requires no notice from a railroad company to put down its rates, but notice in order to advance its rates. The whole bill is an invitation to the individual railroad company to put down its rates without public notice, and that means private notice in advance for the purpose of securing business. The war is to go on if it is not restrained by those arrangements which the railroad companies believe best for themselves in the interest of protection, and the result will be, as it always is. consolidation-capitalistic consolidation.

Why, Mr. President, the monopolies of this country are built on the graves of weak competitors, and this bill invites that grand monopoly of railroad capital in this country which will be built upon the graves of railroads that are not able to stand in the competition, which railroad monopoly will be the master of the people. I have not learned that such results are to be regarded with favor. I can not unlearn all the teachings of my youth at the demand of these economists, these professors of political economy, these railroad men, and these socialists. I believe that it is better to keep business in a good many hands, if you can, than to concentrate it in a few hands. I believe it is better to let the little stores in the country live than to build up the great mercantile establishments at their expense. I believe it is better to let the little factories live than to build up the great manufacturing corporations at their expense. I believe it is better to let the weak railroads live in this country than it is to build up one gigantic railroad corporation which shall occupy to the railroad business of the country the same position which the Western Union Telegraph Company occupies to the telegraph business of the country. I believe we are holding up a false standard to our young men. I believe that the "little farm well tilled" is better than many leagues of land in one ownership tilled by capitalists whose laborers come and go, and who have little sympathy with the proprietors; that a "little house well filled" is better than the marble palace with its interior decorations of gold, its hangings of silk, and artistic carpets from the marts of foreign nations, better in their tendency to the advancement of the prosperity

of the nation and the welfare of its people. Lut this bill presents these alternatives.

Senators may feel, perhaps, that I am overstating this matter. I want to turn them for a moment to history.

The railroads of this country have not had a long life. What has been the history with regard to consolidation-I mean a consolidation of capital, not combination by these business arrangements, which I defy any man to say are inherently wrong? I turn to Mr. Hadley's book, and I find that since 1853 the New York Central Railroad Company, then composed of fifteen or sixteen separate organizations, has consolidated and consolidated, until now it has a system including more than 4,000 miles of railroad line.

I find that the Pennsylvania Railroad Company, originally composed of local roads, has under one system and one management 7,000 miles of railroad track. I find that what is called the Wabash system, originally composed of many small railroads, is now welded into one gigantic management of 9,500 miles. Where is this to stop? dream and vision of the railroad man that it shall go on. outcome of the problem for him. It is only a temporary check that he supposes is put upon it by these pooling arrangements.

It is the That is the

Let me turn for a moment to the testimony of one railroad man on this subject. I read from Charles Francis Adams's testimony before the Interstate Commerce Committee on the subject of pooling, page 1204 of the report:

So far as pooling is concerned-a subject I see a good deal discussed-pooling, as I regard it, is a mere makeshift. It is an attempt on the part of the railroads to hold in check a natural law which would result in the survivalship of the fittest. If competition worked with its full severity and legislation put a stop to all pooling, saying absolutely to the railroads, "There you are, and you have got to compete"-and this I take to be the object of the proposed law-I do not suppose there would be at the end of two years more than three or four leading corporations in the country that would not be in the hands of receivers. It would be the condition of affairs now temporarily existing in New York between the Central and West Shore roads perpetuated and made chronic by force of law. Everlasting warfare among railroads would be provided for by statute. The thing is absurd and unworthy of discussion. Of course the railroads would in some way agree to divide traffic, and to divide traffic is to pool it. But supposing the pooling or division of the traffic effectually forbidden by law; then, so far as I can judge, the natural result would follow, a result which 1 for one do not object to at all, though it would be attended with immense waste of wealth and would wipe out of existence forms of securities which in amount probably would far exceed the national debt of the country.

The result would be that, as the companies became bankrupt, those who got possession of their properties would combine and consolidate them, and you would have one railroad corporation in the country in the course of a few years which, as compared with the corporations you now have, would occupy about the position the Western Union Telegraph Company occupies among telegraph companies; that is, one wholly predominating company. In other words, the legislation intended to prevent the pooling of traffic and insure competition would produce exactly what it was meant to prohibit. The railroads would be pooled themselves, and competition would be done away with through consolidation.

Then he goes on to say:

In order to secure so far as may be what you desire-that is, to preserve competition and prevent this consolidation into great corporations-the course that Congress should pursue would be the exact opposite of what is now suggested. Congress should legalize pooling, and impose a heavy penalty on any violation. of pooling agreements. That would keep the weaker corporations alive and prevent their being absorbed by the large ones, as they inevitably soon must way things are now going on.

It will be observed that this bill does not in any line of it prohibit the consolidation of railroad capital, and in my judgment by prohibiting pooling and making it criminal it invites that result.

Now, I desire, Mr. President, to answer in advance, if I can, an

argument which I know will surely be made in reply to what I say. It is that when the bill prohibits discrimination the necessity of pooling will be done away with. Suppose that to be so, for a moment. It is rather hard, even in that case, to say that a practice which has been resorted to with the avowed purpose, and only for the purpose, whatever its results may have been, of preventing discrimination, shall be declared criminal because the bill declares that discrimination must cease. I maintain that that is illogical

But I do not believe that this bill unaided and alone will do away with discrimination, and I say so because it is the experience of foreign countries that rigid laws aimed against discrimination have been ineffectual except as aided by the efforts of the railroads themselves by pooling. The experience of foreign countries is worth something, and I want here to state what is said on that subject by Mr. Hadley. I do not know but that I read it yesterday, but I wish to emphasize what he says in these few words:

We are thus reduced to the simple alternative, pooling or discrimination. Each effort to prohibit both at the same time only makes the necessity more clear. The governments of continental Europe have ceased to struggle against it. Kightly judging that discrimination is the main evil, they recognize pools as the most effective method of combating it.

And yet for years and years they have had these anti-discrimination statutes which they can not enforce, and it was only by a resort to a system of pooling that they were able to enforce their laws. Is it not a strange thing, a solecism, that it should be urged here that an effort among railroad companie to secure the same thing which you say is to be accomplished by this bill should be declared criminal? Is it wise to discard any aid or agency which may help to carry out and make effective in its operation so important a bill as this and the removal of which may throw discredit upon the whole legislation and render it absolutely ineffectual?

I wish to read what the real situation with regard to pooling is in foreign countries.

Believing Professor Hadley, to whom I have so frequently referred in this discussion, to be the most thoroughly informed and thoroughly independent student of the railroad problem in the country, I wrote him asking for information as to the present status of pooling arrangements in Europe.

NEW HAVEN, December 25, 1886.

MY DEAR MR. PLATT: Please excuse the unavoidable delay in answering your letter.

The most conspicuous examples of the public use of pooling are found in Belgium, Germany, and Austria. Fifteen years ago all these countries had a good deal of active railroad competition; and it was found in each country that under any such active competition it was impossible to secure obedience to any law against discrimination. The reckless and speculatively managed roads were able to force not merely the sounder private roads but the state reads themselves into discriminations of the worst kind.

You know the general history, and I will only mention one or two recent facts:

I. The Belgian state railroads have within the last two years concluded a pooling agreement with the only private system of importance, which provides for an almost permanent division of traffic and is intended to render competition forever impossible.

II. Although nearly all the railroads in Germany are State owned, the rivalry between different systems is so strong that a pool is necessary to regulate the action of the officials themselves; and in order that the system may be thoroughly carried out, a recent imperial ordinance forbids the shipper select the route over which his goods are to be sent.

III. In Austria not merely do the state roads divide traffic with the private roads, but also with competing water-routes; and the government authorities say explicitly that they regard this as the only possible method of securing jus