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tice to local points. There has been no recent change in legislation, but the practice is becoming more fully established every day.

These are the countries where the most positive authority is given to pools; they are also those where railroads are the best managed, rates on the whole lowest, and traffic developing most harmoniously. The other countries may be divided into two classes. In one class are France and Italy, where the country is districted between different railroads, and competition thus rendered impossible-a division of the field instead of a division of the traffic. Yet these countries pool their international traffic, which can not be thus districted.

The second class includes those countries where pooling is merely tolerated rather than encouraged-Switzerland, Russia, Holland, or England. It is noticeable, 1, that these countries suffer from more abuses and discriminations than those previously mentioned; 2, that they are worst where natural causes have hindered the growth of pools, as shown by a recent investigation in Holland; 3, that government authority over rates, however great, is ineffective to prevent discrimination. Russia being a strong instance in point. As far as I know, no European country directly prohibits pools.

Sincerely yours,

ARTHUR T. HADLEY.

I do not think that we can afford to overlook the importance of the experience of these countries in this respect.

There is a single other feature of this bill to which I wish to refer in this connection. It contains a short-haul clause or law. Why? Why the necessity for it? The inexorable logic of the case is that the competitive rate is too low and the railroads are attempting to earn remunerative rates by putting unreasonable charges upon local traffic. Is there any other reason for a short-haul law? What is to be the effect of the prohibition of pooling? To make the competing rates still lower, they being now too low, and to force the railroad company, if it be possible, to raise its local rates.

How a man who insists upon the necessity and justice of a short-haul law can also insist upon the necessity and justice of a prohibition of pooling, I am unable to see. You propose to remedy the already too low competitive rates by saying that the railroads shall not recoup for their losses upon the local traffic, and yet you propose to prohibit that very thing which the railroad companies have adopted as the only means known to them to prevent competitive rates from going still lower. You put the railroad companies in the condition of a man under what was claimed to be the old Calvinistic theology, of which it was wittily rather than truly said that under its doctrine a man is "damned if he does, and damned if he don't." That is precisely what this bill proposes to do with the railroad companies of the country. In my judgment, a more glaring inconsistency in legislation was never attempted than in this proposal to insert a short-haul law and the prohibition of pooling in the same bill.

But there is another point to which I did not allude at length when I was speaking of the competition which exists, that it seems to me makes pooling necessary and makes its prevention entirely improper. The American railroads which are competing between the West and the East under this bill with pooling prohibited will be absolutely at the mercy of the Grand Trunk Railroad of Canada. Whatever effect a short-haul and long-haul clause may have upon that traffic as diverting it to Canada, you may rest certain, I think-and I think experience justifies me in the assertion-that if pooling is prohibited the traffic of the West comes to the seaboard through Canada and not over American roads. Why? Because by this bill you invite the Grand Trunk road to put down its rates without notice. It desires first of all things to insure business. Then it can put them up, probably.

It is to-day making its arrangements, by the outlay of great amounts of money in securing improved cars and engines and the improvement

of its track, to do a greater through business. Now, prohibit pooling. put the bill in operation, and what will be the result? The Grand Trunk road may put all through business from the West to the seaboard down to an unremunerative point and make up for it by recouping upon the local traffic: through Canada, and we are powerless to prevent it. You may say that pooling would not prevent it; but it is the only means which the American roads have to secure any terms with the Grand Trunk road which shall give them any considerable share of the traffic which shall pass from the West to the seaboard.

I have already occupied more time than I desired, and, instead of stating my own conclusion as to what pooling has accomplished, I prefer to state the conclusions of Mr. Nimmo, from whom I have frequently quoted during this argument and whom I quote with the more satisfaction because I think he has given the matter as careful study perhaps as any man investigating it outside of railroad circles. As will be seen by his reports, he devoted at least eight years to a scientific and practical study of this problem. The history of every pool, the results of every pooling arrangement almost, are to be found in the tables and statistics of his internal commerce reports from 1879 to 1884. The conclusions of such an investigator are entitled to weight, and as they are clearly and tersely stated and coincide entirely with my own, I wish to adopt them:

In conclusion, the following general observations may be made in regard to railroad federations or pooling organizations:

First. They have been instrumental in preventing unjust discriminations through special secret rates to favored shippers, and the consequent demoralization of trade.

Second. They have prevented many unjust and ruinous discriminations against towns and cities, and against particular States or sections of the country.

Third. They have put a stop to violently fluctuating rates.

Fourth. They have had the effect of protecting the weaker lines and of preventing their absorption by the stronger lines, and thus of conserving elements of competition in transportation.

Fifth. By preventing the absorption of the weaker by the stronger lines, they have prevented the threatened danger to the country of its being districted among a few great corporations, by which means the regulating influence of the competition of trade forces would have been eliminated, and transportation would have gotten the mastery of trade.

Sixth. They have tended to prevent those shocks to the financial interests of the country which generally accompany the bankruptcy of great railroad corporations.

Seventh. Since they have been adopted the railroad transportation facilities of the country have been greatly extended. The volume of traffic has also enormously increased, and rates have constantly fallen. These facts seem to prove that railroad federation has not had the effect of obstructing the beneficial operation of the competition of trade forces and of the direct competition between transportation lines. Statistics hereinbefore presented clearly indicate this fact.

Eighth. The most hopeful aspect of federations for the division or pooling of traffic is that thereby the railroads have been brought to a condition in which their accountability to the public interests may be more clearly defined, and in which any departure from undoubted principles of right can be observed and the responsibility therefor located. It is believed to be much easier to regulate great federations of railroads with respect to matters relating to commerce among the States than to regulate a great number of railroads acting independently, for the reason that these federations constitute concrete expressions of relationships and antagonisms both among railroads and among trade centers, and tend to illustrate the relative force of the same.

Ninth. Railroad pools have not proved to be rigid compacts, but they have been constantly subject to change. Occasional and even protracted wars of rates render their requirements at times almost entirely inoperative. This must, in the light of public interests, be regarded as a favorable symptom of their practical workings. The conditions surrounding and governing the commercial and transportation interests of the country are constantly subject to change, and it is impracticable that any fixed rules or set of rules should be formulated which in practice would tend to prevent such changes.

The Senator from Massachusetts [Mr. HOAR] asks me if I have in my mind statistics bearing on the point as to whether the net receipts of the railroad companies pay more on the average than a fair rate upon the capital invested. I think that was the question. I have not the exact figures. I sent home to Connecticut, my own State; I found this to be true of Connecticut, that the amount paid as dividends upon railroad stock in the State of Connecticut during the past year would average upon the whole capital stock of Connecticut railroads about 4 per cent. Of course some roads do not pay any, and one pays as high as 10 per cent., but the average upon the capital stock of all railroads in the State would be 4 per cent. The statistics for the whole country are not accurately in my mind at this time, but I think I will venture upon my recollection to say that the entire railroad dividends of the United States in the year 1885 applied to the entire capital stock of the railroad companies of the United States would produce a dividend of about 24 per cent.

Mr. HOAR Do you mean stock unwatered?

Mr. PLATT. I mean the stock as it stands, watered, if it has been watered, and undoubtedly it has been. The Senator from Colorado [Mr. TELLER] says that is true in all cases. I think it is not universally true. Here is a railroad running into Washington-the Baltimore and Ohio-that has not increased its capital stock in many years, which has to day, as I remember, only twenty millions of capital stock, though its property equals in value the property of roads whose capital is three or four times as much. It is not true in a good many instances that might be mentioned. It is lamentable that it is too true in this country; but, as I said, the discussion of what rate of interest shall be paid upon the capital as it stands, including water, is outside of this discussion which I am now carrying on. I should say as severe things on that subject, probably, as any member of the Senate. I should be glad if there were some way to eliminate fictitious capital. I might regard competition as a blessing if when it bankrupted a railroad management the water should be eliminated before another management was set on foot; but that never will be.

Mr. President, I have heard it suggested in reply to all this that we can pass this law and then pass another law directing the commission to investigate; and if the commission shall, on the whole, conclude on its investigations that pooling arrangements are not injurious to the public welfare, then we can repeal the section prohibiting pooling. That is after the fashion of what is known in Scotland as Jedburgh justice, for border marauders, "hang them first, try them afterwards." That is not a correct principle in legislation. We had better investigate first. All investigation so far, the weight of all testimony, the weight of all the testimony of students who have given the most attention to this problem, and the weight of the best informed railroad officers and railroad commissioners, shows the wisdom of legalizing and regulating, rather than prohibiting, pooling.

I suppose that Senators will rise and tell me of specific instances where justice has not been done to localities or to individuals under pools. I reply, first, legalize them and then regulate them by this commission and the evils will disappear. They are not inherent in the system. I reply, second, those evils would not be remedied by prohibitions of pooling. They would exist still and be intensified. not charge upon the pool that for which it is not responsible. Do not make it criminal to engage in such contracts because certain things occur, not chargeable to them, which you do not like.

Do

The issue here, however, is not between legalizing immediately and prohibiting. It is between the proposition now before the Senate and the Senate bill, which, very properly in my judgment, sought to refer this matter for further investigation to the commission to be appointed under the bill. I submit to the Senate that a majority of its Senators to-day believe that it is the wise thing to do; that the intelligent judgment of Senators must bring them to this conclusion. If it is wise, why surrender it? Shall we surrender it for the fear that if we do the wise thing here there may be obstinacy elsewhere which shall prevent any legislation at all? If that principle is to be adopted, then we are driven to this in the Senate, that whenever legislation upon any subject is desirable and we have determined what legislation is wise and politic and just, we are to surrender our views as to that and agree to legislation which we deem impolitic, unwise, and unjust, because otherwise we cannot get any legislation at all.

Mr. President, others may yield their judgment upon what they consider vital matters for the purpose of getting some kind of legislation, but for one I am content to stand and take the judgment of the country upon my action when I vote only for what upon mature deliberation I believe is the best legislation. I do not believe that the legislation will fail if this bill goes back to a conference with an indication that the Senate will not consent to brand as criminal practices those arrangements which railroads have made to accomplish the precise object which is intended to be accomplished by legislation in this bill. I believe we may trust to the good judgment of conferees and of legislators not to do a thing which, upon reflection and investigation, they must be satisfied will probably, I may say almost inevitably, break up and demoralize the existing conditions of railroad service in this country.

Nine-tenths of all the interstate-commerce business done to-day is done under those arrangements which are sought to be damned because of the evil meaning which has been given to the word "pooling." Whatever of stability has been given to the railroad business, and through it to other business of the country, has been secured by these traffic arrangements, and in my judgment a bill which breaks them all up ruthlessly within sixty days, which invites the competition which is to demoralize business, will be far-reaching in its injurious results. For one, I prefer to stand by my judgment. I will try to have the courage of my convictions. I will try to do what I believe to be right, and I can not assent to a bill which, though I accept its other provisions, contains a provision which I regard as positively vicious and wrong.

Mr. MORGAN. Mr. President, it is very late in this debate, after it has occupied the attention of both Houses now for several years, for any one to attempt to advance an argument that has not already been sifted and winnowed thoroughly, and I shall not attempt to convince the Senate of anything to-day by arguing this question before them, but shall merely state the reasons which influence my own vote against this bill.

I am not content with the bill in respect of its practical effects upon the people of my own State, for Alabama is at the farther southern margin of the United States, and the markets in which we buy our dry goods and a large portion of our groceries are in the far northeast, and there is a broad intervening area of country between them. The markets in which we buy our supplies are also far distant from Alabama; they are in Chicago, Saint Louis, and Cincinnati chiefly. The markets in which we sell our products are all distant from our homes, and we

have a vast tract of country to cross with transportation in getting over to the market of purchase or the market of sale.

So I think that any bill which forces the railroads of this country to raise the price of charges of freights for long hauls is necessarily inimical to the best interests of all the different business occupations in my State. That practical statement of the reasons why I might oppose this bill will be quite sufficient I think to justify me in the course that I feel compelled to take toward it, but I have other reasons which I will proceed to state as briefly as I may.

I deprecate the task which the decisions of the Supreme Court seem to have imposed upon Congress, of taking control of all internal commerce under the guise of regulating interstate commerce.

Had that court left to the States the field of jurisdiction, clearly open to them (in the absence of legislation by Congress), they would have dealt with the great lines of transportation in a way to benefit every community, and that, of course, would have benefited the whole country.

Every State can be trusted to take care of its own people, and their concurrent endeavors to restrain common carriers within due bounds would have been far more effectual than anything Congress can do, looking to this result. But the Supreme Court is about to force Congress into reluctant action, by having declared that the States can not regulate, within their own limits, the transportation of commerce destined to reach other States or countries. Congress has long resisted this demand upon its alleged powers and duties, by silence and inaction, until now it is declared by the Supreme Court that the States can not constitutionally exert any of these powers, because they are expressly conferred upon Congress.

They hold that all commerce becomes interstate that is destined to cross a State line, though it might traverse hundreds of miles within the State of its origin and only a few feet in the State where it is delivered.

For example, a car-load of merchandise shipped at Alexandria, Va., for Bristol, would be interstate commerce if it is delivered on the south side of a street in Bristol through which the line between Virginia and Tennessee runs. It would be Virginia commerce if delivered on the north side of that street.

A question of disputed jurisdiction between two governments, in which the most important questions are involved, would be made in such a case to hang upon the accident whether the delivery of the freight is made in Virginia or Tennessee. Or if the point of shipment and destination of the goods are to determine this question of jurisdiction, the matter would be quite as uncertain, for the shipper has the right with the consent of the carrier to end the transit of goods destined for Bristol in Tennessee at the State line. I do not present this to show upon how narrow a margin of territory may hang this grave question of jurisdiction, but to bring into view the question whether the jurisdiction of either government to regulate the commerce that may be in the transit of the goods can be rationally determined alone, as is done in this bill by the location on the map of the points of shipment and of delivery.

As the purpose of all regulation of interstate commerce must be to control the transit among the States, the law that regulates it must operate upon the goods, the vehicle of transportation, the carrier, the shipper, and all concerned in the transportation at the time the journey is begun, and must continue its control until the destination is reached.

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