The infliction of that curse upon the nation must be charged to the policy which unites the railways in efforts to suppress competition among themselves and to give favored shippers a monopoly of the traffic by discriminating rates.

These four corporations

*

Referring to the New York Central, the Erie, the Pennsylvania, and the Baltimore and Ohio Railroads

the exemplars and leaders of the railway system of the country, furnished to that conspiracy against independent commerce and free competition the active strength and support which made its success possible. Without their steady and persistent violation of the great rule of equal privileges to all shippers the project for the subjugation of the petroleum trade would have died still-born. In assigning to them the responsibility for such an attack upon commercial liberties, is it too severe to declare that the four leading railways of the country are guilty of the great commercial crime of the last decade?

I hope the boards of trade of the country will publish that exhibit to the world, and advise the people whether it is a system that com-mends itself to them as one that ought to be perpetuated.

Mr. President, it is impossible for the representatives of the States and people to sit supinely by and see the whole power vested by the Constitution in Congress to regulate commerce among the States and with foreign nations usurped by railroad corporations acting in combiEven Congress can not impose a tax. nation under the pooling system. on exports. Yet the railroad pool can not only impose an export tax in the form of a double rate on transportation, but they can do it. without a moment's warning, when the crops of the country must be moved to the seaboard. They not only apply all the taxes so imposed to their own use, but under the "pool" system they divide the plunder with roads that carried little or none of the freight in order to prevent them from carrying it at a cheaper rate than the managers of the Worse than all, they can, and as I pool have determined to exact. have shown do, haul for one customer or set of customers for one-half charge they impose on others. So that, not only the commerce of the country, but the fortunes of all engaged in it are at the mercy of a few railroad magnates. Yet we are told by boards of trade, professing to be the guardians of our commerce, that we will ruin the country if we prevent combinations, discriminations, rebates, and drawbacks, and require equal rates, publicly advertised, to be given to all shippers alike.

the tax or

There can be no higher evidence of the omnipotence of the railroad pool than its ability to obtain from respectable boards of trade such resolutions as are daily sent to us, urging us not to interfere with this railroad despotism. I deny that railroads have any right to "regulate commerce among the States," or to grant favors to or impose penalties on either persons or localities on their lines. Their roads are public highways, and they are common carriers for hire. They should be protected by law in the enjoyment of all their rights as such, and each should be required to compete for business with the others. Whenever they undertake to charge one customer more than another for the same service or to interfere with the commercial operations of the people, they should be prohibited from doing so and punished if they disobey. Congress has the sole constitutional authority to regulate interstate commerce, as the State Legislatures have of the commerce of each State, and the common carriers under each system must be required to treat all who use their roads equally, and work for a reasonable compensation, giving public notice of any increase of their rates long enough in advance of the change for men to regulate their transportation and their purchases accordingly.

The great fundamental principle which the pas

sage of this bill will establish is that Congress not only proposes hereafter to regulate interstate commerce, but it proposes to require the carriers of it to do equal and exact justice to all people dealing with them.

We do not assume that all or indeed any of the railway managers will be guilty of unjust discriminations or extortions by passing this bill, any more than we assume that men are murderers and robbers because we pass laws punishing murder and robbery. We assume it to be our duty to prescribe in advance what shall be the punishment for such offenses, so that no one can plead ignorance of the law or of the punishment which will follow its violation. But I must hurry on. One of the ablest advocates of the railroads said:

The necessities of modern progress rendered a modification of old theories and even old principles inevitable; and since the introduction of railroads the idea that private property taken for the purpose of travel in a peculiar manner and under new conditions is a public highway is no longer tenable and in prac tice is not recognized. The old theory of the rights of the public in such a road was necessarily modified in practice, though it still lingered in the minds of some jurists.-W. F. Crafts, Scribner's Monthly, October, 1881.

That was for a long time the general tone of all the advocates of these corporations, even before the committees of Congress. Indeed all the railroads bave tried to maintain that their lines are their private property, to be used as best suited their interests, but the courts-State and Federal-have uniformly decided against all their assumptions, and maintained that they are created by sovereign powers which could only be exercised for public uses, and that the right of each citizen to use the road on equal terms with every other citizen is the supreme and controlling obligation of the managers of each of them. Even Congress can not authorize private property to be taken except for public use. It may, by bad laws, accumulate half, or even all, the currency needed for circulation in the Treasury, and there may be no way to pay it out, yet it can not require any holder of our bonds not yet due to surrender them or to take the money for them, even with 50 per cent. premium added. Yet it can by a railroad charter authorize the homes of the people, that no money could buy, or their graveyards, sacred to the dearest memories, to be torn down and desecrated in order to establish a public highway for the equal use of all the people. Congress could not confer such power for any private purpose, however important. That fact effectually disposes of all pretense of private rights or interests in railroads being either superior or even being allowed to conflict with the fair, equal, reasonable use of these highways by all the people.

What would be thought of a turnpike company that undertook to charge one man a dollar and another twenty-five cents at its toll gates for wagons exactly alike, laden with an equal quantity of similar freight, or which refused to allow any wagons but those of its managers to pass its toll-gates at all if engaged in hauling coal, upon the ground that the turnpike company had made arrangements to control the coal trade, as the railroad companies have done time and again in regard to the express and special freight business over their lines; and what would be thought of boards of trade protesting against an act of the legislature requiring the highways to be kept open for the use of all the people at a stipulated, reasonable, uni:orm toll," which is all we propose to do by this bill?

Redfield on Railways, chapter 11, page 229, says:

That railways are but improved publie highways, and are of such public use as to justify the right of eminent domain by the sovereign in their construction is now almost universally conceded.

He supports this statement by a long list of authorities, State and Federal. The railroad is no more private property than the turnpike; on one the freighter runs his own wagon, on the other the common carrier furnishes it; but the principle of public right, uniform charges, and impartiality in use relates equally to both.

The advocates of the railroads have been driven to admit the truth of these principles after years of resistance; their last refuge is that the principle is founded on an obsolete theory, not now applicable to their complicated and important system." I can not better answer that argument than by again reading from Mr. Hudson's work, page 150 He says:

But it is worthy of notice that the constitutional provisions of the leading States in the Union are fully as explicit as the common law in declaring the public character of the railways and in asserting their subordination to the legislative power in all matters affecting the public interests. The "obsolete theory" that the railways are public highways finds direct enunciation in the most recently enacted State constitutions. In Arkansas, Alabama. Colorado, Indiana, Louisiana, Missouri, Nebraska, Pennsylvania, and Texas the constitutions adopted within the last decade all declare that the railways are public highways. The constitutions of California, Georgia, Iowa, Michigan, Minnesota, and Wisconsin affirm the right of the Legislature to regulate the operations of the railways, while many other States have practically asserted that right by its actual exercise, and it has never been successfully denied. Of the fifteen constitutions referred to, twelve explicitly forbid discriminations between shippers or passengers, while in other States a similar prohibition is implied by the constitution or by laws made under its authority. Pools or combinations between different railroads to the prejudice of other railroads are forbidden by the constitutions of Arkansas, Illinois, Colorado, Georgia, Michigan, Missouri, Nebraska, Pennsylvania, and Ohio. Rebates and drawbacks are prohibited by constitutional enactments in Arkansas, California, Georgia, Missouri, and Pennsylvania, while the much-defended practice of charging more for a short haul than for a longer haul over the same line is forbidden by the constitutions of Pennsylvania, Missouri, Arkansas, and California, and by the highly-lauded statute law of Massachusetts.

serve.

To sum up, the railway is created by law to fulfill a public purpose-that of affording improved transportation on equal terms to all persons whom it can Whatever is necessary for the honest and impartial discharge of that one function it has a right to do. It can make such charges as will yield it a profit on the investment of its capital; but it must distribute the burden of its charges evenly among all its patrous in proportion to the service rendered. It is designed to overcome the obstacle of distance; but it should overcome that obstacle for the benefit of all, and it is not within its objects to bring one locality nearer to market than another and to make the latter support it in doing so. It is a public servant, and not a public tyrant which can enrich and magnify its favorites at the general expense. It may own and control a franchise in its tracks and rights of way, but it has no right to control legislatures, or to compel courts and public officers to do its bidding. It is not a commercial providence to exalt one vessel to honor and condemn another to dishonor. It is not a political guild to sway by its capital, its commercial power, and the work of its employés, the business of the people. It is not a modern baron with supreme power over the property and prosperity of its subjects. It is not endowed by the State with the power to rule the business of the nation, dictating in what manner or over what routes the people shall carry on their commerce, or the amount of business that they shall transact. A creature of the State, it must not become a conspirator against commerce, either by building up monopolies for its favorites, or by organizing them for its own profit.

The necessity for Congressional action was made so apparent that the bill now before us, in the shape it then was, passed the Senate at the last session of this Congress on a call of the yeas and nays by a vote of 47 to 4, and it passed the House as amended in that body on the 30th of July last, by a vote of 192 to 41. Now, when the Conferees on the part of the two Houses have agreed on a bill satisfactory to both, it seems to me that it ought to become a law. The subject had been referred to a committee, and full opportunity for objection to its provisions had been given to the railroads and all their adherents before it was acted on, as the report of the committee shows.

No man can justify the conduct of many of the great railroad corporations in their treatment of the vast interests necessarily confided to their care and management. Take the anthracite-coal railroad pool, which is perhaps the oldest and best maintained, and therefore the most atrocious of this system of "pools;" its discriminations, extortions, and combinations to limit production in order to increase the price of the product have become so outrageous that the governor of Pennsylvania had to order the attorney-general to proceed against them in the name of the commonwealth. I again read from Mr. Hudson's work, page 211:

In this case the evils of combination

Referring to the anthracite-coal trade

have been increased by the direct interest of the companies in the business which furnishes their chief traffic. The legislative investigation referred to showed that excessive and outrageous discrimina ions against shippers had been made of the coal roads. After a thir y days' strike

The interests of labor are carefully guarded by them!

After a thirty days' strike the private mine owners had consentel to the wages demanded by the miners, and would have supplied a large trade, but the railways, which were also miners as well as carriers, an 1 were determined not to yield to their men, raised the freight rates of the private firms to three times their former standard. By this means the price of coal was brought up to $12 a ton, and the private operators, their workmen, and the consumers of coal were made to feel the power of the great railway and mining companies. It is not necessary to follow out in detail the steps by which the railways established their absolute power in all branches of the coal trade. Enough that the result is that of 270,000 acres of anthracite-coal lands in Pennsylvania 195,000 are now owned by six railways. One effect of uniting, in the same corporations, the business of shippers and that of carriers is the enormous inflation of their capital. I ask Senators to pay attention to what I shall now read, as I shall refer to it hereafter.

Their aggregate capitalization amounts to $5)),0)),0)), while the actual cost of the roads and equipment for transportation is $LL4,000,000.

For the purpose of securing a profit on this stupendous amount of inflated capital, the policy of combination has been carried to an unequaled extent. Not only was competition in transportation suspended by a division of traffic between the railways, but the competition of the mines was stopped, as far as possible, by agreements which limited the output of anthracite coal to an arbitrary total fixed by the combination.

This amounted to 30,000,000 tons only during the past two years. These agreements are enforced by ordering the suspension of mining at such time as the railway combination determines; sometimes for one-quarter of the working time in a year.

God save the protected laboring man from such friends!

We have seen that the combination contends as vigorously to prevent an advance of miners' wages as to maintain the price of coal; and hence the artificial advance of price brings no corresponding increase of pay to the labor employed. In fact statistics show that the average wages paid to the m n engaged in this severe and arduous work ranges from $350 to $400 per year. The restrictive powers of the combination are extended over the distribution of the product. No wholesale dealer can engage in the anthracite coal business wit out the consent of one or the other of the lines forming the combination, or without conforming to the fixed and arbitrary wholesale prices prescribed by the compa nies. Some of the eccentricities of the artificial means used to sustain prices have been exposed in a previous chapter. The burden of the control estab ished over both producers and consumers, by the anthracite and bitumino s coal combinations, has been estimated at $31,000,000 annually. Whatever may be thought of the accuracy of this calculation, there is no doubt that the combination controlling the coal trade of Pennsylvania has, by restrictions upon that industry and artificial prices for its products, inflicted a vast and wholly unjustifiable burden upon the producers and the public.

I again ask, ought such things to be possible and Congress be told that they can not and ought not be regulated and controlled by law? The statement that their aggregate capitalization amounts to $500,000,

000, while the actual cost of the roads and equipment for transportation is $114,000,000, is a startling one, and would seem incredible but for the incontrovertible proof that has been furnished to State and Congressional committees of the methods employed to produce these results. Some very striking examples are given by Mr. Hudson to illustrate the system. For example, he says (see page 270):

The South Pennsylvania Railroad project illustrates, in many striking features, the great railway abuses of the times. The projectors of this enterprise, in itself legitimate and desirable, had an offer to build and equip the road for $10,000,000, and they planned a liberal inflation by raising that sum on bonds and making the stock capital wholly fictitious. But the project fell into the hands of the Vanderbilt interest, and the plan was found to be wholly insuflicient. The stock was placed at $20 000,000, and the bonds at the same amount. A contract was made with a construction company, said to consist of Mr. Vanderbilt's clerks and brokers, to do for $15,000,000 the work which a responsible contractor had offered to do for $6,500.000. The $15,000,000 were to be furnished by a syndicate of capitalists from New York, Cleveland, Philadelphia, and Pittsburgh, who were to receive for their subscriptions the $10,000,000 of securities. It is now asserted on good authority that the sum of $10,000,000 is an ample estimate of the legitimate investment represented by the $49,050.000. Upon this basis of $4 in capitalization for one of cost the greatest railway capitalists of the country conducted this enterprise, until, in pursuance of a broader policy, they sold out to the Pennsylvania Railroad, deserting the men who had put the money into the project in good faith to secure a competing line, that they might establish the monopoly of the New York Central and Pennsylvania roads over their respective districts.

In regard to the New York road, which was held up as an exemplar of freedom from inflation, and one of them is enough. After telling how the New York Central and Hudson River Railroad watered its stock,

he says:

It is sufficient for the present purpose to cite the conclusion of the New York legislative committee, from the testimony of experts, that the property of the company, capitalized at $155,000,000, could be replaced for $65,000,000; that the most moderate estimate of the actual "water" in its securities was $53,163,881, not including a loss of $10,800,000 by discounts in the sale of $25,000,000 of bonds. The capital stock of the company is $85,000,000, representing, according to this most moderate view, $22,000,000 of actual investment; while others estimate that the bonded securities of the company alone represent the entire amount invested in the property, and $10,000,000 more; so that the entire share capital and part of the bonds are a stupendous mixture of wind and water.

The report of the New York legislative committee puts it in this language:

It matters little for the purposes of this report whether $50,000,000 or $70,000,000, representing nothing save mismanagement, prodigality, and pilfering, have been injected into the capitalization of this road, and are now seeking to drain interest and dividends from the commerce of the country. In either case the wrong is equally glaring and the demand for a remedy equally imperative.

One more extract and I am done with that branch of the question: A still more notorious and flagrant example of stock inflation is that of the Pacific railroads. The public are familiar with the record of this creation of stupendous wealth out of the loan of a government subsidy and the gift of an empire of land. It has been told by Mr. Charles Francis Adams in detail, and with an authority that is emphasized by his present position at the head of one of the companies. The story of the construction company, the "Credit Mobilier," upon whose stock, the investment in which was nominal, the greater portion of the shares and debt of the Union Pacific Railway was distributed as dividends, is part of the record of national politics. It is also well known how the Central Pacific Railway was built. A company of capitalists whose resources at the $195,000, with the aid of loans from the city of Sacramento and Placer County to the extent of $550,000, built enough road to draw $348,000 from the United States Treasury as the subsidy for the first section, and by repeating the process constructed the entire road; with which, as a nucleus, they have now gathered a total capitalization of $139,000,000.

Their

Similar illustrations might be found in the financial "ballooning" of the Northern Pacific, the Texas Pacific, and the Atlantic and Pacific; but an outline of the history of the two older corporations is sufficient for our present purpose. aggregate capital is $120,000,000; their funded debt, apart from the Government subsidy, is $136,000,000; and the contribution of the United States to their con