struction was $61,000,000, in the form of a loan, on which less than half the interest has been repaid by the companies. It is well known that of this capitalization, the stock does not represent a dollar of actual investment; that a large portion of the debt was pocketed by the constructors of the roads in the shape of contracts, which they made with themselves, to build the tracks at two or three times the legitimate cost; that the roads were almost, if not wholly, paid for by the Government subsidy; and that of the $259,000,000 of additional stock and bonds issued upon the properties, an estimate that one-third represents invested cash will be too liberal.

Little wonder that Mr. Poor, who is the highest authority known to me on railroad statistics, said that the actual cost in money of all the railroads in the United States in 1883 did not exceed their funded and floating debts, an aggregate of $3,787,000,000, and that the fictitious capitalization was $3,708,000,000. This is his language:

If it be assumed that the cost in money of all the roads in operation in the United States in 1883 did not exceed, as it certainly did not, the amount of their funded and floating debts, $3.787,410,728, the actual investment was a most profitable one. The net earnings for the year were $336,911,884, a sum equaling about 9 per cent, on their cost. If the fictitious capital could be eliminated from their accounts, their success, as investiments, would have no parallel.

It is in this immense increase of fictitious capital that is to be found the cause of the general distress which prevails, and the enormous decline in the price of railroad securities. From 1879 to near the close of 1883 a most singular delusion rested upon the public as to their value, and this delusion was taken advantage of on a vast scale by able and unscrupulous adventurers. Whatever was manufactured and put afloat was seized with avidity by an eager and uninformed public. The delusion was increased and prolonged by payments on a very large scale of interest and dividends from capital. In this delusion the most loudmouthed and unscrupulous promoters usually had the greatest success.

I can add

As I have said, Mr. Poor's work is the best railroad authority, and his statements are entitled to the highest consideration. nothing to their weight or to strengthen their claim to reliability. So much for that. While the provisions of the bill as to uniformity of charges, publicity of rates, and even the reasonableness of the provision in regard to the long and short haul are not seriously controverted, the tentative provision as to the pooling system is made the subject of serious complaint. The fact that "pools are prohibited by the constitutions of nine States-Arkansas, Illinois, Colorado, Georgia, Ohio, Michigan, Missouri, Nebraska, and Pennsylvania-ought to be strongly persuasive evidence that the principle is vicious in practice, while the fact that all the wrongs committed under the Standard Oil monopoly were perpetrated under the pooling system, and all the outrages perpetrated by the anthracite railroad combination were the workings of the pool, ought to make Congress set its face against it. Mr. Hudson, at page 244 of his work, gives this case, which shows how Judge Baxter regarded pools:

An agreement, in the common form of money pools, existed between the roads engaged in the transportation of coal from the Hocking Valley regions, by which one of them, conducting a large traffic, was to pay a considerable share of its earnings to other companies, a draft upon its life blood which eventually sent it into the hands of a receiver. The receiver, after operating the road for some time, accumulated $100,000 of earnings, which, by the terms of the agreement, was to go to the other pooling companies. Hesitating to make a gift of funds to the competitors of the road while the bondholders were waiting for their interest, he submitted the matter to the court which had appointed him, the district court of the United States for Northern Ohio. Judge Baxter, with some of the indignation of the old fifteenth century judge already referred to, ordered that he should not only not pay out this money, but to pay no money whatever for any such purpose while the road is in the custody of this court; "adding, "such contracts as these are no more to be respected by the law than any other gambling contracts."

Judge Baxter's form of expression is, to say the least," pungent." A pool is simply a combination between railroad managers engaged in competition with each other for traffic to maintain such rates as they agree

on by suspending competition and placing the trade and earnings of all in a common 64 pool" from which the business or its proceeds is divided among the confederated companies in fixed percentages. They never apply it to the local traffic, of which each has its own monopoly; each squeezes all it can out of that, and keeps it. When the States and the United States granted railroad charters, made grants of public lands and subsidies from the public Treasury, and cities, counties, and individuals aided by taxation and subscription of money, as was often done, to build these roads, it was on the assumption that the roads would compete honestly and fairly for business, and would carry freight and passengers at such rates as would pay to the stockholders a reasonable interest on the money actually invested in their construction and equipment, treating all their customers alike. Watering stock to create fictitious capital on which to claim that interest must be earned, forming pools to control business at rates which enable them to pay dividends on fictitious stock, and all devices to prevent honest, fair competition are unjust and should be declared illegal. Pooling is against public policy in other regards besides destroying the competition which the people have a right to the benefit of. It destroys all inducements for the roads to offer the best services or other accommodations to secure patronage, as the worst get their allotted proportion for the poorest service, the same as the best, whether they are patronized or not. When the pool protects its members against loss by the reduction of traffic that naturally follows mean accommodation; the public interest is always prejudiced. The result of such protection must inevitably be poor service, and the courts have always declared such combinations' illegal on common-law principles.

The New York court of appeals had that question before them in regard to pools formed by the boatmen on the Erie Canal, and in declaring a pooling combination of the canal-boat owners to be illegal the court pointed out the inevitable tendency of such a system, as follows: The association being thus secure against internal defections and external encroachments, and the members having thus thrown their concerns into stock to derive an income in proportion to the number of shares they hold, and not according to their merit and activity in business, and safe against the reduction that would otherwise follow mean accommodations and want of skill and attention, the public interests must necessarily suffer grievous loss. Indeed, the consequence of such a state of things would be that freighters and passengers Would be ill-served just in proportion that carriers would be well paid. (Stanton 18. Allen, 5 Denio, 534).

Perhaps the most arbitrary and unjust discrimination which the managers of the pool have been able lately to perfect and maintain in the interest of the railroad managers who own and control the stock yards along their lines is the charge of nearly double as much for hauling dressed beef as is charged for the same weight of live stock. There is not one-tenth part of the risk in hauling dressed beef that there is in hauling live animals. If accidents happen it is hardly possible to injure dressed beef seriously, and hardly possible to save live animals; but the stock yards make nothing out of dressed beef and they make what they please out of the hauling of live animals. In a note to page

221 Mr. Hudson says:

With regard to the live-stock and

Before the Hepburn committee Mr. Fink correctly said: "The proper basis of railroad tariffs is the cost of transportation." which the matter was settled to be that of putting the dressed-beef and live-stock shippers on the same footing the cost of transportation (which in this instance means freight

as regards

charges) of the product of the animal to Eastern markets." In other words, the

economy

the live-stock interests of the New York Central and Pennsylvania Railroad of the dressed-beef shipments was to be destroyed for the benefit of

managers.

That is about all there is of it.

Mr. President, I will not occupy the time of the Senate any longer in the discussion of this question. I had intended to vote for the report of the conference committee without saying a word; but when I was urged by intelligent boards of trade in Kentucky and elsewhere to vote against this measure, I thought it was due to myself and respectful to them to give the reasons why I can not comply with their requests. I am not an enemy of railroads. I would not knowingly do anything to impair their usefulness or deprive them of any legitimate rights to which they are entitled. They have done more than all other agencies to develop the resources of this continent. They have enabled us to control and almost settle the Indian problem. Without them, ninetenths of the country west of the Mississippi would be a wilderness today. But for the cheap transportation they furnish, our exports would be a mere bagatelle, and the comforts of every man's home would be immeasurably lessened; but with all my high appreciation of their importance, and of the wisdom of sustaining and encouraging them in the developments they are making, I would require them to do equal and exact justice to all men, regardless of race, color, or previous condition. The bale of cotton shipped by the humblest negro, or the can of oil he had purchased to light his humble home, should be transported over the public railroad highways on precisely the same terms that Mr. Vanderbilt, Mr. Gould, or the Standard Oil Company could have it hauled for. I seek to substitute the undoubted authority of Congress over interstate commerce for the greed of interested railroad managers in regulating commerce among the States, and in securing equal rights to their citizens; and believing that the bill submitted to us by the intelligent conferees of the two Houses goes far toward securing these results without injury to any of the legitimate rights of the railroad companies, I shall vote for it.

Mr. CULLOM. Mr. President, I have not risen for the purpose of making a general speech upon this subject. I have been more inclined to say nothing on the subject than to occupy any time whatever; but certain portions of the bill as reported by the conference committee have been very fiercely attacked, and seem to be in a measure misunderstood, in my judgment, so that I have felt called upon to give expression to my views on one section of the bill alone at present. What I shall say to-day will be confined substantially to a discussion of the meaning of the fourth section of the bill. It may be that before the discussion is closed I shall have something to say upon other portions of the bill, but at present I shall contine my remarks to the fourth section.

Mr. President, the regulation of interstate railroad transportation is a subject that occupies a very conspicuous place in the thoughts of the American people. The magnitude of the vast interests to be affected by such regulation makes it necessary that the legislation proposed on the subject should receive the most thoughtful and deliberate consideration, for the commerce and prosperity of the entire country may be affected favorably or unfavorably, as the case may be, by the character of the regulations which Congress, in the exercise of its undoubted right to regulate, may see fit to impose upon interstate transportation by railroad. I recognize the importance and the great propriety of a full and free discussion of the measure now before the Senate, which may be so far-reaching in its consequences, and I am anxious that the effect and meaning of the provisions of the bill shall be fully understood, in order that the Senate may act upon it intelligently.

Since the report of the conference committee was made public the bill as it now stands has been critically analyzed by the ablest representatives of the various interests that will be most affected by its passage, in case it shall become a law, and has received a great deal of attention from the press and from the general public. It seems to me that the bill has stood the test of this general and critical scrutiny remarkably well. Its general provisions seem, for the most part, to have met with approval, while the feature which has been most strongly objected to seems to have been misunderstood, if not misrepresented, and it is this feature only which I desire now to undertake to explain.

I have not had time to carefully read all the numerous expressions of opinion upon the bill that have come under my notice, but, so far as I have been able to do so, it appears that the railroad managers and others prominently identified with railroad interests who have expressed their views publicly have directed their attacks almost wholly upon the "short-haul" section and the one prohibiting pooling. For the most part they criticise these sections and express alarm at their supposed effect upon the country, but take pains to explain with more or less qualification that they approve the general scope of the bill, or, at least, that they do not seriously object to its other provisions.

If the very ab e gentlemen who manage the railroads of the United States find only two points of serious attack in a measure which is intended to bring about, in many important particulars, a reversal of existing railway practices and methods of management, we have a right to assume that the bill is not, aside from the features which they specially criticise, unduly oppressive toward the railroads, or very far from right in its main provisions and regulations. And if these gentlemen are mistaken in their view of the probable effect of the two features which they attack, their objections to the enactment of the proposed law fall to the ground. I think they are mistaken, and that this will be made to appear during the course of the present debate; but, if I am mistaken and they are correct, I would be unwilling to give the measure my support.

It must be borne in mind, however, that any measure which Congress can enact upon this subject may prove to some extent ineffective and unsatisfactory until it has been supplemented by similar State legislation, just as the State legislation now in force in many of the States has been found ineffective and unsatisfactory in some respects because of the absence of national legislation. There is no way in which the entire internal commerce of the country can be subjected at once to the same uniform plan of regulation under the Constitution as it stands. Much of this commerce is beyond the jurisdiction of Congress, but if we will apply just and proper regulations to the interstate commerce now subject to our control under the Constitution, I am satisfied that within a few years the States which have not already done so will enact similar regulations, and that eventually the entire internal commerce of the country will be placed under a substantially uniform plan of regulation.

Until that time comes, however, it may be possible for the railroads to obstruct and interfere with the successful operation of the law to some extent, because of the divided jurisdiction of the States and the General Government over the subject, in case the railroads should not be disposed to accept in good faith the regulations Congress may impose upon them. But I do not look for factious or unreasonable opposition on the part of the leading railroads of the country. When once the bill goes into force, if it should become a law, I believe that the

railroads will as a rule seek to give the law a fair interpretation and endeavor to live up to it.

But, however that may prove to be, we must expect a great deal of friction in attempting to put into practical operation a new and heretofore untried system of regulation-untried at least as to the interstate commerce of the United States. The questions that may arise can not possibly all be foreseen or guarded against. The requirements of the bill against unjust discrimination and favoritism as between persons, places, and particular classes of traffic will pinch very hard in a good many quarters. The "big fish" will be placed upon an equality with the little ones, or more nearly so, and we must be prepared to hear very energetic and very vigorous protests from those who have been enjoying all kinds of special privileges and advantages at the expense of the general public, and who will be convinced that the country is going to everlasting smash if their privileges are cut off. But I take it that it

is our duty to legislate here with a view to securing the greatest good to the greatest number, and I have faith that, if the legislation now proposed can be fairly tested, its enactment will prove beneficial alike to the railroads and to the general public when it is once fairly in operation and when business has adjusted itself to the changed conditions which it will bring about.

I come now to the consideration of the much debated "short-haul " section.

The objection made to this section as it now stands which, if it were well founded, I should regard as the most serious, is that it is indefinite. and ambiguous, that it is open to more than one construction. Of course, we can not undertake to say positively what construction will be put upon the language used by the courts if they shall be called upon to determine the meaning of the section. It seems to me, however, that but one construction can be reasonably and properly placed upon this section, especially when it is considered, as it must be, in connection with the other provisions of the bill, and that its meaning is perfectly clear. But in view of the erroneous construction that seems to have been put upon this section in some quarters I deem it proper to state that there seems to be no difference of opinion as to its meaning among the conferees on the part of the Senate. I do not know that I ought to say this, but I venture to do so; and yet it may be that as to the minutiae of my statement the other conferees of the Senate may not agree with me.

I think the Senator from Connecticut [Mr. PLATT] and the Senator from Tennessee [Mr. HARRIS] understand the section as I do, and I think I am justified in saying that we would not approve it if we supposed or believed it to mean what some have claimed that it does mean or may be made to mean.

The short-haul section simply undertakes to lay down in specific terms a rule or principle which, as I have always contended, is already in effect contained in other provisions of the bill. The first requirement of the bill on the subject of rates is found in the first section, and is that all rates shall be reasonable and just." This is, in effect, a declaration that under similar circumstances and conditions a greater sum shall not be charged for a shorter than for a longer distance, because under such circumstances it would not be "reasonable and just to make such a charge. The next requirement of the bill that affects this question is found in the first part of the third section, which declares

That it shall be unlawful for any common carrier subject to the provisions of