Iowa. Board of Railroad Commissioners.

Annual report of the Board of Railroad Commissioners for the year ..., Volume 11 online

. (page 4 of 55)
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much as anything else, Iowa property, the courts having determined



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BOARD OF RAILROAD COMlflSSIONfiRS. gg

that it is under State oontrol, and the sooner what is equitable and
JQBt is determined, the better it will be for all parties.

To call hard names, impute ignorance, prejudice or malice to a
commission that can have but one object in view, the general pros-
perity of the interests of the State, among which the railrdad is one
of the most important, is not the best method of reaching a right
adjustment of difference.

We introduce here the comments of Gen. Dodge, a gentleman who
has large railroad interests in Iowa, as well as in other western
States, to show that the deliberate judgment of the thinking railroad
man sees more to condemn in the competitive action of the roads to-
ward each other than in the action of State authorities. We insert
it in full :

TSB BAILBOAD SITUATION IN THB WXST.

In a recent interview Vice President Sykes of the Northwestern,
after a trip of over 3,000 miles over the lines of that system, expres-
sed his views in regard to the railroad situation at the west, in which
he made the following statement, viz.:

Our equipment is fully employed, but we are working at low rates,
and find it hard work, in common with other ro^s in the Northwest,
to earn as much as last year, although doing a much greater business.
This is owing to the concessions in prices for transportation, and
more particularly the effect of the operation of the inter state law,
and of the reductions in rates by the local State authorities and pow-
ers that claim to regulate the business of the railroads, more espe-
cially in Minnesota and Iowa. Railroad men throughout the North-
west and all over the country look with grave concern upon the last
named phase, and hope the tide of popular feeling, which at present
finds expression in the arbitrary and oppressive, if not actually de-
structive, course toward the railroads, will abate before the proper-
ties are rendered valueless, alike to the public and to the owners of
the capital invested.

These statements have attracted the attention, not only of the
public, but of a good many railroad' men, among whom are Gen. G.
M. Dodge of the Denver Oity & Fort Worth, and the Union Pacific.
Referring to Mr. Sykes' statement, Gen. Dodge said :

First: I claim that no reduction has ever been made by legislation
that has not been fir^t made by the railroad companies, lasting from



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40 ELEVENTH ANNUAL REPORT OF THE

three to nine months. Their example has led the people of the States
to believe that^ if they can carry freight and passengers at the cut
rates and special rates that they made in their fights, they conld do it
under a law, and so far as I know, no answer has ever been made to
that. Daring the session of the legislature of Iowa, when it had in
consideration these ratee, there were, for six months in Iowa, rates
upon everything that were far below the rates made by the Iowa Com-
mission. Of course the rates made by the roads and the rates made
by the Commission are ruinous. The whole trouble comes from the
disposition of every traffic manager in the country to obtain some-
thing that he is not justly entitled to. They have gone on giving
privileges to shippers until now the mileage on cars east of the Mis-
souri river is about one-half what it used to be ten years ago, and this
all comes from the disposition of every road to allow their cars to be
used as warehouses.

In the city of Chicago the jealousies^between the roads make it
almost impossible for one railroad to deliver its freight to another, or
to its customers, without great cost. It is almost impossible to get a
car through the city of Chicago under one week; whereas if the
whole city was organized and districted for each company to do its
proportion of the switching, there is no reason why every car should
not be switched, and delivered and returned inside of three days.

I think the whole demoralization in the railroad system comes from
the lack of nerve on the part of the managers of the roads, from the
fact that they have turned their business entirely over to the traffic
managers, and the first duty that they owe to their companies, and to
their stockholders, is to divorce their operating and traffic depart-
ments; second, to lay down rules which governed us ten years^ago, by
which no man could hold a car at a station or a terminal over three
days without paying for its use; third, to pay attention to their local
business. So far as my experience goes, no road west of the lakes
gives attention to its local business; its whole effort appears to be
to its through business — a non paying business — while the demands
from almost every local point on its entire line for local business, and
which, if they would accommodate, would pay one hundred times for
their through business.

Mr. Sykes makes a great ado about what the legislators do, and
about the harm they have done to the companies, but if he will go
back two years and take up the rates that his own road has made in



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BOARD OF RAILROAD COMMISSIONERS. 4^

lUiooiB and Iowa to meet other rates, and compare them with the
lowest rate that has ever been placed upon him by legislation, he will
find that the rates of the Railroad Commission have been generons
compared to his own. I think the owners of property should under-
stand fully that all these low rates in the West have been made from
the example set by the managers of their own roads, and that they
should put the fault right where it lays.

I have no sympathy with the rates that have been made in Iowa by
the Railroad Commission, but I think that they were made, not only
with the view of enforcing them, but with the view of having the
comparison made by the owners of the property; and I think that if
you compare the rates made by the Commissioners with the rates
of the railroads through Iowa upon which they were based, it will be
very hard for the railroads to attack the Commission's rates.

I only speak of Iowa by reason of having personal knowledge of it.
So far as my knowledge goes, it is the same in Kansas, in Missouri,
and in Nebraska.

To my certain knowledge, the Union Pacific Road, of which I am
director, is doing a large amount of its business now as competitive
business at a loss, and they have not got the nerve to stand up and
refuse it because they are fearful that some other road will get it; and
I know to day that there is a large demand upon their road for every
car they have got, to do a paying business.

In contrast with what Gton. Dodge says, and the manner in which a
well balanced, level headed man looks at matters of this kind, we in-
sert a letter from Mr. Purdy, the officer of the C, R. I. & P. Railway,
making the reports of that company to the Commission. Section 4
of chapter 77, laws of the Seventeenth General Assembly, requires the
Commission to make a report to the Qovernor on the first of Decem-
ber of each year; such report shall contain as to every railroad corpo-
ration doing business in the State, among other things, << the cost and
present cash value of its road and equipment, including oermanent
way, buildings and rolling stock; all real estate used exclusively in
operating the road, and all fixtures and conveniences for transacting
its business." Section 5 says: *'To enable said Commissioners to
make such a report, the managing officer of each corporation doing
business in the State shall annually make to said Commissioners such
returns in the form which they may prescribe, as will afford the in-
formation required for said official report."



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42 ELEVENTH ANNUAL REPORT OF THE

In reply to a letter from the CommisBioners, asking the present
cash value of the road, we here insert Mr. Pardy's letter:



Ghicaoo, Bock Island & Pacific Railway Go.
Officb of Vios-F&BSiDBirr, Secbbtabt and Tbbasubbb

Chicago, October 24, 1888.



;."'!



W. W. AiNSWORTH, Esq , Secretary Board of BaUroad Commisaioners, Des
Moines^ Lnoa:

Dbar Sib— In reply to yours of October 5th, I say, as Mr. E. St. John,
the General Manager of this company, said in his letter of the 8d day of De-
cember, 1887, in reply to a like inquiry propounded by you for the Board of
Railway Commissioners:

^* As to present value of the property mentioned. The information called
for consists in opinions based upon facts as accessible to your honorable
Board as to any officer of this company. These opinions fluctuate con-
stantly because of crop prospects, the financial condition of the country,
and the possibility of legislation which may materially affect such value. I
am advised that the present cash value of property is measured by the
price which it would command if offered at public sale to the highest bid-
der for cash in hand. What price the railways of this company in Iowa
would command at such a sale cannot, in my judgment, be approximately
conjectuied. If such conjectures were feasible, the communication of them
to your honorable Board would not answer your questions."

That the reasons thus assigned for declining to gu/ias at the cash value of
this property were duly appreciated by your honorable Board is indicated
by your letter to Lusk & Bunn, under date of October 4, 1887. In this you
say:

^' The Commissioners appreciate the difficulty in answering the questions
as to the actual cash value of the property; in fact have never made it
one of the questions to be answered, until their attention was called to
the requirements of the law by the Governor. They have prepared no
formal questions for the purpose of making these returns, and in /act have
no cEtsttnct idea of what was contemplated by the Ugiilative ndnd tchen the require-
ment toas wade."

The '' difficulties" which you so dearly ''appreciated" less than a year
ago, have been increased rather than diminished, by causes since developed,
prominent among which may be noted the legislation of the last General
Assembly of the State of Iowa, and the attempt of your honorable Board
to enforce a schedule of maximum rates which it solemnly admits of record
^^ are unreasonable and entirely too low to enable the common carriers to
which the same is to be applied (including the Chicago, Bock Island & Pa-
cific Bailway Company) to transact their business as common carriers,
without loss"; that it '' knowingly and willfully " made the same '' to low,"
and that ^' said rates will not enable said common carriers (including the
Chicago, Bock Island & Pacific Bailway Company), when the effect thereof
shall have been applied to the earnings of said carrier to pay its fixed



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.BOARD OF RAILROAD COMMISSIONERS. 43

charges and operating expenaes; and the effect of adopting said rates
wonld be to render nnprodactive the capital Invested G)y the Chicago, Bock
Island & Paeiftc Railway Ck>mpany) in its said railroad property, and to
make insolvent many, if not all, of the railroad corporations transacting
business in said State of Iowa."

Yonr honorable Board is now asking the Supreme Court of the State to
recognize its righi to establish such rates and to enforce them, though the
effect be to drive the railway corporations of the State into insolvency.
The admitted character of this schedule, the determination of your honor-
able Board to enforce it, with confessed knowledge as to the effect of such
enforcement, added to other causes, all of which threaten to convert an al-
ready accomplished reduction into a destruction of dividends, has created
an impression in the public mind, as you must know, that the '^ present ac-
tual cash values" of railroads in the State of Iowa are lower than they
were a few years ago and higher than they will be a few years hence. Any
attempt to make a more specific statement would consist in the expression
of opinions which would change as the conditions change, and be as in-
distinct as the ''idea " which your honorable Board has conceived ''of what
was contemplated in the legislative mind."

Respectfully yours,

W. G. PURDY,

Vioe-PreMent.

On the 27th day of February, 1888; Mr. Purdy expressed his views
of the ** present cash value of his road in Iowa'' in his report to the
Secretary of State, in which, under the head of *' Value of property
per mile of road in Iowa," he places the value for taxation purposes
at 16,291 per mile, and sustains this estimate with the following affi-
davit:

STATE OF ILLINOIS, ) «-
Cook County. f^°'

I, W. G. Furdy, of said county, being duly sworn, depose and say that I
am Vice-president of the Chicago, Bock Island & Pacific Railway Company,
and have examined the foregoing schedules of property, earnings and ex-
penses of said company, for the year ending January 1, 1888, made in pur-
suance of the provisions of chapter 5, title 10 of the Code of Iowa, and that
the same is true and correct, to the best of my knowledge and belief.
(Signed,)

W. G. Furdy,
Vice-President of the Chicago, Bock Island <§ Poc^tc Bailtoay.

Sworn and subscribed to before me, a notary public in and for said county
and State, this 27th day of February, a. d. 1888.

Babclby W. Fbbkins,

Notary Public.



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44 ELEVENTH ANNUAL REPOKT OF THE

The report of the company filed with this Board fixes the cost of
road and equipment in Iowa, per mile, at $55,343.99.
Comment is unnecessary.

BAILWAT BNGINBBBS' STBIKB.

On February 27 th the locomotive engineers and firemen on the line
of the Chicago, Burlington A Quincy Railroad, in this and adjoining
States, quit work in obedience to an arrangement previously made by
which, in case certain concessions were not made, the railroad com-
pany was to be left without the means to carry on its business. Twice
the Commissioners were called upon to investigate matters connected
with this strike, and as their attention was specially called to the
subject, they do not think it out of place here to express the views
they have formed upon the subject, which they believe represents the
legal status of the case.

Any body of men may associate themselves together for the pur-
pose of mutual improvement or mutual interest; they may properly
say for whom they will work and prescribe the conditions; having
done this, their employers may accept or reject their terms; this done,
they are each party entirely within the sphere of their just and legiti-
mate action.

If they attempt by intimidation or force to prevent any one else
from accepting the employment they refuse, they are trampling upon
rights as sacred as their own, they become violators of the law, and
it is the duty of government to lend its forces for the protection of
those they seek to oppress.

The employer and the employe each have rights.

It is as criminal for the employe to destroy the property or inter-
fere with its use, as it would be for the employer to prevent those
who had abandoned his service from earning a livelihood elsewhere.

^ THB POLITICAL SITUATION.

It is to be regretted that the differences between the railways and
the Commissioners should be injected into the politics of the State.

All 'matters coming before the Commissioners should be treated
judicially. No rate should be made that cannot be defended on
equitable principles, and no question that comes before the Board
should be met by preconceived notions, intensified by the position
of parties in a political struggle.



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BOARD OF RAILROAD C0MMISSI0NBR8. 45

The worst feature of the litigation pending is that in the recent /
election, the rates fixed by the Oommissioners were made the claim '
for support or rejection of candidates. The Commissioners do not
regard themselves responsible for this condition.

Pbtbb a. Dbt.

Spbnokb Smith.

Fbank T. Campbbll.
Attest:

W. W. AiNSWOBTH,

Secretary.

I agree with the foregoing, and would add further, as a complete
refutation of Mr. Purdy's charge, that the rates made by the Com-
missioners ''are unreasonable and entirely too low to enable the com-
mon carriers, to which the same is applied (including the Chicago,
Book Island &» Pacific Railway) to transact their business without
loss," 'Hhat said rates will not enable said common carriers (includ-
ing the Chicago, Rock Island Pacific Railway), when the effect
thereof shall have been applied to the earnings of said carrier, to pay
its fixed charges and operating expenses," the following extract from
the statement, made under oath, in the hearing of the Davenport
complaints, of Gteo. H. Crosby, Freight Auditor of the Chicago,
Rook Island &» Pacific Railway, who had been engaged for weeks
with a large force of clerks in endeavoring to ascertain the effect of
the Commissioners' rates on the local business of their road in Iowa.
Hr. Crosby said: **0n the purely local business of Iowa our earn-
ings for 1887 were 1960,840.97, and if the Commissioners' rate and
classification had been applied, we would have received $752,700.88,
81.66 per cent of reduction. The reduction on Iowa business proper
would have been in round numbers, 1208,000. Deducting this amount
from the total earnings of the company, and it would still have been
able to pay its regular dividends."

F. T. CiLMPBBLL.



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Online LibraryIowa. Board of Railroad CommissionersAnnual report of the Board of Railroad Commissioners for the year ..., Volume 11 → online text (page 4 of 55)