United States. Congress. Senate. Committee on Inte.

Regulation of railway rates : Hearings before the Committee on Interstate Commerce, United States Senate, in special session, pursuant to Senate Resolution No. 288, Fifty-eighth Congress, third session, April 17, 1905- online

. (page 79 of 123)
Online LibraryUnited States. Congress. Senate. Committee on InteRegulation of railway rates : Hearings before the Committee on Interstate Commerce, United States Senate, in special session, pursuant to Senate Resolution No. 288, Fifty-eighth Congress, third session, April 17, 1905- → online text (page 79 of 123)
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is about 10 per cent in the Pennsylvania, and in the Illinois Central
and St. Paul nearly as much.

Thus, since 1898, the railways have been obliged to pay from 15 per-
cent to 50 per cent more for labor, fuel, and all materials which they
use, while their rates for passengers, as well as for freight, have
advanced but fractionally, and are much lower in this country than
in England, France, or Germany, although labor and most materials
are much higher here.

In this connection it is interesting to read what Mr. Priestly, the
expert English authority, has to say :

The present prosperity of tbe United States of America is. in no small extent,
clue to the low rates charged for transportation. This prosperity has reflected
itself in an increase of wages all round, which, in its turn, has increased con-
sumption and consequently production. These high wages are not due to the
necessaries of life costing the laboring classes in America more than they cost
the same class in England. It is only the style of living which is better. At the
back of it all there is no doubt the protective tariff ; but that would have a\'ailed
little without the cheapening of the cost of transportation. * » *

In India pooling and the territorial division of traffic are ijermitted and
railways are not only allowed but are encouraged to protect themselves against
competition. American railways enjoy no such protection (any act which tends
to restrict competition is illegal), but have been left to work out their own sal-
vation as best they could. They have consequently been obliged to devote their
efforts to reducing the cost of transportation, and the great bulk of the traffic
can now be carried at rates which a few years ago were held to be impracticable
and spelled bankruptcy. * * *

Previous to the lowering of the rates by competition consumption of many
commodities was confined to a limited class of people, and to that class in a
limited quantity. The lowering of rates not only brought these commodities
within the reach of a wider class of consumers, but enabled the previous con-
sumei-s to increase their consumption.

To restore the railways to solvency it was not possible to put up rates, even
if this had been desirable with the experience before them, and the railway
officials w"ere forced to devise methods which would permit their carrying the
traffic at these low rates and at the same time earn a dividend for the stock-
holders. The alert American mind was not long in devising those methods, and
to-day railway rates for goods traffic, judged as a whole, are lower in America
than in any other country in the world. * * *

They (American railway men) have managed to do what no other country in
the world has done, and that is carry their goods traffic profitably at extraor-
dinarily low rates, uotwithstandihg the fact that they pay more for their labor
than any other country.

The whole history of the railway industry is the story of a won-
derful evolution. In its infancy all communities were so anxious to
profit by this new method of transportation that franchises, lands,
and subsidies were lavished upon any group of individuals who would
build a road, while when the road was built any rates M'hich it
charged were cheerfully and Avillingly paid. Human nature would
be more than human if it waved aside the franchises, privileges, and
money throAvn at it ; and while the better and more far-sighted men



TWENTY-SECOND DAY. 11

exercised some moderation and rendered the best equivalent po-rsible
in services for the advantages received, the more unscrupulous secured
every advantage, every privilege, and all the money possible, and
I'endered as little in return and at as exorbitant a price as possible.
These were the golden years for promoters, construction companies,
and builders of railways and expensive ones for the public, who, how-
ever, comp)aring the new Avith the old methqds of transportation,
willingh- paid the heaw charges laid upon them, and "nevertheless
made money and prospered. There were two great periods of this
feverish and reckless railway construction — from 1845 to 1857, and
Ixom 1866 to 1889, with varying intermissions, until the inevitable
reaction began. Railways had been built far in excess of the needs
of the country, competitive lines were established where no necessity
existed, rates were made as hea^^j' as the traffic would bear, in order
to bolster up useless and unprofitable lines and pay large dividends to
the stockholders of better ones, and the old gratitude and friendliness
of the shippers and the general public gradually changed into a deep-
seated hostility.

Partly to blame for this condition of affairs was the hugging of
the fetish of competition, unrestrained and a outrance. This false
economic theory, ingrained in the minds of most men, frequent un-
scrupulousness in taking advantage of the craze of all communities
for railroads and more railroads, and the credulity of the public
in believing that any and all roads, in any section of the country,
were gold mines in another form, all led to the inevitable periods
of disaster, receiverships, and reorganizations, which occurred with
every period of depression, until in the decade 1890-1899, even
many of the oldest and best roads were subjected to these clrastic
processes.

In 1895, 1896, and 1897 more than 70 per cent of the capital stock
of the railroads in the United States paid no dividends, and more
than 16 per cent of the funded debt paid no interest. At the end of
this period inost of the inflation which had existed in many roads
had been adequately punctured, and the bonds and stocks repre-
sented verj' generally money invested in the railroads.

Chastened as they were by this long and trying experience, and
having learned a few economic truths, the managers were prepared
to perform their duties to the public in a different spirit and manner
from that which had hitherto generally prevailed; but the hostility
which had become so general could not be immediatelj' transformed
into good will.

Hostile legislation had been everywhere enacted, not only hostile,
but irrational ; taxes were increased and new ones levied.

The attitude of animosity which the Interstate Commerce Com-
mission has assumed toward railroads is a reflection of that which
has prevailed for many years — almost a generation — among the
public. It should not, of course, exist in a quasi-judicial body, but
as the composition of the Interstate Commerce Commission is affected
by the usual political reasons, it is not unnatural that it should,
consciously or unconsciously, represent the animus of its creators.
This sentiment of hostility toward railroads, fortunately decreasing,
would probably disappear with a fuller knowledge by the public of
the railway industry.



12 TWENTY-SECOND DAY.

A^Tiatever the failings of the great railway managers are, they
can not be accused of stupidity, and they have learned the lessons
which, in the earlier period of railways, managers might be excused
for not apprehending, that harmony aids and friction retards prog-
ress ; that unrestrained competition is as destructive as other warfare ;
that railways can only jDrosper with the prosperity of the country
through which thej'^ pass and of the county at large; that large
traffic at low rates is preferable to less traffic at high rates ; and that
I'ailroads are quasi-public corporations and owe a duty to the public.

That the Intei'state Commerce Commission, instrvicted by the fre-
quent overrulings of its decisions by the Supreme Court, has en-
deavored to examine more fairly into the propriety of increases in
railway rates is evident from the report and opinion of the Commis-
sion in re advance of freight rates, in the case decided on April 2,
1903; as is apparent, also, their utter inability to cope with the
subject. In this very important case the following roads were repre-
sented : Michigan Central, Lake Shore, Pennsylvania, Baltimore and
Ohio, "Wabash, Erie, New York Central, Southern, and others.

With regard to the contention that, as the prices of all commodities
and of labor have advanced, the railroads are justified in advancing
rates, the Commission had this to say :

The second reason is that they should be allowed to increase their revenues,
owing to increased expense of operation. The \Yhole claim stated upon the
hearing, in varying forms, comes briefly to this: The present prices of com-
modities are high, therefore they can pay a higher freight charge. Times
are good, and railroads should share in the general prosperity; but high prices
of materials and labor add to the expense of operation, and gross revenues
must therefore be increased.

Plainly the character of the question thus presented is entirely different from
that of questions previously considered. It is no longer a question of what
the traffic will bear, but rather of what the public should bear. Conditions
are such that this rate can be advanced as between the people who pay it and
the stockholders who receive it. Is the advance right? Every question as to
the reasonableness of a rate may present itself in two aspects. First, is the
rate reasonable estimated b.y the cost and value of the service, and as compared
with other commodities? Second, is it reasonable in the absolute, regarded
more nearly as a tax laid upon the people who ultimately paj that rate? The
considerations which determine the first of these aspects are of but little weight
in determining the second, which we have now to consider.

Every such inquiry involves the idea of some limit beyond which the capital
invested in railways ought not to be allowed to tax other species of property.
What is that limit, and how can it be fixed?

It is a matter of common notoriety tliat the Post-Office Department,
which costs the public several millions a year in addition to the " tax "
represented by stamps, could be riui at a profit by a private corpora-
tion and the third and fourth class matter carried free, and so with
all other departments of government, whether Federal, State or
municipal.

The question of governmental oAvnership is not, of course, enter-
tained by serious men ; although it is a favorite panacea of theorists,
socialists, and cranks, whose heroic efforts and propaganda are usually
coincident with some new and fresh scandal in a Government Depart-
ment.

Adequate but scientific supervision of quasi-public corporations,
however, would be welcomed by all the better class of railroads, whose
only complaint is that the Interstate Commerce Commission does not



TWENTY-SECOND DAY.



13



represent this type. A purely political body, occupying a nondescript
position, it has neither the power nor the knowledge to do effective
work. Its crude conclusions are usually reversed by the Supreme
Court, but that is a long way to go for a decision on rates, and the
complexity and technicality of the issues involved put an unnecessary
burden upon that body, and one which it should not he called upon to
perform.

In the Michigan Central Case, for instance, which involved a most
important principle, i. e., whether a railroad was not justified in
iippropriating a portion of its earnings to the betterment of its prop-
erty, which (the rates being admittedly low) would seem to affect
only the stockholders, the Interstate Commerce Commission reasoned
as follows:

But it may be urged that after paying its fixed charges, taxes, aud dividend
out of its net income for tbe year 1'.i02 it had left but a comparatively small
amount. That year was oue of prosperity, aud it cm hardly be expected that
conditions will continue without interruption as favorable. Ought not a rail-
way to be allowed to accumulate, in some form, a surplus during fat years which
may tide over subsequent lean years? To this we \A-ould unhesitatingly answer
in tbe affirmative. In times like the present a railroad company should be
allowed to earn something more than a merely fair return upon the investment ;
but we also think that it clearly appears that the Jlichigan Central is doing this.

Within recent years this railroad, in common with many others in the United
State;, has been extensively improved. Grades have been eliminated, curves
reduced, wood bridges replaced with those of iron and stone, station buildings
rebuilt, equipment of all kinds greatly added to. All this has been rendered
necessary, partly liy increase in traffic and partly l)y the desire to handle this
traffic in the cheapest possible manner ; and it adds verj- materially to the value
and the earning capacity of the property. Now. in so far as those outlays are
reasonably necessary to keep the property up to its former standard, or perhaps
to even a higher standard of operation, they are properly a part of the operating
expenses of the road, but when they add to the earning capacity of the property,
and therefore to its value, they are in the nature of a permanent improvement.
-Assuming that the stockholder is only entitled to exact from the public a certain
amount for the performance of the service, he clearly has no right to both receive
that amount in dividends and add to the ijroductive value of his property. The
policy of the Jlichigan Central has been to make these improvements, not by
adding to the debt or the capital stock of tbe company, but out of its gross
earnings as a part of the operating expenses.

This is hardly encouraging either for the large capitalist or the
small investor. "What a long distance we haAe travelecl from the day
when the State of Xew Jersey gave the Camden and Amboy Railroad
the exclusive franchise of roads throughout the State forever, or from
the days of huge land grants and millions of sttbsidies ! Thousands
of millions of capital having been lured into investments in railroads
by the attitude of the States and the public, the owners are now told
that they are entitled to earn something on their cajjital. The time
has been, and is liable to come again, when railroads had much better
take up their tracks, abandon their franchises, and realize on their
assets what they can, instead of carrjdng on a ceaseless fight for
existence and for an adequate return for the capital and labor-
employed.

W. MOKTON GkINNELL.



14



TWEN"TY-SECO]SrD DAY.



OKIENTAL EXPORTS AND IMPORTS.

The following statistics were furnished by Mr. J. J. Hill to accom-
panjr his statement :

JAPAN.



Value of principal imports into Japan.
[Unit of yen. Values: 1 yen = 80.50 gold; 1 kin = 1.32 pounds; 1 picul = 132 pounds.]



Article.


United
States.


B?l"afn. Germany.


France.


Belgium.


Austria-
Hungary.




10,910,485


1










10,760,639 1 632,950
5,187,019 1 5,163,244












2,505,409


980,020




PAt.vnlAiTi-n


6,825.457




Sugar




2,773,254






2, 497, 951
















10, 103, 676
1,721,983

667,279
1,078,689

1,813,496












Wheat












Electric machin-
ery


234,985
1,113,134

9,635,729


195,588
















Iron and iron man-
ufactures J....


4,845,479




3,192,931











Article.


Russian

Asia.


British
India.


French
India.


Dutch
India.


China.


Philippine
Islands.


Total
value, in-
cluding all

other
countries.






38,470,934






15,609,162




68,206,724


Cotton fabrics .










11,853,121


Woolen goods














16,316,073


Petroleum


4,630,239












11,455,696


Sugar






9,557,022


1,040,356


2,886,299


20,966,031
51,960,272
10,324,420






27,427,674 14,207,367


Flour












Wheat








2,227,587




4.767,838


Electric machin-










1,113,641
















2,267,471
19, 580, 454


Iron and iron
manufactures






















1





Value of principal exports from Japan.



Article.



United States.



Great Britain. Germany.



Prance.



-Camphor

Silk and silk tissue-

Tea -

Matting

Cotton yarns .

Coal

Seaweeds

Copper _

Matches.



1,149,924
53,011,250
12,451,942

4,290,457



491,046
1,701,482
28,874 ■
54,949 1



672,501

658,676

356

8,562



360,275

31,781,609

508

1,321



684,081



16,665



1,837,862



815,536



245,2%



Article.



Camphor

Silk and silk tissue .

Tea

Matting

Cotton yarns _

Coal....

Seaweeds

Copper

Matches



British
India.



China.



595,736

3,976,580

1,111

8,075 !

731

311,376



45.),. 544
846,672 i



56.281

515,183

27,642

16,49!)

28, .338, 366

8,040,478

997,818

4,003,915

3,294,960



Hongkong.



20,490

697,198

5,348

17,508
891,426
886,761



i, 6:i0, 992
1,101,352



Korea.



Total value,
including all
other coun-
tries.



78,663
16,fl24
::i73
1,030,663
16:>, 631
11,:^4.5
134,925
244,604



3,537,844
109,931.2:39
13,935, ;;.52

4,599,566
31,418,613
19,260,501

1,043,598
14,987,009

8,473,071



NOTK.— Throughout this set of statistics the aim has been, as a rule, to list commodities having
an export value of S250,a)0 gold or over.



TWEXTY-SECOND DAY.



15



EXPORTS.

Quantity aiicl value of the important coinmodities exported from Japan to United
States. Canada, Great Britain. Gcnnani/. France. China. Hongkon;/. am!
the Philippine Islands, and grand total ccport value of commodities of ivhich
United States received part, for the tirelre moyiihs ending December. lOOJf.

UNITED STATES.



Article.



Tea - kins.

Rice - piculs.

Camphor _ kins.

Sulptiur - - do...

Silk and silk tissues do...

Silk tissues yards.

Silk handkerchiefs dozen.

Ccal tons.

Matting: rolls.

Porcelain and earthenware

Straw plaits.- ...-. bundles.

Wood chip braids _. do...



Quantity.



231.471S
9B,616
397, li3
49],. 391
064,639
700,680
.312,065
114.856
6051,5.57



2,;i95



019

.«79



Value.



Yen.

12,451,

586,

1,149,

56T,

.52, 489,

.523,

979.

IM,

4,290.

1. 375,

,%7.

1593.



Total value

exports to

.all countries.



942

648

924

256

169 :

087 I

9.Hfi

OKI

4.57 '
061
914
7«l



Yen.

13,935,
4, 9.59,
3. .5:37,
947,
10*.9:j0.
1,000,
2,93<,

19.260.
4.599,
3. 169,
3.7^7,
1.246,



252

879
.«44
224
!V,S
:^6
420
.501
566
008
062
.590



CANADA AND OTHER BRITISH AJIERICA.



Article.




Quantity.


Value.






4, 1:^11. 149
35.446
20,149
1^25. .3S1
+4. 921
.><.4':i7
13,281


Yen.
1,2X9,626


Rice


piculs


250, 564


Silk and silk tissues


- kins..


274,569
266,322


Silk handkerchiefs

Coal...


- dozen..


162,201
59,409






84,700


Porcelain and earthenware


84,439







GREAT BRITAIN.



Rice piculs.

Camplior _ kins .

Copper, refined do . . .

Silk and silk tissues _ do . . .

Silk handkerchiefs dozens .

Carpets (hemp, cotton, or wool) square yards.

Straw plaits, - - - bundles.

Wood chip braids do - .



92,990


54S.250


5,445,982


540,498


166,827


592,759


3,933,416


697,151



545.266
491, 046

1,837,S62

6,7ni,4h2

6h7. 4n3

305, 713

1,360.7.59

428,718



GERMANY.



Rice... - - - - piculs..

Camphor ...kins..

Copper, refined _. do

Silk and silk tissues. do

Straw plaits .bundles..



68,208


347,686


761,289


672,-501


2..5S16T1


815.536


48,379


658.676


935,795


379. 2S)9



FRANCE.



Rice — - piculs.

Camphor kins.

Copper, refined _ do...

Silk and silk tissues. .-. do...

Silk tissues . ..- yards.

Silk handkerchief s dozens.

Straw plaits _ bundles.



2:3.5.''4


125,101


:tf0.498


:360,275


803,748


24.5.296


5,628.070


31,748,496


99,716


:«,113


69.627


214,400


9,'i7, 707


;»7,4.38



16



TWENTY-SECOND BAY.



Quanlittj (Did value of the important commodities exported, etc. — Continuecl.

CHINA.



Article.


Quantity.


Value.


Seaweeds


kins


48,457,8.57
197,678
449,452
214, 684

11,10.5,088

83,782,212
446,012

22,363,036

592,068

1,521,9:«

12,179,208
1,523,179


Yen.
997,813


Beer . .


dozen iDOttles


506,982


Mushrooms




309,392




do .


282,729


Copper, refined . ..


do


4,008,915


Cotton yarns


do


28,338,386






994,796


Do




1,988,789


Towels


dozens


560,058


Coal.


tons


8,040,473


Matches




3,294,960






804, 99&







HONGKONG.



Mushrooms-

Copper, refined...

Cotton yarns

Cotton tissues .-

Do -

Coal

Matches -..

Straw plaits

Porcelain and earthenware .



kins -

do....

do....

...pieces. -

yards..

tons..

gross..

. bundles. -



964,081
18, 105, 328
5,322,315
1,141,866
2, 026, .561
1,051,339
9,7H1,910
1,537,559



554,

5,630,

1,891,

923,

189,

5,886,

3,101,

600,

316,



672
992
426
726
662
761
852
576



PHILIPPINE ISLANDS.



Mineral water


kins




87,. 550




do....


2,7:W..516

8.457.6(18

2.57.. 53]

37(1,0(1(1

97.201


97,283




do....


196,057


Wax, vegetable


do


73, 719


Cotton yarns


do


1.56,953


Coal


tniiM


592,14a





IMPORTS.



tnaiititi/ and value of the important imports into Japan from United i^tates,
Canada. Great Britain, Germanij. France, China. Honr/l-ovg, and the Philip-
pine L'<land.'< for the tnrlrr months ending Deeeniher. Ifio.i.

UNITED STATES.



Article.



Quantity.



Value.



Value
I imports
from all
i countries.



Electric machinery

Fire engines and pumps

Locomotive engines

Sewing machines

Steam boiler and engines

Condensed milk... dozens.

Flour : kins.

Wheat do...

Leather do...

Eails do...

Rail fittings do...

Pipes and tubes do...

Nails do - -

Materials for bridges and buildings do . . .

Lead do...

Kerosene oil gallons.

Lubricating oil kins.

Paraffin wax do...

Cardboard _ do...

Cotton, raw, ginned piculs.

Tobacco leaf .-.;.._ kins.

Coal - - tons.

Carriages, bicycles, tricycles, and parts



150,217

204,913,427

43,095,035

1,016,359

3,;633

228,282

9,491,095

15,693,318

1,630,336

3,903,331

32,511,201

10,488,232

9,560,318

7,283,751

390,817

4,374,763

17,548



Yvn.

667,279

103,303

1,078,689

142,602

373.346

416,232

10,103,676

1,721,088

758,217

450

15, 489

763,049

773,093

174, 4:M

310,272

6,825,457

476,836

942,298

869,948

10,910,485

1,072,922

296, 815

863,075



Yen.

1,113,641

417,098

2,267,471

248,630

989,873

979,990

10,324,420

4, 767, ass

1,532,266.

2,751,971

515,911

1,482:249

1,509,993

589,325

909,091

11,455,696

488,280

947,531

690. 756

68,206,724

1,077,179

1,972,923

972,948



TWENTY-SECOKD DAY.



17



Quantity and value of the important imports, etc. — Continued.
CANADA AND OTHER BRITISH AMERICA.



Article.


Quantity.


Value.


Flour




kins


3,619,839
1,468,08T


Yen.
190, 799


Salted salmon and trout

Timber and rough lumber




do.—


94,996
121,244









GREAT BRITAIN.



Implements of farmers and mechanics

Electric machinery

Fire engines and pumps .__

Locomotive en^nes

Spinning machmery

Steam boilers and engines

Condensed milk dozens.

Soda _ ___kins-

Iron and mill steel:

Pig and ingot .__ do. -

Barandrod _ do. -

Rails do_ -

Rail fittings _ do...

Plate and sheet do...

Galvanized sheet ___ .do...

Pipes and tubes do...

Tinned plate or sheet do...

Material of bridges and buildings- do...

Paper _ do...

Cotton yarns and threads _ kins.

Other cotton manufactures square yards-
Wool and yarn . - kins.

Woolen manufactures - square yards-

Coal - - - - tons-



185,873
14,451,531

58,655,871
8,974,865

31,455,617
3,689,941

35,440,147

26,293,491
8,088,931

10,677,713
4,470,005
4,063,625
1,323,807

77,898,982

852,672

7,311,033

102,707



149,924
234,985
308,516
1,113,134
511,703
995,275
368,452
779,000

1,175,889

647,083

1,123,785

215,225

1,598,169

2,391,182

629,747

964,783

355,551

582,409

1,058,997

9,701,642

813,278

4,373,741

1,675,494



GERMANY.



Electric machinery

Alcohol liters.

Aniline dyes - - - - kins-

Indigo - - do...

Iron and mild steel:

Bar and rod .' - - do...

Rails do - .

Rail fittings - - do...

Plate and sheet - - do...

Nails,- do...

Telegraph wire - do...

Zinc do-.-

Paper- - do...

Sugar - piculs-

Cotton yarns and threads kins.

Cotton manufactures - square yards-

Woolaud yarns kins-

Woolen manufactures square yards.

Pulp : kins.



2,472,348

1,872,065

463,025

33,059,270
39,381,215
3,938,964
8,164,514
13, .531, 889
8,837,869
4,028,853
7,308,413
451,898



Online LibraryUnited States. Congress. Senate. Committee on InteRegulation of railway rates : Hearings before the Committee on Interstate Commerce, United States Senate, in special session, pursuant to Senate Resolution No. 288, Fifty-eighth Congress, third session, April 17, 1905- → online text (page 79 of 123)