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The advocate. [volume] (Topeka, Kan.) 1894-1897, June 27, 1894, Image 2

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THE ADVOCATE
NATIONAL 0WNES1IIP OF RAILS0AD8.
Facts and Figures mkh Show Tills to Be
the Only True Bemedy.
BY THOMAS V. CATOU.
The time is ripe! The hour has
come. The necessity is urgent for
government ownership of railroads
and telegraphs. Delay endangers the
existence of free institutions. Any at
tempt to supervise and control them
effectually has proved and is impossible.
Control means an attempt by acts of con
gress and of legislatures to create com
missions empowered to fix schedules of
rates and tolls. These methods have
been conclusively demonstrated to be
impossible to execute. In our form of
government, the final refuge of despot
ism and monopoly is in the courts. The
courts have emphatically decided that
neither congress nor the states, by leg
islation or commission, can provide for
or put into operation any schedules of
rates or tolls, to bind a railway, which
cannot be restrained by injunction, and
declared void, either by a state or
United States court, if upon hearing,
such court deems it unreasonable. The
courts say that if the schedules fixed by
the power of law are not, in the opin
ion of the court, reasonable, then it
amounts to a taking of private prop
erty, for public use, without just com
pensation, and is forbidden by the con
stitution of the United States. This
has been decided by the supreme court
of the United States in the cases of
Stone vs. The Farmers' Company, 116
U. S. Hep. p. 307, and in Dow
vs. Beidlman, 125 U. S. Rep. p.
C80; also in United States cir
cuit court, in 35 Ted. Hep. 880-880;
also by decisions of the courts of last
resort of many states, which are quoted
in the late case of Water Works vs.
San Francisco, 82 Cal. Kep., p. 280,
where it was held that even where the
constitution empowered a board to fix
rates absolutely, it could be restrained
by the courts if it thought other and
higher rates proper.
The final absolute decision of our
courts, therefore, is that the power to
fix rates is in the courts, and cannot be
placed elsewhere. What, then, is the
rule adopted by the courts ? It is this:
That the rates must pay first, the in
terest on the railway debts; second, all
its operating expenses, and third, a
fair dividend on its capital stock.
What these sums amount to must be
determined by evidence, and theevi
dence i3, first, the bonds and interest
bearing debt; second, the capital stock
as fixed or increased; third, the ex
penses of operation shown by the books
of the company, because no one Is in a
position to disprove these books, even
if falsely kept, as to operating ac
counts. This amounts, therefore, to allow
ing the company to fix its own
rates, despite and in defiance
of any attempt to regulate. So
if the Farmers' Alliance were in pos
session of every branch of government
in states and nation, it would be help
less to regulate or control railways.
Every law or schedule would be imme
diately stayed by the injunction of a
court.
This was done when Judge Brewer,
by injunction, forbade the state of
. Iowa to put its schedule of rates into
operation, at the suit of the Chicago &
Northwestern Railway company. It
was done when the supreme court of
Calif ornia prohibited the city of San
Francisco from putting its schedule of
water rates into operation; and that
such is to be the course, wherever con
trol i3 ettcmpted, i3 squarely asserted
by Mr. C. P. Huntington in an inter
view published in the Examiner at
San Francisco on April 4, 1802. When
he was asked what would be done if
any political action should be taken by
the "Merchants' Traffic association" to
compel a reduction of rates, his an
swer was as follows:
"I will say that the association may,
or may not draw the company into pol
itics. I think not; but if the legisla
ture of the state passes acts tending to
destroy the value of our property, we
shall have to call for protection upon
the judicial arm of the government."
This proves that henceforth the
above doctrine established by the court
is to be the shield of monopolies. They
can increase stock and bonds at pleas
ure. So that no income would be so
large but they could show that it was
required to pay interest, operating ex
penses and dividends. They have the
supreme court of the United States
committed to this doctrine. These
judges hold office for life or good be
havior. Are we to permit puplic com
mon carriers to lay the producer under
tribute for all time, by fixing their own
rates, by taking "all the traffic will
bear?"
The railway has become the great
highway of nations. The producer
must have railroads, more and more of
them, of the greatest efficiency, and
operated at the least proper cost. It is
a function of government to own and
control all public highways. Cor
porations which own railroads and
seek the largest possible divi
dends cannot be trustees for the
people. They simply seek their own
profit. How then can the public con
trol them without owning them? It
is idle to say you will favor ownership
by the government if control fails, be
cause every effort to control them has,
and of necessity must fail, until the
people own and operate them. How
can you expect to join such inconsist
ent things as private ownership and
public control? The right to control,
to fix rates, is the very essence of prop
erty and ownership. He who cannot
control, does not in fact own property.
If we seek by boards, commissions,
legislatures, congresses or courts, to
frame methods and sources to control
railroads, the inevitable law of self
interest will immediately induce the
owner to own all these boards of con
trol, by which, as we have seen, all
such commissions, legislatures, con
gresses and courts are elected, packed,
ownned by that monopoly. So that
railroads may say, as did Louis XIV
in the supremacy of his despotism, "I
am the state." They are the state.
They are the government, because
those who own must control or perish.
Here, then, is an "irrepressible con
fiict," continuous in its nature. Lin,
coin said we could not live half slave
and half free. So we cannot live and
control government, unless we remove
the incentive of railroads to control
our government, and there is but one
way to do this we must own the rail
roads or be owned by them. There is
no middle ground. Experience has al
ready proven what an inevitable law
of industry and private enterprise dic
tates. Other governments own and operate
railroads most beneficially to the peo
ple. Why should we not do so? Fur
ther reference in detail to this will be
made in another place in this discus
sion. But it is no very great matter
financially for the people to obtain
these roads or duplicate them by con
struction. We felt no wonderful strain
in paying over 6 billion dollars in a war
to abolish slavery. There every dollar
was outgo. No basis was laid for fu
ture income. But we can obtain all
the railroads for less than that sum,
and in addition save the people over
billion of dollars per year at once, in
tolls, and more and more in the future,
and at the same time substantially end
a source of corruption which will sub
vert the republic if permitted to continue.
Let us examine figures:
The railways had on January 1, 1891,
in the United States, 163,420 miles of
road, capitalized as follows:
Capital Btock $ 4.640,239,578
Funded debt. 5405,902,025
Unfunded debt. 876,494,297
Current debt 271,145.220
Total capitalization S10.293.7S1.120
The total revenues for the year
were $ 1499,722,053
Expenditures reported. 1,147,781,393
Which were made up as follows :
Interest $ 226,799,682
Rents and Interest paid. ' 59429,924
Miscellaneous 35474,333
(Pretended) operating expenses.. . 714,373,838
Dividends 82.30&516
Total $ 1447,781393
Excess of total revenue over pay
ments was $51,990,660, which if added
to the $82,303,616 above mentioned,
and also paid in dividends, would have
made total yearly dividend on this
watered capital stock apparently less
than 3 per cent. So if all the railroads
were "under one management they
could by their books compel the courts
to prevent any reduction of present
charges. When we remember that they
can increase bonds and stock almost
at pleasure, it is easily seen that they
can defy any attempt at honest regu
lation.
The total honest value of these rail
ways is very little, if any, over 4 billion
dollars. But as these bonds and this
stock are held by what the law calls
third parties, the court adopts the rule
that it cannot disturb vested rights,
therefore it will give interest and di
vidends on watered stock.
The tendency to consolidation is so
great that in a short time all our rail
ways will be in very few and finally in
one company. Imagine the political
despotism of such a syndicate! At
present, although there are on paper
over 1,700 companies, yet forty-one
companies operate 77,872 miles, and
seventy-four companies receive 80 per
cent, of the amount paid for railway
service. C. P. Huntington has an
nounced his desire to see all ralroads in
the United States under one syndicate
thus they could more easily escape
every attempt at control; and to evade
the last vestige of any law which can
affect them they will soon be under
one management.
A portion of what can be saved an
nually by government ownership is
stated in the Arena by Mr. Davis, a
practical railroad man, as follows:
Savings from consolidations of de
pots and staffs. $ 20,000,000
Savings from exclusive use of short
est routes. 25,000,000
Savings In attorney's salaries and
legal expenses 12,000,000
Savings from abrogration of the pass
evil 30,000,000
Savings from abrogation of commis
sion system 20,000,000
Savings from dispensing with high
priced officers and staffs 4,000,000
Savings by disbanding traffic asso
ciations. 4,000,000
Savings by dispensing with presi
dents, etc 25,000,000
Savings by abolishing (all but local)
officers and solicitors, etc 15,000,000
Savings of five-sevenths of advertis
ing accounts. 5,000,000
Total $160000,000
In addition to this there would be
saved:
The annual political corruption
fund ;....$ 30,000,000
Secret rebates to directors, etc., who
compose various trusts and combi
nations. 50.000000
All dividends and surplus 134,000,000
Total $214,000,000
Add Mr. Davis figures 16O00O000
Total $374,000000
Now, if the government paid 5 bil
lion dollars to obtain these roads, at
least 1 billion dollars would be paid in
currency issued for that purpose. Per
sonally I am opposed to any bonds; but
if the remaining 4 billion dollars drew
interest at 2 per cent., the interest
charge would be only 80 million dol
lars, against 226 million dollars paid
now by the roads, which would save
146 million dollars yearly in interest,
which, added to the above, would
make the total savings by the people
520 millions of dollars per year at once.
But it is said by objectors that the
employment of so many persons would
perpetuate a party in power. This idea
is carefully fostered and put forward
by monopolists, who, at every age of
the world, are ready to oppose great
reforms by special pleading, and by ap
peals to false fears natural to the con
servatism of mankind. Forty years
ago, millions of our people, the vast
majority of the nation, admitted the
intolerable evils of African slavery,
and were willing to abolish it, but they
were held back because they were made
to believe it could not be done without
anarchy and massacre. They feared
that the emancipated slaves would
rise en masse, attempt to exterminate
their former masters, and deluge the
South with bloodshed. This argument
was put forth by able men, as well as
by party expediency, and the vast ma
jority honestly believed it, just as
many now believe that one-twentieth of
the people, if employed by the govern
ment, would perpetuate a party in
power, against the will of the nine-teen-twentieths
who were not in public
service. Well, the war came; the
slaves were emancipated. None of the
fears of alarmists were realized. No
slave attempted any insurrection.
Then those men who had so feared
said to themselves: Why, I might
have seen there was no such danger.
One might see that 4 millions of crea
tures, desirous of freedom, would not
rise up and become murderers because
their condition was improved, and I
might have seen that 4 millions of
negroes could not hope to exterminate
six times as many whites, and, there
fore, they would make no attempt of
the kind. None of the evils which
monopolies point out ever happen.
Gold men of Wall street have cried out
for years that even limited silver coin-
age would ruin the country, but it has
not done so. But there are many other
complete answers to this objection
about perpetuating party power. The
ownership of railroads by the people
would, instead of perpetuating the
power of any party, be a cause for the
defeat of any unfaithful party, much
sooner than now. The reason why
government officials sppear to have un
due activity in politics is because they
are the only persons outside of monop
olies, who always feel their interests
directly connected with the administra
tion. This is so because the mass of
the people find that the government
does not perform any function in any
branch of industry. But the moment
the whole telegraphic and transporta
tion business passes to public direction
and control, that moment every pro
ducer and consumer will come to see
and feel himself closely connected with
and interested in the administration,
and any administration, in the least
degree false to that great trust would
be deposed from power, by overwhelm
ing majorities.
Again, the number of persons em
ployed in connection with railways,
who are voters, is about 000,000, or less
than one out of twenty of the 13 mil-

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