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old by-laws, and that is to repeal them and begin again at the foundation. I believe the public have learned that there is a great deal in the present law that is worse than useless, and is destructive to the interests of both the public and the railroads. The public want steady rates; they want fair rates between people and places all over the United States; and then they want those fair rates enforced. They do not want on the statute book a set of arbitrary laws, or laws full of arbitrary details, to which it is impossible to conform.
The suggestion I have to make is very simple. It is that the law be simplified down to a declaration in the plainest language that the rates shall be stable, that they shall be fair, and that they shall be just between people and places.
That is a very easy statement to make, but it is much harder to enforce, because there is a quality in railroad rates, just as there is in almost everything else. There is quality in sugar, in silk, in wheat, corn, etc., and so there is quality in railroad rates; and if the same rates for good railroad transportation and financial responsibility that you enforce on poor roads with poor equipment and facilities, you are going to have chaos.
My idea is that railroad companies should have the privilege of making any agreements that they choose between themselves; that they should be held responsible for violating those agreements; and then, they having made those agreements, I would give the courts the absolute power to enforce them. And I would give the Interstate Commerce Commission just the same power of temporary injunction that the courts now have, subject, of course, to approval or disapproval upon review by the courts. This would make it simple, and the railroads could attend to the pooling question to suit themselves within the principle of the law. Leave out all possible details in the law, and let the railroads in their own way, from their own experience, correct the evils which have grown up, but make them absolutely responsible. Let them make any tariff's or any arrangements with each other consistent with the law that they choose, because that is absolutely necessary in order to have steady rates where some railroads have inferior lines as against better ones.
The first pool I ever knew to be made was the most successful and long-enduring one that was ever made in my opinion. The Rock Island and the Northwestern railroads, both entering Omaha, got into a quarrel, and they were carrying freights at all kinds of rates. The same man was elected president of both roads, and, of course, he wanted that quarrel stopped. Just at that time the Burlington Railroad opened its line into Omaha, and thereupon a third element came into the problem. At that time I was in the directorate of both the Northwestern and Rock Island railroads, and we finally agreed that there was no solution of this difficulty except through pooling, and we made a verbal pool.
We knew there was nothing in the law authorizing a pool. When I speak now of railroads being allowed to pool, I want the pool to be legal and to hold. I do not want verbal pools. I want the law to provide for their enforcement.) Mr. Harris was president of the Burlington, and we sent for him. He came and said, “Well, we are just opened; we do not know exactly how the business is, and we have got to have our chance to test how much business we can get. After discussing the matter for half an hour, Mr. Harris said, “Mr. Tracey, what proportion of the business are you going to give us if we go into this? Mr. Tracey said, very emphatically, “You will fight until you get it. We will each take one-third.” And thereupon the pool was made.
Senator MILLARD. I remember that was a strong pool.
Mr. PORTER. Railroads will fight to get their share of the business. Self-protection, the first law of nature, demands this. Let this simple principle be at the foundation: That the railroads can have all freedom to agree with each other if they can, within the principle of the law. If they can not, of course that is the end of it, and they must fight until they can. If they make any particular rate or rates in their tariffs that the Interstate Commerce Commission thinks wrong, let the Commission stop the particular item or items; those rates not objected to to continue in effect. If they went into court, the court would grant a temporary injunction. Give the Interstate Commerce Commission power to grant the same temporary injunction. Until we have a law of that kind we shall have to continue under the present demoralizing conditions, which involve disrespect of law, and, on the part of the railroad companies, disrespect of each other.
I think we have demonstrated thoroughly in the United States to-day that the putting together of properties is to the benefit of all interests. I think some of you gentlemen will bear me out in the assertion that more than twenty-five years ago Jay Gould was called the most unpopular monopolist in the United States. W. H. Vanderbilt and others then controlled the Western Union Telegraph, and Gould was building telegraph lines here and there and cutting into the telegraph business everywhere he could. The Western Union necessarily followed him in the competition by cutting the rates in two, and then cutting them again. Every legislature was trying some legislative cure for that unstable transportation difficulty.
The telegraph lines were all broken up and values chaotic, and then Jay Gould conceived the idea of putting telegraph properties together. He did it, and he did it so quickly that the legislatures could not act in time to stop him. Every newspaper and the whole public sentiment was opposed to it on the ground that they were not going to be able to secure freedom of information, and cost would be increased; that Jay Gould would be able to secure information for personal speculation to individual and public injury. Notwithstanding that opposition on the part of the newspapers and public, however, there has not been for years a serious complaint against the telegraph. His remedy was perfect and the public's fears found groundless.
If you analyze it there are three kinds of transportation-transportation of people, transportation of property, and transportation of thought. The transportation of thought by the Western Union was on the same right of way and on lines parallel with the rails of the railroad lines used for the transportation of people and of property. The delivery is the same; the classification is the same.
If you travel on a limited express you have to pay an extra price. If you send a banker's message you bave to pay an extra price. If you send a package by express or by fast freight you have to pay an extra price. Ordinary passage and freight are the same as ordinary day messages. Cheap passage and coarse freight are the same as night messages.
But whatever do you will be criticised. I have been connected with railroads since 1853, and I never yet made a tariff that some one
could not show me some rate in it that it would be better to change in all interests.
Give the railroads full freedom. If they quarrel among themselves let them fight it out within the principles of the law. If they fight over stable rates they will get over it. They can gain nothing. They must consider quality as an element as well as quantity in transportation. Make the law constitutional and make it short.
When a man takes an employee into his service he gives him power and discretion. He does not supervise everything that the employee does; but if the employee does something the employer does not like, he disapproves of it and takes such measures as he thinks proper to see that it does not occur again.
Senator MILLARD. Your idea is that the present law should be repealed and begin again?
Mr. PORTER. Yes; entirely repeal the old laws and begin again. Make the new law constitutional. Give the railroads the power to make agreements, and give the Commission the authority to disapprove and stop the operation of any particular items in such agreements until the courts say what is right and what is wrong. This you can do under the Constitution. I do not know whether I have made myself understood, but I have tried to do so.
The CHAIRMAN. What you have stated is very much to the point. Is there anything else you want to state?
Mr. PORTER. I came here after the original law had been enacted, and had conversations with Judge Cooley, a very able man, the first chairman of the Interstate Commerce Commission, who came here full of hope and died disappointed because people would not do what he expected, without regard to their moneyed interest.
I think some one should be appointed on that Commission who has had experience in railroad transportation. The responsibility of disapproval of a railroad agreement being upon the Commission, the members of that Commission should have among them one who has had sufficient railroad experience to help the Commission judge whether the agreement is wise or not.
Senator FOSTER. Do you believe that the Elkins bill provides for pooling!
Mr. PORTER. I do not like the word pooling. But I believe that it is within the power of Congress to enact a law providing that rates shall be stable, and that is one of the most important elements. I have seen merchants ruined by over-buying goods in order to get them shipped at low rates, and later in consequence having to sell them at a sacrifice. The rates ought to be stable, and should be just between places and people. Of course there should be no favored shippers. It costs the railroad just as much to carry freights when the rates are cut as it does when they are carried at stable tariff rates. I would give to the railroads just the same freedom I would give to anyoneto make any kind of a legal agreement among themselves, and have that agreement enforceable.
Take the Wisconsin lumber trade when I operated there. The lumbermen used to pile the lumber at their mills. I used to go to them and say, “Let me haul it down to your yards in Kansas and Nebraska when I want to, and I will give you a 10 or 15 per cent lower tariff.” Why did I do that? Because I could do that at a time when grain was going eastward very heavily, and if I took the lumber westward it would save hauling empty cars one way. It was a commercial transaction. I would have made more money, the lumbermen could save money, and the consumer in Kansas and Nebraska would have had to pay no more for his lumber. I grant you that can not be done now. People could not understand it. But I saved thousands of miles of empty-car mileage in that way, and without that right it must cost railroads more to do transportation.
STATEMENT OF HON. MARTIN A. KNAPP.
The CHAIRMAN. Do you want to make a statement this morning, Mr. Knapp?
Mr. KNAPP. I am entirely at the service of the committee.
The CHAIRMAN. The committee wanted to hear some of these other gentlemen on the automatic-coupler bill, but we will hear you now.
Mr. KNAPP. Mr. Chairman and gentlemen, it was my misfortune not to arrive here in time to hear Mr. Porter's entire statement, but I think perhaps I got the drift of it from his closing remarks. So much may be said upon the subject embraced in the pending bills that I hardly know where to begin or how, in a brief statement, to say anything which is likely to aid your consideration.
For ten years and more I have endeavored to make this question a subject of conscientious study, with the result of having some rather definite convictions. My observation and experience lead me to be very conservative. I certainly would not advocate any radical change in the existing laws, except in one respect, to which I shall presently allude, with your permission. Nor do I think it necessary to go further, for the present at least, than to give the regulating statute that degree of efficiency which it was supposed to have at the time of its passage.
The bill introduced by Senator Nelson, as you doubtless know, embraces, so far as it goes, some of the specific recommendations of the Commission. With reference to the subject-matter of that measure I need only say that it meets the approval, I think I am warranted in saying, of the entire Commission. I mean by that, as to its general aims and purposes. It has some minor provisions which I think of doubtful validity and which I should not be prepared to indorse.
The bill introduced by the chairman-a revised edition, if I may so characterize it, of which has been introduced in the House and is known there as the Wanger bill-apparently aims at the same purposes and is designed to accomplish substantially the same results as the Nelson bill by way of amending the law. It differs in form materially, however, because it is in form an independent measure, whereas the Nelson bill in form is an amendment of specific sections of the present act.
But the subjects which are in a way covered or treated by the Nelson bill and the corresponding provisions of the Elkins and the Wanger bills are not essentially dissimilar. While, as I said, there are some things in the Nelson bill which I am not prepared to indorse, there are some things also in the Elkins bill which I think might be moditied to advantage, not in essential respects, but with reference to making its meaning more certain and relieving it from possible ambiguity, because we all concede that it is desirable in legislation to avoid the necessity of resorting to the courts for judicial interpretation, so far
as possible, and to enact such amendments as shall be plain, simple, and readily comprehended.
The two measures differ, however, in one very material respect.
The Elkins bill confers upon carriers, subject to the provisions of the act, rights of association and to contract with each other, which rights existing laws deny. The Nelson bill is entirely silent on that subject.
Speaking for myself, and not undertaking to voice the united opinion of the Coinmission, I am very much in favor of changing the law in that respect. My study of this question, Mr. Chairman, led me quite early to perceive the fundamental inconsistency between the aims and purposes of the “act to regulate commerce" and the prohibition of pooling contained in its fifth section. To my mind the idea that all rates shall be just and reasonable, that there shall be no discrimination between persons or localities-in other words, that the announced tariff shall furnish a standard of compensation binding upon the carriers and the public, and to be invariably observed in all cases-is a rule practically inconsistent with competitive relations. There can be no actual competition in railway rates, as the term “competition” is ordinarily understood, and at the same time an actual observance of published tariffs.
I think it is the misfortune of this law that a provision inconsistent with its general purpose was incorporated in it, and a still greater misfortune, because of its far wider application, was the so-called Sherman antitrust law, which the Supreme Court has said applies in all its provisions to railway operations. It might be, if we had the choice between large numbers of actually separate and independent railroads and the legalized association of those roads, that we should hesitate to confer a right of association which is now denied and which is contrary, in a general way, at least, to the trend of judicial utterance for more than two hundred years. But we have not any such choice, and I think the right of contracting, which the Elkins bill confers, could be defended, if upon no other ground, for the reason that it is desirable to preserve as much railway competition as you can.
So the practical choice, in my judgment, is between a degree of independence (the preservation of a considerable autonomy) and some check upon the tendency to railway combination—the choice between that and practically universal consolidation of our American railwayswhich shall eliminate their competition with each other.
You can not have continued competition that is legitimate, that is honest, of which everybody has the advantage; you can not have that without permitting the roads, by amendment of this law, to put some sanctioned restraint upon competition with each other; and I regard a measure which embodies that principle as not only in harmony with the aims and purposes of a published regulation, but practically essential to the realization of those purposes.
The very obvious fact to my mind is that railway competition, whatever may have been its effects years ago in breaking down railway rates, has not in recent years, broadly speaking, had much influence in reducing published tariffs. That competition has found expression, and does find expression to-day, mainly in secret arrangements and preferential bargains by which the larger shippers profit.
It is very difficult for me to see where the ordinary man of affairsthe farmer, the crossroads country dealer, or the wage-earner of any