Massachusetts. General Court. Committee on Railways and Canals

“ All, however, agreed in the opinion that, under proper management it was destined to become, at no very distant day, perhaps, the great avenue for trade between the East and West. The eagerness with which various railroad corporations seek its control by "ways and means," if honest, should be convincing proof of the great importance of the Tunnel to the public, and if not honest, it should merit the condemnation of every honest man in the community. ”

“ If the benefit of this increase in business can be secured to the people who furnish the traffic, instead of to the corporations who provide the capital, an immense public benefit will follow. The most valuable experiment to be tried at the present day is to ascertain how cheaply railroad transportation can be afforded. Corporations formed to make money for their stockholders, can hardly be expected to fairly try this experiment. The greatest need of this Commonwealth is cheap transportation. To secure this the Hoosac Tunnel has been constructed at a cost of $12,000,000 of public money. ”

“ Business can be done cheaper in Boston than in New York; and yet New York has drawn away from us a large proportion of our legitimate business,—the sale of our manufactured goods; and this loss can be directly attributed to a defect in our railroad system, which can and should be remedied. I say defect, but, more properly, the want of a strong and independent line of railroad through to the West, controlled in the interest of Massachusetts. ”

“ And when a man's reputation is thus at stake, he cannot afford to cheat himself by withholding from the State his best talents and energies. It has another and still greater advantage,—the endorsement of the Commonwealth of Massachusetts, which furnishes power and capital for terminal facilities, equipment and the improvement of the line at a cheaper rate than any consolidated company can procure it; and cheap capital in disinterested hands secures cheap transportation. ”

“ Every senator is aware how powerful and wide-spread is the pressure when public railroad legislation is under consideration. If these influences were confined to the questions of special or general railroad legislation, great as the evil is, it would not be irreparable. But unhappily the evil does not stop here. Hardly a question of special or general legislation is decided by either branch of the legislature without being affected in a greater or less degree by these railroad questions. ”

“ Within the last fifty years this Commonwealth has almost entirely changed its industrial position. Half a century ago, agriculture, the fisheries, and commerce were the leading interests. Now, manufactures engross the attention of our people, and have made all other interests subordinate. They have not excluded other interests, but in a measure supplemented them. Our agriculture has changed and now finds its chief support in providing supplies for the manufacturing towns which have grown up in every part of the Commonwealth. ”

“ We can raise but a small proportion of the food necessary to feed the people of the State; under such circumstances the transportation must weigh heavily upon our industry. We feel it in the increased cost of living, which increases the cost of every article we produce. We feel it in the increased cost of the raw materials of our manufactures, which makes us less able to compete successfully with more favored locations. We feel it finally in the increased cost of marketing our goods. ”

“ She has gained control of the export trade—and the export trade governs the import trade. Ships go where they can find a return cargo, and merchants follow their goods. The possession of the great bulk of the export trade, has given to New York the great bulk of importations, and [35] equally the control of the domestic trade. How can we, in Boston and Massachusetts, get our fair share of the importing and domestic trade of the country? There is but one way—by reducing the transportation tax. In many respects Boston has great advantages for the export trade. ”

“ We are fully convinced that to secure to the people the full advantages to be derived from the construction of this new avenue to the West, and to secure equal lights to all parties desiring to use it, the State must not part with the control of the tunnel. We are equally convinced that to secure efficiency in the lines working through the tunnel, consolidation is necessary, and that the tunnel itself [7] must be worked and managed for all parties using it, by one head. ”

“ Senators will bear me witness that I have never solicited their vote on any personal consideration, and in the decision of this great question, I can only appeal to you as legislators to record your votes in accordance with your convictions of duty to the people of this Commonwealth, and for the protection of her six hundred millions of industrial interests; unbiased by any local or personal interest, keeping in mind that there is no power but that of the State that is safe to trust in the great exigency that now exists. ”

“ If this state of things does not corrupt legislators, it is because legislators are incorruptible. We know its results in other States, and we may well fear it here. Special legislation has totally failed in securing the results intended, and left behind a train of unmitigated evils which must increase with the increased magnitude of the railroad interest, and the growth of railroad corporations. The establishment of such a corporation as is provided for in the majority bill may well be dreaded. The creature will be more powerful than its creator. ”

“ Our true policy is to maintain unimpaired our four routes to the West, and under whatever management they may be, at all events maintain that they shall be independent of each other. If a consolidation is to be made of the Tunnel line we are clearly of the opinion that it should be of the direct line only between Boston and Troy, including the Fitchburg, Vermont and Massachusetts, Troy and Greenfield, and Troy and Boston, and the Massachusetts Central if it desires to form part of such a line. ”

“ It is further in evidence that it has been the custom of the managers of the Erie Railroad from year to year in the past to expend large sums to control elections and to influence legislation. In 1868 more than one million dollars was disbursed from the treasury for 'extra and legal services.' What the Erie has done, other great corporations are doubtless doing from year to year. We have here simply an acknowledgment, of the fact. Combined as they are, the power of the great moneyed corporations of this country are a standing menace to the liberties of the people. ”

“ The Commonwealth, owning the Tunnel,—the most valuable portion of the line, the key to the whole line,—has no voice in its management except a minority in the board of direction; no voice in fixing rates, no influence in its operations. This is all placed in the hands of a private corporation, governed by stockholders, whose stock is at all times in the market, and may be purchased at any time by any parties who deem it for their interest to control the line. ”

“ Our system of railroads is so interwoven that all our railroads are to some extent competing, and the operation of one railroad by a corporation in the interest of the public will to a great extent control the whole railroad system of the State. The direct Tunnel line probably now occupies the most important controlling position of any in the State. It can be made a regulator of the Western business of the State. It can by its connections with the Cheshire and other Vermont and Massachusetts railroads, largely control the northern lines. ”

“ This position has been so well stated by the Railroad Commissioners in their report of 1870, page 39, that I may repeat it here:
"It may safely be asserted that there is no branch of Massachusetts industry which is not carried on against competition more advantageously located. The State has very few natural advantages; but everything with her depends on the intelligence of her people, and the cost of transportation. The West, in producing cereals, has at least a soil of unsurpassed fertility: Pennsylvania in manufacturing iron has the ore and the coal in close proximity to the furnace. ”

“ Our commerce, both internal and external, is largely engaged in bringing to our doors the raw material for our laborers, and in spreading throughout the world the products of our manufacturing industry. ”

“ The railroads of this Commonwealth are prohibited by law from making stock dividends, and yet here stock dividends are allowed to such extent as the parties think proper. One of the greatest impositions ever practised upon the public, from which the people of this Commonwealth now suffer, is the watered stock of the railroads between Albany and Chicago. The amount of stock in these roads issued without any equivalent, upon which our traffic is now taxed, is variously estimated at from forty-four millions to one hundred and five millions. ”

“ To-day Boston is without a through and independent line to the West, and while we are shipping our goods to New York to be sold, to be transported over the great lines leading South and West, our own Western road, so called, in 1872, according to the annual report of the directors, carried through from Boston to Albany 112,071 tons of freight, and from Albany to Boston 556,202 tons—more than four times as much from the West than is carried to the West ”

“ It makes little difference to the individual whether his compensation comes in the form of the payment of a fixed sum or of an annual annuity. It does make some difference to the State, whether it increases a debt to payoff these stockholders at once, or pays such interest as the property acquired may be fairly presumed to earn. The guarantee does not exceed the dividends which the property may be expected to earn, and the advantage which a lease gives over a purchase by avoiding the transfer and changing of capital should not be overlooked. ”

“ The purpose of the minority of the Committee in proposing their plan, was to provide a corporate body removed as far as possible from political influence.
The State Trustees are appointed by the Governor and Council. They are appointed for five years. A single vacancy occurs each year. They hold nearly the same position in regard to the operatives employed ill the operation of the corporation, as directors of corporations, and no one ever heard of directors exerting any great political influence, particularly State directors. ”

“ In proportion as the business increases, in that same proportion will the profits increase, and when the business shall amount to ten millions, which I have no doubt it will in less than ten years, you create a fund over and above the interest on the whole cost that can be used for extinguishing the debt, purchasing the stock of the leased roads, as the value is fixed by the terms of the lease, or for the reduction of rates of fares and freights. ”

“ Rates are now fixed to a remarkable extent by combination, and not by competition. Every business man knows that the freight rates between important points are fixed at meetings of freight agents, who consider not what is a fair price for rendering the service, but what will best pay the corporations which control the business. ”

“ Judging from the present local business now done on the several roads—forming what is anticipated as the Tunnel line, and the testimony of eminent railroad men of the business that is sure to come to this great through route to the West—it is fair to assume that the whole will do a business that will average six millions a year for the first five years; twenty-five per cent. ”

“ Company, on the terms following: twenty-five per cent. of the gross earnings of said leased railroad and property shall be reserved annually by said board of trustees as a specific fund, out of which they shall pay to said company a yearly rental equal to ten per cent. on the present capital stock of said company, free of all taxes upon the stockholders or said company, and also on an additional capital stock of one hundred thousand dollars, which said company is hereby authorized to issue and hold for its own benefit, or such a proportion of said rental, not exceeding said ten per cent. ”

“ The importance of this ONE element will be more fully realized by the Eastern manufacturer when he finds that his Southern and Western rivals save it altogether by having the raw material at hand, and a home market with all the other elements (save skilled labor which can be transported) that make manufacturing industry profitable at a much less cost. ”

“ Moreover the majority bill, placing the Boston and Lowell Railroad and the Fitchburg in the same control, and authorizing a lease of the Cheshire, gives the consolidated company such a substantial control of the whole northern business that its transfer to the Boston and Maine would necessarily be followed by such disastrous competition as to preclude such a connection. It must inevitably result in a consolidation of the Tunnel and the Northern line [45] under one management. In creating a new line we destroy one which already exists. ”

“ The Commonwealth has full power in the case, and it is only necessary to invoke the same power which the majority bill gives the consolidation company to take property from the Fitchburg, to take from the Lowell Railroad Company the property which it now represents as not needed for its business which it has obtained under the representation of a public necessity. ”