Frank Parsons

“ What reason is there to believe that the railroads will accept a new statute in good faith and obey it any more than any former law? On the contrary, the probability is that if the Hepburn Bill becomes a law the main effect will be to compel railway managers and counsel to sit up nights for a time planning methods to evade and overcome the new provisions. Even if Congress gave the full power at first demanded by the President, to fix the precise rate to be charged, the general effect would probably be that railways would exert themselves to control the Commission. ”

“ Is it not possible to create a board that shall have the thorough knowledge of first-class railway experts, together with the high motives and unmixed interests of an honorable public commission or court, and so remove the chief causes that have worked injustice in the past?
It is possible that there may be another fair solution,—that the rates may be made neither by the railroads themselves nor by a body representing the public alone. ”

“ Commissioner Cockrell replied: “There is where I think you are entirely wrong. No government could live under such a condition. The rich would soon absorb everything and the small man would be wiped out of existence. The whole business we are on now started from a railroad giving a man a rebate. The minute the railroad does a thing like that it opens the way to a swindling petty graft and bigger grafting and crooked work. It is wrong, all wrong. It is so wrong that nobody knows what to call it. Down in Louisville they call it a ‘swag.’ Here you call it an ‘allowance.’ It is all wrong.” ”

“ The fact is that the Supreme Court has not interpreted the law according to its manifest and well-known intent, but in a narrow, technical way that has defeated in large part the real purpose of the law. It is an absurdity to rule that the law is valid and then to decide that the railroads may escape from the long-haul section by means of dissimilar circumstances created by themselves. And many believe it to be an equal absurdity to declare that the Commission may order the discontinuance, of an excessive rate or unjust discrimination, but cannot fix a reasonable rate. ”

“ It is unfair to give the coast people the celerity of railway traffic at the cost of water traffic. The railroad theory that every pound of freight is to be secured that will pay the cost of hauling or a little more, though a water route or a shorter rail line might carry the freight at less absolute cost, is not in accord with sound public policy or the saving of industrial power. It is an economic absurdity to haul by rail what can go more cheaply and as safely by water. ”

“ That unjust discrimination in railroad rates and service can be abolished, we know from the experience of other nations. Studying the railways of ten countries on the ground, examining the railway literature and talking with leading authorities of twenty-six countries, and analyzing the writings of the principal critics of the various systems, I find that the railroads of the United States are unique in two respects—the efficiency of the service they render, and the extent and viciousness of the discriminations they make. ”

“ The Texas Railway Commission says: “It is plain that, if a railway company is permitted to become interested in any kind of business competitive with business in the carrying on of which for others it is engaged, the business in which it is interested can be made to prosper at the expense of the business in which it has no interest. The temptation to unfair discrimination in such a case is so powerful that it ought to be removed.” ”

“ If it is a valid argument to say that the low average freight rate in the United States under private ownership proves the case as against the higher average freight rate under the public systems, then why is it not fair to say that the high rates in Great Britain and France under private ownership in their turn prove the case for public ownership. The average passenger rate in the United States and in Great Britain is twice as high as in some of the public systems of the continent. ”

“ If people found they were unfairly treated by the bakeries or groceries or shoe stores of a town, it would be easy to establish a new store co-operatively or otherwise, that would be fair and reasonable, and that possibility keeps the store fair as a rule even where there is no direct competition. But when the railways do not deal justly with the people of a town they cannot build a new road to Chicago or San Francisco. It is the monopoly element, together with the vital and all-pervading influence of transportation, that differentiates the railroad service from any ordinary sort of commerce. ”

“ But it is clear that the final power to pass on transportation rates must rest somewhere. That railways are public highways, and transportation charges in the nature of taxes, are settled principles of law and economics. That governments have a right to regulate railroad rates is everywhere recognized. But how is the right to be effectively exercised? If legislative bodies attempt to exercise it directly, the lack of detailed information as to specific cases and the failure of elasticity and adaptation to the needs of business, urged against Commission work, would be emphasized a hundred fold. ”

“ If then a certain amount of injustice is unavoidable, and we must choose between injustice to a small group of stockholders or to eighty millions of people, which alternative shall we accept? If there is no way to solve this problem that will not work injustice somewhere, shall it be to the little group of profit-makers or to the great public, the people of the United States? ”

“ The fact is that the fixing of rates is a complex business, with a considerable percentage of guesswork, experiment, broad judgment, and arbitrary decision. There are some general principles of cost, distance, what the traffic can pay and move, what shippers demand, what other carriers are charging, what rates are necessary to create new business and fill up the cars both ways, etc., but they are like the principles of law, you can come to any conclusion you wish and then find a principle that will back up your decision. Railroad men do not trouble themselves about consistency. ”

“ Every railroad man admitted privately that he paid no heed whatever to it, and the Interstate Commerce Commission had shown itself absolutely powerless to secure this heed. When I took up the matter and endeavored to enforce obedience to the law on the part of the railroads in the question of rebates, I encountered violent opposition from the great bulk of the railroad men and a refusal by all of those to whom I spoke to testify in public to the very state of affairs which they freely admitted to me in private. ”

“ The inevitable result was that this management of the business had a direct and very decided tendency to strengthen unjustly the strong among the customers and to depress the weak. These were very great evils and the indirect consequences were even greater and more pernicious than the direct, for they tended to fix in the public mind a belief that injustice and inequality in the employment of public agencies were not condemned by the law, and that success in business was to be sought for in favoritism rather than in legitimate competition and enterprise. ”

“ The gross receipts of the railroads of this country, in round numbers, are eight hundred millions of dollars per annum, and I verily and honestly believe that one hundred millions of dollars annually are taken out of the pockets of the people of this country by unjust railway discrimination, and turned over to this privileged class—and this is equal to a tax of two dollars per head paid by the people for the sake of building up the new aristocracy of wealth that in this free country arrogate to themselves the position of the nobility of the older countries. ”

“ And this dominance of public interest is the only thing that can eliminate unjust discrimination and establish an impartial railway service.
The State railways of Germany, Austria, Switzerland, Belgium, Denmark, and the Anglo-Saxon republics of South Africa and Australasia are absolutely free from unjust discrimination. There are no complaints or suspicions on that score. Shippers know to a certainty that their rivals are paying the same charges that they are. Even the most strenuous opponents of public railways do not accuse them of favoritism. ”

“ In respect to the distance tariff question, Chairman Knapp of the Commission says: “I am very far from believing that there should be anything more than the most inconsiderable tendency, if any at all, toward the adjustment of rates on a mileage basis, and I think the prosperity of the railroads, the development of the different sections of the country and their industries, justify the making of rates upon what might be called a commercial basis rather than any distance basis; but do you realize what an enormous power that is putting into the hands of the railroads? ”

“ The managers favor some interests because they are linked with the interests of the railways or the managers, and they favor some other interests because they are forced to. The pressure of private interest is stronger than the pressure of the law, and so the railroad manager fractures his conscience and breaks the statutes and common law into fragments. ”

“ The railways are public highways, they exercise governmental powers and fulfil governmental functions, and it is an atrocious misuse of social power to employ these so as to give special advantages to a few members of the community. The Interstate Commission says: “The railroad is justly regarded as a public facility which every person may enjoy at pleasure, a common right to which all are admitted and from which none can be excluded. ”

“ On the contrary, disregard of it is chronic and contagious, and constitutes one of the leading characteristics of our railway system. In spite of law and justice our railway practice is a tissue of unfair discrimination, denying the small man equal opportunity with the rich and influential, and breaking the connection between merit and success.
The railways unjustly favor persons, places, and commodities, and they do it constantly, systematically, habitually. ”

“ In none of the States does the power to regulate rates appear to have produced results of much value. In some States, Georgia, Texas, Nebraska, Iowa, etc., the power has been at times vigorously used, but the effect has been to antagonize the railroads, which have so much power that is beyond the reach of any State Commission that they can arrange their tariffs and service so as to work against the aggressive States and disgust the people with the consequences of trying to control the rates. ”

“ The principles of the publicity of the rates and the equal treatment of all shippers which are embodied in the railroad legislation of all countries, are liable, as experience has shown, to be circumvented on account of the competing interests of the railroads, and also by individual interests which have influence with the managements. The granting of these secret advantages in transportation in the most diversified ways to individual shippers, and in particular the so-called rebate system, is the most injurious misuse of the powers granted to railroad corporations. ”

“ Never in the history of railways have tariffs been so little respected as to-day. Private arrangements and understandings are more plentiful than regular rates. The larger shippers, the irresponsible shippers, are obtaining advantages which must sooner or later prove the ruin of smaller and more conservative traders, and in the end will break up many of the commercial houses in this country and ruin the railways. A madness seems to have seized upon some railway managers, and a large portion of the freight of the country is being carried at prices far below cost.... ”

“ And the reason the railway managers make rates that are contrary to public policy is that they are more or less influenced by motives that are antagonistic to the public interest. The Commission is disinterested; it has no wish or personal interest leading to unfairness either to the railroads or the public; its motive is right, but its knowledge is imperfect. The railway traffic managers, on the other hand, have much more perfect understanding of the transportation business, but their interest is not altogether in harmony with justice and the public good. ”

“ Every freight pool or agreement to prevent cutting freight rates that was ever made was broken by some railroad secretly cutting prices, and it may be that an agreement to maintain fares is not safe against secret cutting either.
One of the most peculiar things about scalping is that, unlike other forms of discrimination, its benefits go to the poor man instead of the rich man. It is the only kind of discrimination that gives the poor man any comfort or tends to diffuse wealth instead of concentrating it. In this one case the rich help to pay for the poor man’s transportation ”