Railroad corporation

“ Just as the corporation in the theory of the law was supposed to be a body to whom Government delegated powers to do certain things in the interests of the people, so was the railroad considered theoretically a public highway operated for the convenience of the people. It was upon this ostensible ground that railroad corporations secured charters, franchises, property and such privileges as the right of condemnation of necessary land. ”

“ A railroad corporation has a public duty to perform as well as a private interest to subserve, and I never before believed that the courts would permit it to abandon the one to promote the other. Nowhere in its charter is in terms expressed the duty of carrying passengers and freight. ”

“ Let a few corporations be organized under Government auspices, and let each, by the terms of its charter, receive a perpetual lease of all the railway lines built, or to be built, within a given territory. Let the territory of each of these corporations be so large, and so planned with regard to its neighbors, that there shall be, so far as possible, no competition between them. For instance, one corporation would operate all the lines south of the Ohio and east of the Mississippi River ”

“ Entrance into the railway service should be by agreement for a definite time, and dismissals and resignations should be governed by rules agreed upon by boards of commissioners and the companies.
The use of the corporation has done so much to secure for capital so large a share of the profits of industrial enterprises, and large salaries also for the officers who manage them, that laborers have been led to organize themselves into associations for like purposes, and ambitious men have not been slow in availing themselves of the advantages afforded them in this new field. ”

“ The majority of such offices are off the lines of the respective corporations, in the larger cities, where high rents are paid and great expenses entailed, that proper attention may be given to bolstering or depressing the price of the corporation's shares, as the management may be long or short of the market. So far as the utility of the railways is concerned, as instruments of anything but speculation such offices and officers might as well be located in the moon, and their cost saved to the public.... ”

“ Among the more frequent abuses of their official power, we find railroad officers personally buying lands in new territory or mining lands, and then building at the expense of the corporation branch lines to reach these properties and enhance their value; the establishment of manufacturing or business enterprises, in which the railway men are often secret partners, and securing for these enterprises favorable terms, and then contracting with the railroad to do business for less than cost ”

“ The following are the main points of the decision: “the railroad company is a quasi-public corporation and bound by the laws regulating the powers and duties of common carriers, persons and property. It is the duty of such company as a public servant to receive and carry goods for all persons alike, without injurious discrimination as to rates or terms.” ”

“ By the first section of the original railroad act of Congress, passed in July, 1862, certain persons therein designated were created a corporation by the name of the Union Pacific Railroad Company, and authorized to construct and operate a continuous railroad and telegraph line from a designated point on the one hundredth meridian of longitude west from Greenwich to the western boundary of Nevada Territory, and were invested with the powers, privileges, and immunities necessary for that purpose, and with such as are usually conferred upon corporations. ”

“ In the former, however, it is complicated more often by the fact that the lines of a railroad extend through many States, with terminals in one or two, and, further, that the railroads have many subsidiary, controlled, or dependent companies, such as coal, lighterage, terminal, car, warehouse, contracting, elevator, stock yard, and supply companies, often owned, wholly or in part, by men in the railroad management. ”

“ Some of the roads, beginning with the Erie, have gone so far as to rent their repair-shops at division points for operation by privately organized corporations. In fact the Erie has gone so far as to follow this practice for its track maintenance in certain instances. A private corporation is bound neither by the national agreements of the Railroad Administration or by the rulings of the Railroad Labor Board out at Chicago. It can buy its labor in the open market and at the prevailing market prices—and at the present moment at obvious savings. ”

“ No limit of time is fixed within which the construction of railroads should begin or be completed. Without such limitations speculating corporations would be enabled to seek out and secure the right of way over the natural and most feasible routes, with no present intention of constructing railroads along such lines, but with the view of holding their advantageous easements for disposal at some future time to some other corporation for a valuable consideration. In this way the construction of needed railroad facilities in that country could be hereafter greatly obstructed and retarded. ”

“ Railroad history in recent years has made it very plain that neither railway employees nor the public have gained as much by hectoring the railroad corporations as either would have gained by considering the interests of the railroad as well as its own. ”

“ The railroad corporations were the deadly enemies of that organization. They understood that its purpose was to unify all the railroad employes. They knew that the unity of the working class meant their end, and so they set their faces like flint against the American Railway Union. And while they were using all their powers to crush and to stamp out the American Railway Union, they were bestowing all their favors upon the several craft brotherhoods, the engineers and the firemen, the conductors and the brakemen. ”

“ The idea that railroads are public highways, and that railroad companies are public corporations, already obtains among congressmen and in the supreme court of the United States. This is well understood among railroad men, as well as the fact that there is an increasing demand on the part of the people for the reform of the many abuses that are now practiced by them. Hence their anxiety to have the United States government assume control of railroad corporations. ”

“ Are the railroad men of this country organized today? No! Not nearly one-half of them are organized at all. And when the railroad corporations from motives of good policy make a concession to the engineers or the conductors, it is gouged out of the poor devils who work for a dollar a day and are compelled to submit.
There are a great many engineers who are perfectly willing to be tied up in a contract. They think they can save themselves at the expense of their fellow-workers. ”

“ There are probably in every legislative body a number of members who are in some way or other connected with railroad corporations. No doubt, a majority of these are personally irreproachable and even so high-minded as to always postpone private for public interest; yet there are also those whose political advancement was brought about by railroad managers for the very purpose of having in the legislative body servile members who could always be relied upon to serve their corporate masters. ”

“ Thus, the railroad corporations have long ceased to compete as regards rates. It is perfectly well understood, and has been admitted over and over again by railroad men before Parliamentary committees, that the railroad companies combine. They agree in their rates, but compete in facilities, speed, etc. If it were not that the railroad companies are strictly regulated by the Board of Trade, this system of concerted action would be a very serious factor. As it is, the railroads represent the most powerful interest in Parliament. ”

“ That the capitalization and bonded indebtedness of the roads largely exceed the actual cost of their construction or their present value, and that unreasonable rates are charged in the effort to pay dividends on watered stock and interest on bonds improperly issued.
17. That railroad corporations have improperly engaged in lines of business entirely distinct from that of transportation, and that undue advantages have been afforded to business enterprises where railroad officials were interested. ”

“ Henry C. Adams, statistician of the Interstate Commerce Commission, says in his third annual report:
"It certainly appears ... that the motive for ownership in railroad stock is quite different from the ordinary motives which lead men to invest in corporate enterprises, thus presenting an additional proof that railways are a business not subject to ordinary business rules."
There is no safer business in the world than railroad transportation; there is none that has less elements of uncertainty; none whose returns in the aggregate are less varying. ”

“ The daily lives of the employees and security-holders of the railroads are affected by the success or failure of the railroads, and they are entitled to protection and encouragement from the people and the Government equal to that accorded other citizens. The owners of the railroads hold securities worth at par nearly $14,000,000,000. The average net return from railroad operation for the year ending June 30, 1909, was 4.07 per cent. In 1905 the net income from manufacturing institutions was 13.06 per cent. ”

“ Every railway company * * * has recognized the right of the public to demand transportation by the railway facilities which the public has permitted to be created of that class of matter which is known as 'express matter." Express companies have undoubtedly invested their capital and built up their business in the hope and expectation of securing, and keeping for themselves, such railway facilities as they needed, and railroad companies have likewise relied upon the express business as one of their important sources of income. ”

“ Regarding railroads as the most useful instrumentality by which intercourse is carried on between different sections of the country, the people do not desire the adoption of a narrow or unfriendly policy toward them. But it should be remembered that these corporations were created, and their valuable franchises granted by the legislature to promote the interests of the people of the State. No railroad company can sacrifice those interests without violating the law of its origin. ”

“ The complaints against railroad management, as far as they appear to be just, show that the railroad problem may be divided into two parts: First, how shareholders in railroads can meet the difficulties of joint-stock ownership, and control their property, so that it can be made by all legitimate methods as profitable as possible. ”

“ Railroads are not like stages or steamboats, which, if furnishing no profit at one place, and under one prescribed rate of transportation, can be taken elsewhere and put to use at other places and under other circumstances. The railroad must stay, and, as a permanent investment, its value to its owners may not be destroyed. ”

“ Yet I believe the era is not far off when railroads will be limited to their legitimate sphere as common carriers, when they will treat all persons and all places as impartially as does the Government in the mail service, when their chief factor in rate-making will be the cost of service, when they will respect the rights of the public and those of their stockholders, insuring perfect service to the former and fair profits upon the actual value of the lines operated to the latter. ”

“ It is over three times the annual gross revenue of the railroads, and it amounts to nearly one half of the existing railway capital represented by stocks and bonds. The question of obtaining the $8,500,000,000 necessary to make railroad facilities equal to the expanding traffic of the country during the next five years, therefore, constitutes the most important problem now confronting business men. ”

“ If any branch of business has suffered in consequence of the enactment of the law, it is the branch monopolized by Wall Street. Since 1885, the time when the Interstate Commerce Bill was first seriously agitated, the aggregate of railroad securities has increased nearly $2,500,000,000, or about one-third. This certainly does not look as if capital had been seriously frightened by the Interstate Commerce Act. There are other proofs of railroad prosperity. ”

“ It is claimed by some that such management is more expensive than that of lines owned by private companies. It has already been shown that the permanent way is kept in better condition by the state than by private corporations. In Russia, Germany, Austria-Hungary, France and Italy the state expends from 15 to 30 per cent. more for the maintenance of the permanent way than the private companies. It is perhaps also true that the rank and file of railroad employes fare, on an average, better under government than they do under private management ”

“ When a proposed merger involves rail carriers, the Act requires the Commission to impose labor-protective conditions on the transaction to safeguard the interests of adversely affected railroad employees. ”

“ It is stated on good authority, that the life-insurance companies doing business in the state of New York hold one eighth of the entire railroad-bond issue of the country. There are about 20,000,000 policy-holders in these companies, and they are very much interested in the soundness of this great investment. There are 16,108 holders of Northern Pacific stock, of which 5675, or 35 per cent, are women, and presumably the same relation obtains in other large railroads. ”