The New York herald., 1879-03-27

prise is encouraged among larger number Of
persons. and both passenger and freight business
the rates charged small and large shippers But
aside from question of interest there is question
Of right involved which cannot be disregarded.
This principle is recognized in postal system to
greater extent than we advocate for our trans
portation system, for here everybody. whether
he sends letter thousand, il on
the same footing. Performing public func-
tion. railroad is upon different basis
from the private citizen aud has no right to sell its
commodity transportation ut lower price to one
than to another except where cost Of service
enters into the question: and then only far as it
does enter. This may be difficult matter to de-
eide, but by careful study the difference in cost.of
closely defined At present there can be no doubt
but that the producers and smaller class of mer-
chants in this State are taxed enormously Tor
transportation service as compared with the large
shippers to whom special contracts are given.
In some this discrimination amounts to virtual
prohibition instance the Syracuse rates above
mentioned and coal, regarding which We find in
the report of Assembly Committee for the invesga-
tion of the coal combination in 1878 Up. 9 the fol-
lowing words
The Erie Railroad. having with many Of the large pro.
daeng contracts fSs tbs carrying OF & coal & M
of coal sied and protect these companies
producers and practically shut out all competition
upon the lines they control
The recent developments regarding contracts with
the standard Oil Company seem almost incredible.
and show to what extent individual effort in any
branch Of business may be crushed out oy comb. comoi,
individuals
"INsIDE' EXPRESS COMPANIES.
s. ''rhat the rates for transportation made
necessarily high by the maintenance OF subsidiary
organizations designed to deplee the revenues OF the
roads before they reach the stockholders" Promi-
nent among these the fast freight lines.
bridge companies. rolling stock companies. local
coliusion Of managers stock yard companies. con
struction and supply companies, lighterage com
panies elevator and other terminal facility COM
panes. These and the practice known as stock
watering have perhaps. done more to enhance the
cost of transportation to the public than any other
cause or. in other words, to afford pretext for
charging the public unnecessarily high rates for
transportation service. Striking instances of this
nas0''sS ths New may York 1 central % and Hudson River
and the Erie railroads; the former. according
to current report having rst watered its stock at
Albany and Buffalo, and subsequently, in 1857 and
1868. when, it is said some S47.OO0O Oo0 were added
upon which dividends have been declared which. with
interest amount to $5OO60OO0. Is it just. that
the production and commerce OF this state shall be
liabilities thus created? The report upon the coal
combination above alluded to. page 8. says
During the receipt Of these profits Of the
gagged the coal carrying trade unable under Their char
stock that would absorb their surplus issued
additional the stockholders for which they paid
Watering capitalization Of surplus earnings which is
tho same and making this the
basis for forever asking tho public to interest
their exactod
The Railroad law Of this State provides that when
profits exceed ten per cent upon the cost OF rail-
tenance the rates for transportation may reduced
by the Legislature that they will not yield more
than this sum but such practices entirely annul ana
tho public interest after fair return s received for
the capital actually paid for providing these facili
ties These subsidiary organizations originated
and fostered by the managers officers of the roads,
who thus use their positions to serve their own Pc
cuniary interests at the expense OF stockholders
the public. Mr.. William H. Vanderbilt wrote let
ter to the chairman Of committee under date of
February 2l, 1878, in relation to the terminal ex-
mans Of n "A ter
he the following words:-"Every burden Of
this description is paid directly by the railroad but
necessarily reimbursed upon its traffic." 1t
that these words also apply in equal degree to
the subsidiary organizations above noticed.
THE PROXY SYSTEM.
ways disrega1Ged.s BY an abuse Of the proxy sys-
indefinitely perpetuated Even without proxies one
third OF the stock of large corporation acting in
body can usually control an election the
present system Of buying and selling proxies
stockholaers outside Of the .Ila managing ring
most none for overthrowing corrupt
management. There is also great absence of relia
ble detailed information regarding the condition Of
railroad companies and investors are almost en-
tirely in the dark in this respect In opinion
provision should be msde for the OF
the holders of minority of stock in boards of direc-
tors and such regular and reliable statements pro-
vided for as will make Investments in stocks less
hazardous than 1t Ia under the present system.
ARnITIARY INCONSISTENT MANAGEMENT
s. THAT there is general lack Of that publicity
long to organizations exercising great public func
ton ike that OF operating public highways" We
would that we bell eve that rates should be regu
srly posted ut every station that they should be the
same to all under like circumstances; that unit OF
os should have lower rates and that the rights Of
persons who ship less than this quantity should
be defined and rates established therefor. only so
much higher 1t costs to transport the smaller
quantity. We believe that the present management
OF railroads is in many respects arbitrary and
arrsnrng OF freight tariffs and classifcations in
which the public interest is seldom consulted. An
lines OF the afth or special class on West bound
freight. by which the trade In heavy goods OF low
vAue.such as soda ash cement and SALTS greatly
sstencies for instance bale OF seetings which in
ls64-5 worth S4Oo to $780, is now worth but $50
to 500; the average value OF chest OF tea In 1865
was perhaps $50, while ut the present time IL is
about sl2 yet in both these the articles
main classified the Same a they were fourteen years
ago.
The pooling system above alluded to Is worthy OF
your attention. 1t is ostensibly device for pre-
venting railroad and securing uniformity and
permanency in rates. objects which in themselves
very desirable but the present pool Is objection
able IN that 1t enforces too high rates
freight. 1t may DO the only method by which divi-
den1s can be paid upon the, inflated capitals Of
the trunk lines. but in the minds OF many
persons there grave doubts as to whether the
public ought to be thus taxed 1t is to say that
as . whole the railroads of the United States are
capitalized basis Of 81 to every 81 actually paid
In providing these facilities and they could probably
be constructed to-day for one-third their present
nominal value. Combinations and pools are the
only methods by which returns can be paid to
the holders OF such railroad securities at
present. even with honest management. and
In too many the interests OF stock
aud bond holders subordinate to those
OF a managing ring. who purposely and dis
honestly dcpiete the revenues that majority OF
the e get nothing; and IL 1t be decided
that the maintenance OF such rates unjust to the
public then prohibition Of pooling aud combna-
tions Is the shortest way 10 reach such result;
for the natural competition of railroads would
i
obligations or in bankruptcy lthe same
mercantile houses which by their nature
are unable to combine. and IL reorganized upon
o basis of actual value, they could then perform
the service ut a which would be just to the pub
lie and the time afford fair return to share-
holders. Such process involves hardship to many
PERSONS who hold these securities. and It IL only