Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1881-05-12


watering Of stock has no practical connection with
freight or passenger charges. Whoever doubts this
may satisfy himself by careful review OF all the
stock-watering transactions which have taken place
In this country during the last ten years. and CON-
parison between these transactions and the current
tariffs twill be found that the stock.w watering has
not affected the tariff in the most indirect and
tful way, and that the idea of any systematic con-
nection betweenthe two things is entirely erroneous
The question of what are reasonable rates
may be supposed to depend largely upon the
amount Of a railroads earnings, but in what
proportion these earnings should be divided
ences of views exist. For example, Mr.. Charles
Francis Adams, an admittedly high authority. has
very recently expressed the opinion that to pay in
terest the capital invested in them railroads in
" this country must, the average earn their oper
ating expenses a; half as much or fifty per cent
"more. in England they must earn their oper-
"a ating expenses and as much, or one hundred per
cent more. In neither country would ten per
"cent. above operating expenses begin even to pay
interest on capital"
II this is just estimate 1t would follow that the
profits of the railroads OF this State have not been
and are not in any Just sense unreasonable. No
doubt it has been the popular habit to denounce
them, but in cases OF this kind there must be posi-
tive proof OF delinquency before Judgment is passed.
and that proof has not yet been furnished Never.
theless it is the plain duty Of this Board to endeavor
to find Justification for reduction which, with.
out injurng the railroads, will benefit the people,
and this has been effected by a careful and dis
passionate analysis of the situation. In the first
place it must be recognized that the railroads of
California have been built and operated under
peculiar conditions. The railroad system OF the
State is in advance Of the development Of the State
and its settlement. As result the expense Of OYER
ating the railroads has here been and for some
years must continue to be, practically greater than
in the more thickly populated States. The
way in which these influences operate is
simple and clear. The amount Of tonnage
carried Is the key to the earnings gross
and net of railroad The cost of operation is
virtually fixed rate; that is to say the cost Of
running locomotive and train of cars, given the
locality, is capable Of being estimated with precis
ion. This cost is independent Of the work done !:
that is to say an empty train and engine going over
road will cost amount which is not increased in
proportion by the loading Of the cars The profits
OF railroad operation consequently depend upon T.
amount of tonnage carried, and il fol
lows from this that though railroad
obtains high freight rates its profits may
be low if the aggregate tonnage carried by it is
small while railroad obtaining low freight rates
NAV make large profits if the aggregate of the ton.
mage carried by it is great. second oorrolary Of
.t..z l:4.z
small reduction on the unit Of railroad calculation,
viz the ton, though apparently productive of trivial
changes, WILL when applied to the aggregate tonnage
of the road result in diminution Of earnings which
may bring about parayzing effects. It is therefore,
necessary that reductions should be made with the
utmost caution The reduction on each ton must be
multiplied by the hole number Of tons carried and
the large figure resulting from this calculation has
augmented significance when it is remembered that
the entire volume Of such reduction is from the sum
the net profit.
Again, it must be remembered that in California
there great fluctuations in railroad traffic 1t is
necessary for the railroads to keep large amount
of rolling stock on hand, but during several months
considerable proportion Of this has little or moth
ing to do, and consequently is earning nothing.
There is, it is true, species of fuctuation to
which the local railroads not liable and il is
result of the consolidation which has obtained here
In the Eastern States the most serious evils to the
public have been produced by that fierce fluctuations
which from time to time has sprung up between
rival lines, and the first effect of which has always
been the sudden and radical change OF rates These
have been rapid and unforeseen that
they have converted all business having any depend
ence upon transportation into speculation The
merchant has been unable TO tell from day
to day what the staples in which he
dealt would be worth. He could not venture
to increase diminish his stock without encounter
ing the most serious risks. He was forced to gamble
against his inclination In this way all business has
been disturbed, and uncertainty and loss have been
entailed upon the commercial classes. Fortunately
Tor California her people have exper enced scarcely
anything OF this kind. The absence of such uctua-
lions in California conclusivey shows that the traps
portation companies of this State have adhered to
strictly legitimate business carriers and have not
engaged in speculation in the products of the coun
try with the advantage ra1ical fluctuations in
freight rates confers upon those who control such
fluctuations. The trunk rosd which supplies
ton with ocean route, its rates cannot be made
The sport of reckless competition 1t must continue
70 underbid the seas, or it must abandon business
The local and leased ues being with few exceptions
n the same hands, have been equally free from the
Kind of uctuation referred to- and in this respect
he situation has been peculiarly fortunate
In considering the praeticability of reduction of
'ates it has become necessary to examine the c. M
nercal lawsgoverning thequestion and therefore we
lave analyzed the principles upon which the p
oortionment Of rates has thus far been regulated
L has recently been alleged, as special and OBJ
Iious grievance and abuse, that railroad compa-
lies fix their freight rates in accordance with what
he goods will bear. The reason why this has
eemed unjust appears to be that those who have |
allied attention to it have always gone beyond the
lst implications of the principle and have assumed
hat the practice was to charge much could be
imposed without placing prohibition upon trans
ortation But it is, we think, apparent that the |
rinciple in itself s if not the ideally best at least
he best the exigencies of transportation admit o.
or is impossible to regulate argos either on the
rinciple of fixed percentage Of oft on the |
apital invested, or on the cost of service The |
aue of the service rendered must be the criterion
nd there would to be no other means Of |
this than by estimating the market |
alue of the goods transported. The real guarantee
,r the protection of the shipper in this regard
sts in the interest Of the carrier, which compes
i'm so to regulate his charges that they shall not
perate prohibitive'y, and that they shall not inter.
IRE with the extension of business And it may
observed that unless the whole field Of transpor.
ltion is surveyed it must be impossible to reach
list appreciation OF the merits Of the case, since
ne entire system of railroadtrac is interdependent
nd reciprocal. For example, it is wellestablished
laxim in transportation that the higher the maxi
lum the los er the minimum will be. Now the ex-
lanation Of this maxim really contains the
ucidation of the freight question For it means
nat by charging high rates upon the classes Of
oods which will bear high rates. it is made possible
charge low rates upon the classes of goods which
rust have low rates, or not be moved at ALL To
1arge high rates upon general merchandise is not
impose any burden upon the public. The freight
always incdded in the retail selling prices of
,ese goods and when distributed in this way
makes no tangible addition to that price. Prac-
cally, experience shows, it does not affect the
,tal price, and neither does it affect the profit of
lie merchant. To make large reductions upon gen
-al merchandise, therefore, would be to cripple
ansportaton without producing any appreciable
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