Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1882-08-28
AN OPEN LETTER
FROM
kX GOVERNOR LELAND STANFORD
PRESIDENT OF
The Central Pacific Railroad
Company.
lArgonaut, August e6th.l
OFFICE OF THE CENTRAL PACIFIC RIlLRoAD,
PRESIDENTS DEPARTMENT

lArgonaut, August e6th.l
OFFICE OF THE CENTRAL PACIFIC RIlLRoAD,)
PRESIDENTS DEPARTMENT,
| SAN FRANCISCO, August %, 1882.
| Hon. Frank N. Pixley Editor Argonaut-Dear
Sir: desire to thank you for your open letter OF
the l4th inst. and embrace the opportunity which
an answer will afford to correct certain
impressions concerning railroad matters in this
State which exist in the minds Of many people, and
also by brief statement OF fact to remove possible
prejudice. The spirit of candid inquiry which your
letter evinces leads me to hope that my response
will meet with candid, fair and just consideration
The drst allegation:
That the transportation facilities Of the State Of
| California constitute an oppressive monopoly, sr
Has no foundation in fact 1t SO happens that the
principal volume Of the railroad business of Cali
fornia is subject tocompetition by water transporta
tion which glance at The map will show to be true.
Further the only real monopoly that the railroads
have is to the extent that they abe to do bust
ness cheaper and better for their patrons than
otherwise be done, and to that extent the monopoly
II monopoly it is, is benefcsnt in character In this
connection / desire to state that aside from our
patent and tariff laws, the only monopolies possible
IN the United States to the extent that they are
| beneieent Before the formation OF our general
corporation laws. the only corporations possible
were those created by special Act, and they were
| from that fact necessarily monopolies, enjoying
privileges which others could not possess But our
corporation laws antagonistc to such privileges,
and provide for the protection OF every character Of
| legitimate business, through the principle of CO.
operation of capital and numbers Under thes,
requisite numbers aud the requisite capital to be as
ISOLATED in Its prosecution ii it offers sufficient in
ducement and reward, and this insures all needful
resulative competition. Excessive profit arising
upon any enterprise is the strongest attractive force
TO capital to engage in competitive undertakings
The aggregate capital OF the many is thus made to
balance the advantages of large atcumulations in
the hands Of the few. Cur corporation laws offer no
special privileges the State grants nothing through
them, and acts only for the purpose of aiding the
natural right of association 1t is upon this natural
right OF association that society itself is organized
and the legal association OF capital and numbers is
only the exercise of the same natural right that
man has to call in his neighbor to assist him in
rolling log raising his barn. Ii is the founda-
ton and security Of republican institutions, for
so long as the people assooilte themselves to-
gether with he right to express their IDEAS and or
ganize to give them force. it cnnet be otherwise
than that the majority must rule. The assumption
therefore, that large corporations may be danger
Gus, is to that the people are incapable of
self government, and that the majority will make
laws to Cypress themselves for the benefit of a mi
nority. The establishment Of government founded
in the doctrine that the rights to life and liberty
the pursuit of happiness and the acquisition and en-
ioyment of property naiien4ble is the grsndest
achievement OF modern civilization. The great un-
derlying principle of Government is the protee
ton of the rights of each individual and in securing
the rights of the individual the rights of the many
cannot he otherwise than secured
The second allegation:
That the rates OF transportation charged by the
railroads of California exorbitant and excessive
TO such degree as to arrest the growth of the
monwealth, and to discourage and st file production.
And the thi.d:
That the principle of regulating freight tariffs
upon the basis Of what the article transported will
bear rather than by the standard of the cost to the
crer OF the service rendered, by means of freight
casslhes.ion, Is erroneous, unjustifabe, and dis
eliminating,
viii be considered together.
In answer to the first might content myself by
when railroad transportation began The law under
which most of the railroad corporations OF this
State were organized fixed the maximum rat for
freight at fifteen cents per ton per mile, for all
classes Therefore, under the law, possible aver
age OF fifteen cents per ton per mile might have been
charged but the actual average obtained by the
Central Pacific Railroad during the year 1881 was
less than % cents per ton per MILE or little less
than one-seveuth of the possible average obtainabe
under the law and this without cosnpais;oa other
than that demanded or suggested by the laws Of
business. These laws are the only certain,
just and legitimate regulators, and under
them the greater part of the products of
the country moved at rates below the
average cost Of movement. Wheat will probably be
moved from San Francisco TO New Orleans at the
rate OF about one-half cent per ton Per mile, at
fifth Of the average charge for the movement OF
freight on the Central Pacific Railroad during 1881
and this because Of three controlling principles of
business law coming in to affect it. viz COMPETE
ton, the cost of the commodity at the place of its
destination and its actual value in this market
The natural principles OF business, which have been
found sufficient to regulate all other interests with.
out special reguative enactments, are equally in.
IN,
selfreguatng process is clearly illustrated by the
facts have above cited The railroad finds its re-
ward for the minimum rates IF freight in Che gen.
eral development of the country and the stimulus
given TO production, and after paying the direct ex-
penses consequent upon the movement of these
minimum freights, there may be small balance
still to go toward paying the fixed expenses and the
general cost of maintenance. And to that extent,
these lowpricea commodities contribute share of
support toward means of transpor alton that is Of
general benefit to every commodity. a
This naturally brings me to consideration of the
third question, and explains of the great
for classification, which is to make the burdens of
transportation proportional to values thus each
article as nearly as possible, pays equal percent.
age its value. To fully illustrate the value
to staple articles of production of this principle of
classification, suppose four persons desiring ts con-
struct means OF transportation from a common
point to common point, TO be possessed OF com.
modites related to each other in value as ron COP
per- silver, and gold. Now let it be distinctly un
derstood that the means of transportation is com
mon and that the value of these articles is to reside
in their destination. The transportation of iron
could not confer as much value upon that com
lIouit1 as the AGAIN, the
transportation of copper could not confer as much
value upon the article transported az the Transport
tation Of silver and this again tle transp
of gold. 1t follows, therefore, that the value of the
service rendered by the transportation of gold the
most costly article used 10 this illustration will be
greater than the transportation Of iron, as the
difference in the value OF the two articles brought
into comparison at their market point. To charge
the iron with rate of transpo tation equal to that
charged the gold, when the value of the service in
transporting the gold is many thousands times
greater than that rendered in transporting the ron
would be an unjust discrimination against the iron
and in favor of the gold. The principle, then,
red into practical commerce, is that high rate is
placed upon costly articles, and low rate upon
cheap articles fer mutual benefit and Just distri-
button Of burdens. OF course, other consideration
transported, enter into this question Of cassifca-
ton, such as bulk and volume liability to damage,
convenience of handling, quantity shipped, ETC.
As to the fourth allegation:
That, in practice, the railroads OF California dis
CT inmate arbitrarily and unjustly between indivld.
ual shippers and between shipping points showing
favorits to individuals and localities, TO the OBJ
vious injury Of the persons aud places Disseminated
against,
I first deny that this Is the practice and further
state that rule Of the company has ever existed
which permitted tolerated such practice Every
difference in rate which the rules Of the company
I