St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1885-11-08
INTERSTATE COMMERCE..

the United States senate on Interstate COM
merce Mr.. F. B. THURBER, the Anti-M
nopoly leader of New York, has issued
pamphlet in which he discusses the various
features of the railroad problem in prac-
tical and mastery style. In answer to the
first question in the committees circular
Mr.. THURBER starts out with the assertion
that we need specific prohibition of the
practices of extortion and unjust discrimi-
nation, together with an executive to see
that the laws are executed. He says laws
without a police force or police force
without laws are equally useless. In re-
ply to the inquiry as to The reasonableness
of the rates now charged by corporations
for local and through traffic, he says rates
as a whole on interstate traffic are now
lower than ever before and in some cases
unreasonably low, but in certain sections,
and on certain kinds of traffic, rates are
still excessive and unjust determinations
pervade the entire system. Sin consider
ing the subject. what is reasonable rate?"
Says Mr.. Thurber:
We are constantly brought face to face
with perhaps the greatest difficulty and one
of the greatest wrongs connected with the
whole subject, viz: Fictitious capitalization.
Professional promoters have overloaded our
railway system with watered stock, and have
imposed upon the practical railway men of
this country, who operate these great high
ways, the impossible task of earning divi-
dends upon this mass of fictitious capital and
at the same time satisfying the public. Hav-
ing thus over-capitalized our transportation
system they endeavored by combination to
enforce rates which would yield dividends
ia Of al t11rr
has stimulated the building of parallel lines,
which in many cases were not needed, and,
in times of commercial depression like the
present, their pools and combinations break
down and they appeal to the national gov
eminent for legislation to enforce their agree
ments upon each other and enable them to
tax the commerce of the country to sustain
these fictitious values.
AS good illustration of how excessive
capitalization operates as a mortgage upon
the industry of the country, and as a
machinery for concentrating wealth in a
few hands wherever the power exists to inn
pose rates for transportation which will
yield dividends on watered stock. he pre-
sents table showing what the dividends
have amounted to, with the interest COM
pounded annually, Oh the SAT, 000, 900 of
watered stock put into the New York Cen
trail and Hudson River railway, from which
it appears that the public would be $780,
600, 900 richer if dividends had only been
declared on the actual capital. The Balti-
more & Ohio railroad is referred to as fur
nishing a good illustration of different
policy. It has exacted enormous sums
from the public in excess Of liberal divi-
dends and employed them in extending and
improving its road, but it has not
capitalized this increase of value. In other
words it has exacted from the public the
capital necessary for an enormous extension
of its lines, but it has had the decency not
to capitalize this sum, and make the people
pay dividends upon their own capital thus
eXacted. In reply to the claim made by
railroad men that rates bear no relation to
capitalization, Mr.. THURBER says:
1 admit that where they are governed by
competition they do not, and this is why I so
strenuously advocate holding fast to the sheet
anchor of competition, because without it
the railroad companies would practically own
the country. Indeed would be better than
ownership, for with the machinery of govern
ment invoked to sustain rates which would
pay dividends upon fictitious capitalization
they would be able to tax most of the profit
out of production and commerce without the
trouble or responsibility of ownership.
In view OF this immense over-capitalization
of our entire railroad system, we should con-
slider with great caution any proposition
which would confer the power upon existing
railroad corporations to enforce rates which
would yield satisfactory dividends to them, as
it would necessarily impose corresponding
burdens upon the Industries of the country.
Again, the cost of constructing railways has
declined enormously in many respects, and it
is hard to see why the owners of railroad
property should be allowed to continue to
make profits based upon the original cost Of
their property when owners of other property
have to base their charges upon present
values.
MI. THURBER expresses the opinion that
publicity of rates should in all cases be re-
quired by law; that changes should not be
permitted without reasonable public notice,
and that these requirements would be the
best methods of securing uniformity, if not
stability, of rates. Both of these provisions
were prominent features in the REAGAN
bill but were opposed by the railroads as
impractcable because it was alleged that
they would give an undue advantage to
Canadian lines, but like most of the rail-
road arguments in dealing with. the public
this was specious and misleading, for the
reason that our railroads would still possess
and exercise the same power over Canadian
lines to prevent the cutting Of rates which
they now possess, namely, the fear of retail
iation, which is constantly exercised by
railroad lines in forcing competitors to OBJ
serve an agreed schedule. Where one road
cuts under an agreed schedule it is the Gus
tom of another road to at once reduce rates
so low that the cutting road is forced sooner
or later to restore and live up to the sched-
ule of rates, and the American roads could
hold this whip over their Canadian rivals as
well after the passage of such a law as be-
fore, the only difference being that if five
days notice should be required of American
roads before a change of rates they
would be at disadvantage for that period
only.
He does not think it advisable, however,
to establish a system of maximum and min
imum rates for the transportation of inter-
state commerce at present. In his opinion
the various states within their borders can
regulate their local rates in this manner
with success as has been shown by the eX-
perience of the state OF Georgia. But, for
the present, do not think this necessary
on interstate commerce. Our water lines,
if properly sustained and developed, will
do much to secure reasonable rates over
large extent of our territory; and. if pool
ing combinations are prohibited, there will
be but little necessity for fixing maxi
mum, while in order to give railroads the
e IL
vious section it would not be advisable to
fix minimum rate. He is very en-
phatic in his statement that all sys-
TENS of rebates and drawbacks should
be prohibited. Publicity of rates would be