The San Francisco call., 1897-06-18
A BRITISH VIEW.
Hotc 3nerican RGiLUaV Rates Are Con
sidered f1a london.

Hotc american RaiIIcaV Rates Are Con-
sidered ia london.
The following article bv G. A. Reeve,
published in the London Financial Nei0s
| OF May 70, will be read with interest as
| clear expression of British opinion on
some OF our railway problems:
decided turn for the better was given to
tne American market yesterday by the de-
clslon OF the Supreme Court in the Interstate
commerce Commission case. whether the I'M
PtONemeht VIII be more than temporary is an
| other matter but the effect produced by the
ludGment OF the Supreme Court points to me
Ieiei which IL caused in railroad circles, ana
gives rise TO the hope that railways In the
united States viii in iuture be subject to less
! harGssing legislation,
The case in question had been brought to test
the Ilght OF the Interstate Commission 10 nN
maximum rates, and the decision, as we uh-
uetS tand 1t, was that the CON mission cannot
e deal with rates before they are put into opera
non, OF, IN other words, that II cannot nX
rates, the power Of doing so belonging TO the
railroads, Should the rates be excessive and
the powers of the Interstate Commissi ion
! prove TO be insufficient 10 oblge their reduc-
lon. further legislation could promptly re-
uress any grievance, either by eularglng the
powers ol the commission or in some other
manner; but for the present the point Is that
| the Com mis- siouers cannot arbitrarily say to a
iiaILoau company, "Your rates must not De
| hlgher than certain figure" without regard
case.
The rapid development of the United States
! 10 the enterprise of capitalists who found the
means to build the railways, and there IS to-
uay no country in the world where transpor-
tanon Is cheaper. The fall in prices, the ne
| cessltles OF the population and Keen compeu-
ton among rival roads have all cOntribu ted TO
ms ms result winch up 10 certain point must
Cteaiy Denent the country. But there Is
limit 10 The reduction of rates beyond which
~ Is not advisable TO go, for ii Is easy TO show
mat II railroads are constantly Obliged TO Oe
reoTgsnized with reduced capltal-it IN the
| struggle for existence they are compelled TO
reduce the number and wa ges OF their en-
| ployes and TO be more spaTing In the Dur
chase OF supplies-the whole community sui
! lers from their lack of property. The thrifty
classes lose part of the savings they have in
! vested, wage-earners find employment more
dlmcuIt TO obtain and merchants and prouuc-
ers OF all kinds find less demand Tor whatever
| they have TO sell.
With the cheapened and more perfect
methods now on ihe railways it would be abb
| surd 10 suggest that the same rates should be
IN iorce as those OF, say, thirty years ago. The
question Is whether the competition caused
Dy parallel lines, which we're allowed 10 be
punt without any corresponding benefit to
! Inc public, has not yet reduced rates below
| what is fair 10 those whose money is invested
| IN railroads. The enormous amount sunk in
| the bonds of American railways-$5, GAL OO0,-
| 600 (about seven times more than the Ma
uonsl debt OF the United States)-shows the
| importance of this class OF investment
Now, according to the Interstate Commerce
Commlssion's report for 1893, over $500
! OUO0OO OF bonds were in default, and in 1896
the defaults increased. This fact ought surely
! to make both the pub and the legislatures
| think before placing any additional burdens
| on the railways. Had these bonds been held
! chiefly in America we doubt If such a disas
! irous state of things would have occurred;
but In the hunt for investments Europe was a
| greedy Duyer Oh American railway securities,
and IL is only within the last few years that
| they have been returned in considerable
amounts to their native land.
II is 10 be hoped that the blocks of securities
| which the Americans have repurchased will
bring home 10 them the necessity of better
treatment for the railways, and it would seem
as II they are already recognizing IL, since we
read in the report of the Southern Pacific
Company, which has just reached this cOun-
| try. that the trend OF public opinion is un-
| mistakAbly in favor OF uniform and reason
! able rates such as will enable the railroads TO
keep their proper ties in good condition, i'm
prove anu a11 70 thelr iaclllties for the puol.c
| service and leave reasonable profit on the
capital invested" In this same report q
remarkab table is given, showing the earn
| ings and passengers and tonnage carried in
! 1883 and 1896, from which ii appears that
| the reductions have amounted in eleven years
| TO 2O2S per cent in passenger rates and A %
per cent in freight rates. The figures also
show that the Southern Pacific system in 1896
| as compared with 1885 gave to the public
25.95 per cent more passenger service, with
All increase in gross earnings of less than one
| half of l per cent, and SS. % per cent more
freigh II service with an increase IN gross earn
! lngs OF q fraction over D Der cent. These re-
| ducUons are exceptionally large, for in q re-
| cent article in the North American Review
| the reductions in freight rates on thirteen of
! 'he principal railways were shown TO have
averaged bout 10 per cent between 1885 and
! 1896, and they would not have been poss Bile
withou the unification of a nUmb Der of smaller
| lines, by which the expenses of operation were
| lessened.
Sir Henry Tyler used to make much of the
vast difference to the Grand Trunk that the
fall in rates had produced, and Mr.. C. P. Hun
tington brings the matter home IN still more
startling manner as regards the Southern Pa
| cific. Had the system received in 1896 the
rates which 10 received five wears ago the
] o. nj hav haap h,
S14 074 ,S2j. aud at the rates received in ! SS5
by $26.57S, 500. If the rates received in 1885
are app led 10 the traffic of the subsequent
years, including 1896, the gain TO the public
not interested in railroad securities, and the
loss TO those who invest in them or depend
upon the railroads Tor employment has for
the eleven years amounted TO $79, ,992 GA on
the Pacific portion and to $50. l2o. .SS4 on the
Atlantic part OF the system-a total OF $780,
1l6,499.
Itwili be admitted that when reductions in
rates by one corporation alone are shown to
have benefited the public to the extent OF over
f26, 900 600 in even years IL is hard to be-
lieve that the people of the United States can
have any real grievance against the railroads
And it is not as IL there were any intention to
Try and RAISE rates The present level low
though 10 seems 10 European ideas most
systems, would content railroad managers If
only 1t could be maintained. The arguments
in favor of pooling competitive traffic need
not be recapitulated over here, where the
prime pc has so long been established; but
in the United States IL is at present
l4lcshl, Nuough VIC uANe never WHIT
particular harm was caused when Con-
gress sanctioned pooling in 1856. Yet Mr..
Blanchard, the Commissioner OF the Joint
Ira ffic Association, ana the majority of those
who have had the management of railroad
properties are in favor of a modification of the
in nterst tate commerce law, under which traffic
agreements between railroads can be made
enforceable between them and under which
the prohibitions and penalties prescribed for
carriers saall be made applicable to their Gus
toners. Without some such modification uni
form rates viii Il OF be secured unjust dis
crimin ration win not be preven ted and secret
rate-cutting will continpe to be INDUCED in by
the more needy and unscrupulous companies
1t is satisfactory that orts all testify TO less
hostility toward the railroad corporations, and
whether 1t be the argument of the packet tnat
has effected the change in public opinion a
better understanding of the situation, we only
hope tn ut the outcome Will be the legalizing
once more OF pooling