The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1898-08-28

LID AN\JELES II
declaration of its position and purpose
| in every paragraph from the beginning to
| the end. 1t declares against monopoly
and specifically for RELIEF from monopoly
at every point.
|. l shall discuss at this time but one plank
and then l shall leave the discussion of
! the remainder to my next, and not very dis
tant, visit to Los Angeles
Twenty-three years ago ! had the honor
to be a member of the legislature of CALI
fornia when the battle was commenced
here for relief to- the people against the
oppression Of the railroad monopolies of
this state. I said monopolies 1 apologize
for that-the only monopoly that has held
this state and all its interests in its clutches
for the last thirty years. i had the honor
of supporting the Archer bill, the first def
mite proposition to assert state control OF
freghts and fares on railroad highways
L remember that when we commenced the
investigation of railroad earnings and
corporations, I attended the sessions of
| railroad profits through our committee on
corporations I attended the sessions of
that committee though not member of
1t. I remember when Mr.. Stamford then,
I think, president of the Southern Pacific
Railroad company. was called before the
committee to testify to the earnings and
operating expenses and profits of the road
under his control or in which he was the
controlling factor, he said that the Archer
bill if passed would tie up every railroad in
the state for two years and until the bill
could be repealed by the next legislature
| But he said, II will not point out its de-
fects. will not testify as to the earnings
of any Of the roads in which am interest
ed. I will not testify concerning the oper-
atfng expenses or profits because I deny the
| right of the state to interfere in the pri-
vate business of any Of the companies
which represent" That was the position
taken by the railroad people of the entire
Union twenty-three years ago.
A Long Fight
| long and hard fight was made for the
| establishment of the right of state regu-
lation Of freights and fares. When that
answer was made by Mr.. Stanford the
committee was nonplussed. 1t could pro-
coed no further with It's investigation, for
the assurance was there that no other rail-
road representative would testify concern
| Ing these matters, and when the committee
consulting with such representatives as hap
pened to be present tried to determine what
the next step should be, and my opinion was
asked, I said: you have evidence enough.
Pass the Archer bill. The first fight
that must be made on this question is con-
corning the right of the state to limit
freights and fares and when any corpora
ton, creature of the state, refuses to an
sw err to the state, pass your bill and let them
~f
courts" The house did pass the bill, but
| the senate at that session. by slight ma
Jority refused to pass it. The fight went
on. The right of regulation was asserted.
For twenty years that right of regu-
lation has brought practically no relief,
| because, although the right is now recog-
nized and held by all the courts of the
Land, no method Of regulation has vet been
devised which the courts will sustain and
which brings any substantial relief to the
people.
| In this state today the roads that are
worth. measured by the costs of repro
ducing them which is the true test Of their
present value, ten to twenty thousand dol
lars, are drawing interest in the form of
excessive freights and fares, upon forty
thousand to sixty thousand dollars per
mile Why? Because all statutes per-
NIT it. False systems of valuation are es-
ia blished and upheld by the courts under
which the actual investment of the COM
pany ceases to be considered. They pro-
coed in one or two ways to ascertain the
basis of allowance in fixing freights and
| fare. One method is to ascertain the earn
| ing capacity of the road. BY ascertaining
| The time at which freights and fares are to
be fixed, they ascertained that 1t had
been earning interest upon $4,000 a mile.
Therefore, they say the road is worth $50
| 900 a mile, and Interest must be allowed upon
| that valuation. You can see the fallacy of
| that in an instant The earning repre-
senting $4,000 mile has been made by ex-
| tortionate charges. If you are going to
allow interest on a capitalization of that
kind you must allow It upon some extor-
tionate charges, and if they are basing the
interest upon those extortionate charges
you can have no relief whatever
A change was made In that system. 1t
| was admitted that that was not right. SO
| they adopted another, as stated, and set
forth in form first by Justice Brewer now
| justice of the United States supreme court,
but then a circuit judge, that the way to
reach the allowance for freights and fares
was, first to allow operating expenses
| (Which all will admit, and second, to al
| low fixed charges, which shall include inter-
| est on all bonded Indebtedness, and third,
some allowance upon the stock which rep
resents the investment of the shareholders.
All. of those elements of allowance, with
the single exception of opera ting expenses,
are false.
A Case In Point
Is bonded indebtedness of a road any
| part of its investment? Certainly not.
Take the case of the Central Pacific rail-
road branch from Lathrop to Goshen. Du-
plicate it with the expense of producing
better roadway by the Valley railroad re-
Gently at $1O,5O0 per mile. The Central Pa
cific branch is bonded a $4,000 mile, and
| 1t is a poorer road. A road that would cost
| less for reproduction than the Valley road.
Yet the people of California, because that
company has bonded its road for $4,000 per
| mile, are being compelled to pay the inter-
est on $4,000 per mile for bonded indebted
ness and something beyond for interest
and dividends upon stock. That is an en-
tirely false basis of allowance for freights
and fares 1t is perfectly manifest that 1t
is so. The bonded indebtedness of road