The San Francisco call., 1910-01-23
WANTSSTRICT RULE
FOR FREIGHT RATES
Isidor Jacobs Advocates Closer
Federal Regulation of Rail-
roads and Capitalization
Address Before Commonwealth
Club Scores Abuses in Con-
structiOn and Management

Tsidor Jacobs addressed the mem
hers Of the Commonwealth club at their
weekly luncheon yesterday at the st.
Francis hotel upon the freight rate
question He dealt with the subject gen
orally, advocating a stricter federal su-
pervision and the correction. especially,
Of the abuse of over capitalization. He
said in part:
The time has come for a closer reg
ulation of the railroads. Grave abuses
have been allowed to continue through
over capitalization. Office boys in some
instances have been installed as dummy
directors of great railway enterprises.
We have seen the evils of this eXtrava-
giant capitalization in the case of the
Alton. The capital was increased $780,
100000. with no adequate addition OF
assets. and the promoters divided
$4,000. 900 of profits by the flotation of
bonds on capital that did not exist.
CRAFT IN CONSTRUCTION WORK
Another abuse has been the con-
structiOn company. These concerns
have been formed by a few of the prin-
cipal stock holders in the railroads and
by taking contracts al eXorbitant
prices have made their profits in ad-
vance. The contract figure becomes a
charge gainst the railroad. and hence
there follow high freight rates to
meet ii.
A splendid rate bill was drawn for
the last Legislature by our efficient at
torney general 1t was sidetracked for
= measure that had its inspiration else
where still in this other measure
were incorporated some of the good
features Of the attorney generals bill.
] refer specially to the provision that
empowers the state railroad board to
file complaints in behalf of the ship
pers with the interstate commerce COM
mission. This removes the burden
from the individual Few individuals
IN California will file complaints. Few
have the moral courage because of the
fear of reprisals from the railroads.
NEED OF MORE SUPERVISION
For II years our state railroad com
mission was asleep. Until Commissioner
Leveland took a place on the board its
members did nothing but draw their
salaries IT was Franklin X Lane
who suggested that the state railroad
commission could be made an agency
through which TO proceed in behalf Of
the shippers.
1T is about time that this govern
ment took some action. The railroads
in England are privately owned. They
can not advance rates a penny ton
WlAuOuL the dulu0TiZcllOH OF par
lament, nor can they increase their
capitalization penny a share without
permission of parliament. We need
such legislation in the United States.
INSUFFICIENCY OF Equipment
The equipment of the railroads is not
equal 10 the business offered them. The
question has been asked. Why should
the railroad endeavor TO cripple an in
dustry when 1t must rely upon all in
dustries 10 build up its income2 I be-
lieve the answer is this: The railroad
would rather see the cheaper class Of
freights diverted, as II is now. to
Tehuantepec. Thus 1t has equipment
enough to handle the freight that pays
the higher rate.
The objection has been raised that
in protesting against the recent ad-
vance in transcontinental tariffs we
have placed in jeopardy the San Fran
cisco terminal rates. l do not believe
this is a legitimate excuse. I think we
should welcome this investi cation. The
prosperity of the whole statA is bound
up in the question"