from which Congress derives its power over this matter, a short historical review will be useful. From the date of the treaty of peace, Sept. 3, 1783, which separated the 13 American colonies from the British Empire, to the ratification of the federal constitution and the adoption of our present form of national government in 1788, the 13 states acknowledged only quasi-allegiance to their general government under a loosely constructed agreement called "Articles of Confederation and Perpetual Union." They continued to be in reality 13 separate commonwealths, and the bonds of their union were so frail and shadowy that there was imminent and constant danger of disruption, and a state of discord and disaffection little short of anarchy prevailed throughout the land. The most prominent cause for these distractions and disagreements between the states was the lack of definite and uniform laws giving freedom of commercial intercourse between the citizens thereof. Some of the states discriminated in export and import charges upon passing goods, as between their own and citizens of adjoining states, and others established retaliatory license charges, and the condition finally became so chaotic and unbearable that in 1786, the state of Virginia suggested by circular letter the assembling of commissioners from all the states, "to take into consideration the trade and commerce of the United States, etc." Under this call commissioners from a few states met at Annapolis, Md., Sept. 11, 1786, but their number was too few to make their proceedings authoritative, and the meeting broke up without attempting anything. General dissatisfaction had, however, become so acute, not only as to interstate commercial relations, but also as to many other governmental functions, that in February, 1787, Congress called for a convention of delegates from all the states to assemble at Philadelphia in May of that year, "for the sole and express purpose of revising the Articles of Confederation." This finally resulted in an abandonment of the "Articles of Confedera tion," and the making and adoption in their stead, in 1788, of the constitution of the United States which, with its subsequent amendments, is now the foundation of our national government. Although the basic reason for all this action seems to have been the necessity for adjusting interstate and foreign trade relations, the constitutional convention disposed of this important subject in the fewest possible words. In defining the various duties of Congress it gave to it, among other things, the power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes." It also created the supreme court and imposed upon it the duty of interpreting the constitutional power of Congress wherever differences of opinion should arise concerning it. I do not think it has been or can be shown that the makers of the constitution ever had any other thing in mind, in connection with this delegation to Congress of the power to regulate interstate commercial relations, than a well defined intent to forever prevent the erection by any state of any customs, tariffs or other barriers that should be an obstruction to the freest currents of commerce; and there seems to be no evidence that the idea of regulating the market prices or the methods of transporting either freight or passengers across state lines, or to foreign countries, was ever in the remotest way entertained by any of them. The supreme court has since then so broadened by interpretation this meagrely stated power of Congress, and so enlarged its authority over interstate intercourse that it can now exercise, with apparently lawful authority, control over its minutest detail. We can therefore only accept the situation as it now exists, but each one may for himself investigate and form his own opinion as to the extent to which this enormous, and perhaps unprecedented, power ought to be exercised, and in what way individual and general interests are likely to be thereby benefited or put in jeopardy. For almost a century-just 99 years to be exact-Congress allowed its power to most remote objection thereto, more than 147,000 miles of steam railroad had been constructed and put in operation in the United States, at a cost of upwards of $9,000,000,000, furnished by private investors and without government aid, except that in isolated instances and in a limited way, for the furtherance of the public interest in opening up governmental areas of unoccupied lands for settlement, or to tie with strong and permanent bonds of unity the almost inaccessible Pacific coast states to their older and more fully developed sister states of the East, the national government had donated portions of its public lands and had loaned its credit in aid of some railway extension and development, in the then remote West, that would otherwise have been found difficult, if not impossible, of accomplish ment. Then, in 1887, after all this investment of private capital had been made under conditions that there was no reason to suppose to be other than permanent and after 99 years of noninterference, Congress, through the interstate commerce law, announced its power and determination to thereafter control and regulate all public service corporations that were then engaged, or might thereafter engage, in the business of interstate and, within certain limitations, international commerce. This special and unprecedented national legislation, which was the first attempt by congress to substitute, in this connection, unscientific and inelastic statute law for the natural laws of supply and demand, and to abridge the freedom of private contract rights, has now been in force for about 18 years; and it is perhaps not too much to say of it that it has, in its career thus far, occupied relatively more of the attention of Congress, of the law courts, of those engaged in the business of public transportation, and of the newspaper press and the general public, and has caused more hypocrisy and lying, with less production of intended results, than has any other piece of national legislation that has had its birth since the foundation of our government. It is a law that attempts to place not only the earnings, but the absolute capital privately subscribed and owned and which derives its value wholly from expected earnings, in the hands of a politically selected commission which is endowed not only with the judicial function of passing upon cases that may be submitted by complainants in the usual way, but possesses also a further, and extra judicial, power of initiating investigations of cases that it believes may be violations of the law, of hearing evidence thereon collected by its own agents upon its own instigation, and then of passing in judgment upon the facts as thus in part ascertained. In framing the interstate commerce law it was the purpose of Congress to produce, among others, the following definite results: First, the continuance of competition between the railways; second the prevention of pooling and other combinations that should reduce railway competition, or unduly increase transportation rates; third, to prevent the railways from discriminating between their customers by giving rebates, secret rates or relatively unlike facilities for like or similar service; fourth, to prevent higher rates being charged for short hauls than for long hauls; fifth, to cause uniform, stable and equal rates to be charged for like or similar service. Later, Congress enacted the so-called "Sherman anti-trust law," about which two interesting facts may be stated: One, that although named after Senator Sherman he had little or nothing to do with the details of its making and took no special part in its enactment by Congress; and the other that when it was under discussion by Congress it was not intended or understood to have any reference to, or control over, transportation companies. A third interest ing fact about this law is that its first important use was for breaking up the useful and beneficial traffic associations which had been formed by the rail ways to produce the very uniformity and stability in rates that the interstate commerce law was in part framed to accomplish. It is a fourth interesting fact in regard to this so-called Sherman anti-trust law that in its interpretation the supreme court has laid down the extraordinary principle that under it all combinations in restraint of trade are unlawful even though they may be in themselves beneficial to many interests and harmful to none. Now let us see to what extent the interstate commerce law and its complement, the Sherman anti-trust law, have produced their intended results. The railroads having in many instances extended their lines in anticipation and advance of the public demand therefor, and being denied the privilege of arranging an equitable distribution of the existing competitive traffic at remuner ative and reasonable rates, at once entered upon a fierce and ruinous competition, which made their rates and service unstable, irregular and discriminatory, and, as one of the results of the business panic of 1893, many of the larger, as well as the smaller systems, were forced to take refuge from the claims of their creditors by passing into the hands of receivers; whence most of them have since emerged and, under the process of natural law, have become component parts of greatly enlarged, consolidated and unified combinations, or systems, under whose combined, but lawful, management the possibility of general competition such it was one of the purposes of the interstate commerce law to uphold and maintain, has hopelessly and forever vanished. This combination and unification of separately owned and competing roads is still going on at a rate of progress that will, in the not distant future and still under the working of natural laws-remove whatever rebating, secret rate giving and other forms of favoritism now exist, and for which the railroad managers have been so se as verely censured, but of which the conscience of an outraged public has never yet prevented it from reaping the uttermost advantage. These facts would not be called to your attention but for the further fact that the interstate commerce commission is again before Congress with its many times iterated and reiterated request, now re-enforced by presidential recommendation, that it be given the absolute power to prescribe the maximum rate that a railway, or line of railways may make whenever, upon complaint and investigation, the rates currently charged are deemed by it to be unreasonable, and that it be further empowered to put such prescribed maximum rates in immediate effect, to stay until declared by the courts, upon appeal by the defendant railway or railways, to be unlawful. re In support of its claim that it should have the power to fix maximum rates, the statement is put forth in its hehalf that it does not intend to exercise this power except to remedy occasional, and possibly rare cases of injustice on the part of the railways; and that it does not expect or desire to make tariffs for the railways in a wholesale way; one member of the commission is reported as having said that its proposed methods of correcting existing evils will not be likely to appreciably affect the general average freight rate now ceived by the railways of the country, or materially reduce their gross or net income. The value of this statement is, however, materially weakened by that of another member of the commission, who is quoted as having recently said that unless this power of rate making is given to the commission, the people of this country will continue to pay at least $40,000,000 a year more for their railway facilities than they ought to pay. If this latter statement is to be accepted as embodying the true intent and purpose of the commission, if it is given the power to fix transportation rates, the question naturally arises how this $40,000,000 a year in reduced gross and net earnings is to be provided for without correspondingly re ducing the at present low average dividend returns of the railways, or relatively reducing the cost of their operation. As the average return paid to the railway shareholders of the United States in 1903 was less than 3 per cent. upon the par value of their holdings, and as a four per cent. annual return upon investments of this nature is not considered an extravagant income, will it not be possibly and naturally necessary for the railways to attempt finding some method of reducing their cost of operation so that the interests of their shareholders shall not be unfairly affected? And if a reduction of $40,000,000 a year, or any considerable portion of that sum, in operating expenses must be provided for by the railways at large, is it not probable that the payrolls of those in their employ, which now amounts in total to nearly one half the gross income received from railway operation, will be expected to contribute their proportion of this necessary reduction in the cost of operation; and, if this prove true, will not the individual workers in the railway service be called upon to bear each his proportion of this reduction in income, and is this not, therefore, a question of paramount interest to the million, or so, people who are engaged in the railway service and live upon the income they receive in payment for their labor? To offset the extraordinary advances in the general cost of living, those engaged in this company's service, in 1903 insisted that material and general increases in wages were a necessity that could not longer be postponed; and general adjustments were thereupon mutually agreed upon, with a resultant total increase of payroll disbursements for the next ensuing fiscal year of over $800,000. For that same year the company fortunately received an increased average rate of 47-100 of one mill a ton to a mile upon its total freight movement, a sum in itself wholly insignificant and inconsequential, but which, when averaged over the year's freight tonnage, became a total of nearly $800, 000, a amount almost sufficient to make good the year's wage increase. The shareholders received no increase of dividends, and the road's net earnings were practically the same as in the preceding year. This experience in which you have beneficially participated, illustrates the close and inseparable relation that exists between the average transportation rates received and the possible wage disbursements of a railroad; and I can give no more apt illustration of your individual and personal interest in this rate question, as it inevitably and always mutually affects the finances of the road and the wages of those engaged in its service. While I shall not permit myself to be drawn into a profitless newspaper controversy with anonymous, and more or less flippant, writers, who credit me with opinions that I do not hold and consequently have never expressed, I shall not, on the other hand, be deterred from giving the freest expression to opinions, based on years of examination and study of the many and intricate problems involved in this great subject, and that I believe are worthy the most careful consideration by each and all of the more than 23,000 persons who share, as their means of livelihood, in the annual payroll distribution by the Boston & Maine system of about $16,000,000, a sum equal to nearly onehalf of its annual gross income. I differ with the interstate commerce commission, and with those who advocate increasing its powers, only upon the one point that I believe to be of vital interest, namely, the power to make rates. I am heartily in favor of such carefully thought out additional legislation as may be found needful for ending and forever preventing railways from conspiring to give, or their cus tomers combining to exact, any favors or facilities that may not, under like circumstances and conditions, be given to and received by all; but I am fully convinced that the power to fix the price at which railway transportation shall be sold can be left with safety only in the hands of those who must assume, and have no way of escape from, the care and expense of producing that transportation; and that legislation tending to separate these two indissolubly connected and paramount responsibilities is communistic in its tendencies, and in contravention of the natural laws of supply and demand. Is it not one of the unalterable workings of natural law that whoever exercises the power to fix the maximum price at which a product shall be sold must likewise fix the minimum price, and must also ultimately assume and control the cost of making that product? As no workable plan has yet been devised for equitably dividing the producer's responsibility of fixing the price at which his product may be profitably sold or of guaranteeing its cost, and as the only product of the railway company is transportation, will it not unalterably follow that when government takes the first long step of using its power to fix the maximum price at which that product shall be sold to the public it must also fix the minimum price, and then, sooner or later, take the next and much shorter steps leading to government ownership and operation of the railways, and thereby assume and control the cost of making as well as the selling price of this transportation product? And if this be true, is not this the method which the Socialist has, in season and out of season, insisted should be applied? For the members of the present interstate commerce commission, collectively and individually, I have the greatest respect. They are able and honorable gentlemen, and I have no doubt of their willingness and ability to use justly any power that may be committed to their charge; but neither they nor any one else can give assurance that their politically elected successors will be proportionately well fitted, mentally or otherwise, to satisfactorily carry on the work. It is argued by some who favor giving the interstate commerce commission full rate making powers, that for 10 years after it was created it exercised this power; that its use was harmless The to the railways then, and, therefore, would not hurt them now. This argument fails to state the whole case. railways did indeed submit for a time to the exercise by the commission of this power, but it soon became so pervasive in its spread that they found cause for alarm as to the final outcome, and they therefore took the matter into court where their contention that the commission's power over rates ended when it found them unreasonable, and that it had not been given the power to substitute and make effective other rates that it considered reasonable was sustained. The present widespread and somewhat inflammatory discussion of the railroad rate question would lead one not familiar with our great and unprecedented national prosperity to suppose that by the arbitrary enaction of unwarrantably high railway rates, our industries and commerce must be, as a whole, in such a state of prostration and decadence that radical and even violent legislative means of relief ought at once to be applied. But what are the facts? From 1893 to 1903 (1904 statistics not being yet available) the freight moved one mile by the railways of the United States had grown in volume from 90,000,000,000 to 171,000,000,000 tons, an increase of 81,000,000,000 tons, or about 90 per cent., while the railway mileage during the same period inereased only 17 per cent. The average freight rate received by all the railways in 1893 was 8 93-100 mills per ton per mile, while in 1903 it had fallen to 7 81-100 mills, a reduction of 1 12-100 mills. Now the average rate for 1903, which was less than one-half that received by European railways, does not seem to be so excessive as to become an arbitrary and insurmountable barrier to the free and profitable movement of our domestic and foreign commerce; and when we further find that this reduction of 1 12-100 mills in the average freight rates of 1903 yielded in money, when spread over the tonnage volume of that year, the total of $191,000,000, and that this contribution to the country's commercial |