The Arena

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Another great advantage which would result from national ownership
would be such an adjustment of rates that traffic would take the
natural short route, and not, as under corporate management, be sent
around by the way of Robin Hood's barn, when it might reach
destination by a route but two thirds as long, and thus saving the
unnecessary tax to which the industries of the country are subjected.
That traffic can be sent by these round-about routes at the same or
less rates than is charged by the shorter ones is _prima facie_
evidence that rates are too high. If it costs a given sum to transport
a specific amount of merchandise a thousand miles, it is clear that it
will cost a greater sum to transport it fifteen hundred; and yet
traffic is daily diverted from the thousand mile route to the fifteen
hundred one, and carried at the same or lower rates than is charged by
the shorter line. It is evident, that if the long route can afford to
do the business for the rates charged, that the rates charged by the
shorter are excessive in a high degree.

Under government management, traffic would take the direct route, as
mail matter now does, and the industries of the country be relieved of
the onerous tax imposed by needless hauls. Only those somewhat
familiar with the extent of the diversions from direct routes can form
any conception of the aggregate saving that would be effected by such
change as would result from national ownership, and which may safely
be estimated as equal to two and a half per cent. of the entire cost
of the railway service, or $25,000,000 per annum.

With the government operating the railways there would be a great
reduction in the number of men employed in towns entered by more than
one line. For instance, take a town where there are three or more
railways, and we find three (or more) full-fledged staffs, three (or
more) expensive up-town freight and ticket offices, three (or more)
separate sets of all kinds of officials and employees, and three (or
more) separate depots and yards to be maintained. Under government
control these staffs--except in very large cities--would be reduced to
one, and all trains would run into one centrally located depot;
freight and passengers be transferred without present cost, annoyance,
and friction, and public convenience and comfort subserved, and added
to in manner and degree almost inconceivable.

Economies which would be affected by such staff reductions, would more
than offset any additions to the force likely to be made at the
instance of politicians, thus eliminating that objection; such saving
may be estimated at $20,000,000 per annum.

With the nation owning the railways the great number of expensive
attorneys now employed, with all the attendant corruption of the
fountains of justice, could be dispensed with; and there would be no
corporations to take from the bench the best legal minds, by offering
three or four times the federal salary; nor would there be occasion
for a justice of the Supreme Court of Kansas to render a decision that
a corporation chartered by Kansas for the sole purpose of building a
railway in that State has the right and power under such charter to
guarantee the bonds of corporations building railways in Old or New
Mexico, and shortly after writing such decision be carted all over the
seaboard States in one of the luxurious private cars of such
corporation. Under national ownership such judges would pay their
travelling expenses in some other way, and be transported in the
ordinary manner, and not half as many judges would travel on passes.
There are many judges whose decisions any number of passes would not
affect; but if passes are not to have any effect upon legislation and
litigation, why are congressmen, legislators, judges, and other court
officials singled out for this kind of martyrdom? If the men who
attain these positions remained private citizens, would passes be
thrust upon them?

Although the reports of the Victorian Commissioners show, in detail,
all the expenditures of railway administration, yet not one dollar is
set down for attorneys' salaries or for legal expenses, and it is
presumed that the ordinary law officers of the government attend to
the little legal business arising, and yet judging from reports made
by Kansas roads, the expenditures of the corporate owned railways of
the United States for attorneys' salaries and other legal expenses,
are at least two per cent. of the entire cost of operating the roads,
and yearly aggregate some $14,000,000, all of which is taken directly
from railway users, and is a tax which would be saved under national
ownership, as United States district attorneys could attend to such
legal business as might arise. This expenditure is incurred in endless
controversies between the corporations, in wrecking railways, in
plundering the shareholders, in contending against State and federal
regulation, in manipulating elections and legislation, and in wearing
out such citizens as seek legal redress for some of the many
outrageous acts of oppression practised by the corporations. Once the
government was in control, these lawyers would be relegated to some
employment where they would do less harm, even if not engaged in a
more honorable vocation than that of trying to defeat justice by the
use of such questionable means as the control of the vast revenues of
the corporations place in their hands.

Is it possible that the railway companies can legitimately use
anything like $14,000,000 yearly in protecting their rights in the
courts?

The president of the Union Pacific tells us that: "The courts are open
to redress all real grievances of the citizen."

There is probably no man in the United States better aware than is
Sidney Dillon that no citizen, unless he has as much wealth as the
president of the Union Pacific, can successfully contest a case of any
importance in the courts with one of these corporations which make a
business, as a warning to other possible plaintiffs, of wearing out
the unfortunate plaintiff with the law's costly delays; and failing
this do not hesitate to spirit away the plaintiff's witnesses, and to
pack and buy juries--retaining a special class of attorneys for this
work--the command of great corporate revenues enabling them to
accomplish their ends, and to utterly ruin nearly every man having the
hardihood to seek Mr. Dillon's lauded legal redress, and when they
have accomplished such nefarious object, the entire cost is charged
back to the public, and collected in the form of tolls upon traffic.
Laws are utterly powerless to restrain the corporations, and Mr.
Dillon tells us how easy it is to evade them by pleading compliance,
when there has been no compliance, and then having the expert servants
of the corporation swear there has been.

With the government operating the railways, every citizen riding would
pay fare adding immensely to the revenues. Few have any conception of
the proportion who travel free, and half a century's experience
renders it doubtful if the pass evil--so much greater than ever was
the franking privilege--can be eliminated otherwise than by national
ownership. From the experience of the writer, as an auditor of railway
accounts, and as an executive officer issuing passes, he is able to
say that fully ten per cent. travel free, the result being that the
great mass of railway users are yearly mulcted some $30,000,000 for
the benefit of the favored minority; hence it is evident that if all
were required to pay for railway services, as they are for mail
services, the rates might be reduced ten per cent. or more, and the
corporate revenues be no less, and the operating expenses no more. In
no other country--unless it be under the same system in Canada--are
nine tenths of the people taxed to pay the travelling expenses of the
other tenth. By what right do the corporations tax the public that
members of Congress, legislators, judges, and other court officials
and their families may ride free? Why is it that when a legislature is
in session passes are as plentiful as leaves in the forest in autumn?

The writer, as an executive officer of a railway company having
authority to issue passes, has, during a session of the legislature,
signed vast numbers of blank passes at the request of the legislative
agents of such company, and under instructions of the president of the
corporation to furnish such lobby agents with all the passes they
should ask for. No reports of passes issued are made either to State
or federal governments, or to confiding shareholders, and should such
reports be asked for, by State or nation, in order to measure the
extent of this evil, the Sidney Dillons would rush into print and tell
us it was a piece of impertinence for any citizen (or the public) to
inquire into the extent of or the manner in which the corporations
dispensed their favors. The only way to kill this monster is to put
the instruments of transportation under such control as only national
ownership can give. Laws and agreements between the corporations have
been proven, time and again, wholly ineffective even to lessen this
great and corrupting evil.

In every conceivable way are the net revenues of the corporations
depleted, and needless burthens imposed upon the public, but one of
the worst is the system of paying commissions for the diversion of
traffic to particular lines, often the least direct. The more common
practice is to pay such commissions to agents of connecting lines
where it is possible to send the traffic over any one of two or more
routes, and the one which may, by the payment of such commission,
secure the carrying of the passenger (or merchandise) may be the least
desirable, and the one which would never have been taken but for the
prevarications of an agent bribed by a commission to make false
representations as to the desirableness of the route he selects for
the confiding passenger.

This is but one of many phases of the commission evil, another being
that these sums are ultimately paid, not by the corporations, but by
the users of the railways, and but for the payment of such commissions
the rates might be reduced in like amounts. Aside from commissions
paid for diverting passenger traffic great sums are paid for
"influencing" and "routing" freight traffic, and these sums, while
paid to outsiders, or so-called brokers, are frequently divided with
railway officials. When the writer was in charge of the transportation
accounts of a railway running east from Chicago, it was a part of his
duties to certify to the correctness of the vouchers on which
commission payments were made, and he became aware of the fact that
one Chicago brokerage firm was being paid a commission of from three
to five cents per hundred pounds on nearly all the flour, grain,
packing house, and distillery products being shipped out of Chicago
over this railway, no matter where such shipments might originate,
many of them, in fact, originating on and far west of the Mississippi
River; and when he objected to certifying to shipments with which it
was clear that the Chicago parties could have had nothing to do, he
was told, by the manager, that his duties ended when he had
ascertained and certified that such shipments had been made from
Chicago station. From investigations instituted by the writer, he soon
learned that some one connected with the management was deeply
interested in the payment of the largest sums possible as commissions.

The corporations have ineffectually wrestled with the commission evil,
and any number of agreements have been entered into to do away with
it; but it is so thoroughly entrenched, and so many officials have an
interest in its perpetuation, that they are utterly powerless in the
presence of a system which imposes great and needless burthens upon
their patrons, but which will die the day the government takes
possession of the railways, as then there will be no corporations
ready to pay for the diversion of traffic. National ownership alone
can dispose of an administrative evil that, from such data as is
obtainable, appears to cost the public from $20,000,000 to $25,000,000
per annum.

[10]Mr. Meany, in his _Sun_ article, summarizes six causes for the
diminution of railway dividends and remarks: "It is unnecessary to
dwell at any great length upon the first five mentioned reasons, but
too much could not be said on the sixth. It is now nearly seven years
since James McHenry of London (and New York, Pennsylvania & Ohio
Railway litigation fame) openly charged railway managers, in an
interview published in the _Sun_, with criminal collusion in the
matter of securing extraordinary privileges and unapproachable
contracts with their several corporations for favored fast freight
lines, express routes, bridge companies, etc., etc., in all the
benefits of which such managers shared to a very great extent. On that
occasion Mr. McHenry was promptly cried down. Would he be cried down
to-day?"

[10] Mr. John P. Meany, editor of Poor's Manual of Railroads,
in the New York _Sun_ of January 12, 1891.

As a rule, American railways pay the highest salaries in the world for
those engaged in directing business operations, but such salaries are
not paid because transcendant talents are necessary to conduct the
ordinary operations of railway administration, but for the purpose of
checkmating the chicanery of corporate competitors. In other words,
these exceptionally high salaries are paid for the purpose, and
because their recipients are believed to have the ability to hold up
their end in unscrupulous corporate warfare where, as one railway
president expressed it, "the greatest liar comes out ahead." With the
government operating the railways, there would be no conflicting
interests necessitating the employment of such costly officials whose
great diplomatic talents might well be dispensed with, while the
running of trains, and the conduct of the real work of operating the
roads, could be left to the same officials as at moderate salaries now
perform such duties, and consolidation of all the conflicting
interests in the hands of the government will enable the public to
dispense with the services of the high priced managers now almost
exclusively engaged in "keeping even with the other fellow," as well
as with the costly staffs assisting such managers in keeping even, and
the savings resulting may be estimated at from $4,000,000 to
$5,000,000 per year.

Government control will enable railway users to dispense with the
services of such high priced umpires as Mr. Aldace F. Walker, as well
as of all the other officials of sixty-eight traffic associations,
fruitlessly laboring to prevent each of five hundred corporations from
getting the start of its fellows, and trying to prevent each of the
five hundred from absorbing an undue share of the traffic. It appears
that each of these costly peace-making attachments has an average of
seven corporations to watch.

Referring to traffic associations, and their vain endeavors to keep
the corporations within sight of commercial ethics, the Interstate
Commerce Commission says: "But the most important provisions of the
law have not so often been directly violated as they have
been nullified through devices, carefully framed with legal
assistance,--here is one of the places where the high-priced lawyer
gets in his work--with a view to this very end, and in the belief that
when brought to legal test the device hit upon would not be held by
the courts to be so distinctly opposed to the terms of the law as to
be criminally punishable." In this connection, it is well to remember
what Mr. Dillon tells us of the ease with which the laws can be
evaded.

With national ownership the expenditures involved in the maintenance
of traffic associations would be saved, and railway users relieved of
a tax that, judging from the reports of a limited number of
corporations of their contributions towards the support of such
organizations, must annually amount to between four and five million
dollars.

Of the six hundred corporations operating railways, probably five
hundred maintain costly general offices, where president, treasurer,
and secretary pass the time surrounded by an expensive staff. The
majority of such offices are off the lines of the respective
corporations, in the larger cities, where high rents are paid, and
great expenses entailed, that proper attention may be given to the
bolstering or depressing the price of the corporation's shares, as the
management may be long or short of the market. So far as the utility
of the railways is concerned as instruments of anything but
speculation, such offices and officers might as well be located in the
moon, and their cost saved to the public. The average yearly cost of
such offices (and officers) is more than $50,000, and the transfer of
the railways to the nation would, in this matter alone, effect an
annual saving of more than $25,000,000, as both offices and officials
could be dispensed with, and the service be no less efficient.

Moreover, with the nation owning the railways, the indirect but no
less onerous tax levied upon the industries of the country, by the
thousands of speculators who make day hideous on the stock exchanges,
would be abrogated, as then there would be neither railway share nor
bond for these harpies to make shuttlecocks of, and this would be
another economy due to such ownership.

Railways spend enormous sums in advertising, the most of which
national ownership would save, as it would be no more necessary to
advertise the advantages of any particular line than it is to
advertise the advantages of any given mail route. From reports made by
railway corporations to some of the Western States, it appears that
something over one per cent. of operating expenses are absorbed in
advertising, aggregating something like $7,000,000 per year, of which
we may assume that but $5,000,000 would be saved, as it would still be
desirable to advertise train departures and arrivals.

A still greater expense is involved in the maintenance of freight and
passenger offices off the respective lines, for the purpose of
securing a portion of the competitive traffic. In this way vast sums
are expended in the payment of rents, and the salaries of hordes of
agents, solicitors, clerks, etc., etc. Taking the known expenditures,
for this purpose, of a given mileage, it is estimated that the
aggregate is not less than $15,000,000 yearly, all of which is a tax
upon the public, that would be saved did the government operate the
railways.

Under government control, discriminations against localities would
cease, whereas now localities are discriminated against because
managers are interested in real estate elsewhere, or are interested in
diverting traffic in certain directions; again, under corporate
management, it is for the interest of the company to haul a commodity
as far as possible over its own lines (with the government owning all
the lines this motive will lose its force), and thus traffic is forced
into unnatural channels. For instance: much of the grain from Kansas
should find its way to foreign markets via the short route to the
Gulf, the distance to tide water by this route being less than half
what it is to the Atlantic, yet so opposed to this natural route are
the interests of the majority of the corporations controlling the
traffic associations, which now dictate to the people what routes
their traffic shall take, that the rates to the Gulf are kept so high
as to force the traffic to the Lakes and to the Atlantic; and as all
the railways leading to the Gulf have lines running eastward, the much
lauded corporate competition fails to help out the citizens of Kansas,
who are subjected to the domination of the new tyrant denominated a
"traffic association." With the nation operating the railways, all
this would be changed, and localities favorably located would be able
to reap the benefits which such location should give, and should such
a condition ever obtain, the farmers of western Iowa will not then
ship corn to the drouth-stricken portion of Kansas for fifteen cents
per one hundred pounds, while the Kansas corn grower, living within
seventy-five miles of the same market, is charged ten cents per one
hundred pounds for a haul one eighth as long. By such rates the
railways force the hauling of corn from Iowa to western Kansas, and
then force the corn grower of central Kansas to send his corn
eastward, the result being two long hauls, where one short one would
suffice; but then the corporations would have absorbed less of the
substance of the people.

Another, and an incalculable benefit, which would result from national
ownership, would be the relief of State and national legislation from
the pressure and corrupting practices of railway corporations which
constitute one of the greatest dangers to which Republicaninstitutions
can be subjected. This alone renders the nationalization of the
railways most desirable, and at the same time such nationalization
would have the effect of emancipating a large part of the press from a
galling thraldom to the corporations.

With the nation operating the railways, we may have some hope that
rates will be reduced by some system resembling the Hungarian zone
which has had the effect of diminishing local passenger rates about
forty per cent., resulting in such an increase of traffic as to
greatly increase the revenues of the roads; the average of rates by
ordinary third-class trains being about three fourths of a cent per
mile, and one and a half cents per mile for first-class express
trains.

In Victoria, the parcel or express business is done by the government
railways, and the rates are not one half what they are with us when
farmed out to a second lot of corporations. Space does not permit the
discussion or even the statement of the many salutary phases of
government control, as developed in the various countries of Europe,
and it is not necessary, as there are abundant reasons to be found in
conditions existing at home, for making the proposed change. By far
the most menacing feature of continued corporate ownership is the
power over the money markets which it places in the hands of
unscrupulous men, any half dozen of whom can, at such a time as that
following the failure of the Barings, destroy the welfare of millions,
and plunge the country into all the horrors of a money panic. Whether
it be true or not, there are many who believe that a small coterie,
who had information before the public of the condition of Baring
Brothers and that a block of many millions of American railway
securities held by that house were being (or soon would be) pressed
upon the market, entered into a conspiracy for the purpose of locking
up money and thereby depressing prices in order to secure, at low
cost, the control of certain coveted railways. The railways were
secured, and there is not much doubt that they had been lying in wait
for such a critical condition of the money markets to accomplish this
purpose, which still further enhances their power for evil. With the
railways nationalized, not only would there be no temptation for such
nefarious operations, but the power of such men over values would be
greatly lessened, if not wholly destroyed, as there would be no
railway shares for them to play fast and loose with, and as money,
instead of being tied up in loans on chromos representing little but
water, would seek investment in bona fide enterprises, their
operations would have little influence, and would certainly have no
such baleful power over the industries of the country, as their
ability to affect the value of railway shares--on which such immense
sums are now loaned on call--gives them, they being able by locking up
a few millions when the money market is in the condition, which
obtained at the time of the Baring collapse, to force the calling of
loans and the slaughtering of vast numbers of the shares, carrying the
control of the railways they covet. If only for the purpose of
divesting "The dangerous wealthy classes" of this frightful power,
national ownership would be worth many times its cost, and without
such ownership a score of manipulators are soon likely to be complete
masters of the republic and all its industrial interests; hence, the
question reverts to the form stated in the opening of this paper:
Shall the nation accept as a master a political party that may be
dislodged by the use of the ballot, or shall the republic be dominated
by a master in the form of a score of unscrupulous Goulds,
Vanderbilts, and Huntingtons, who cannot be dislodged, and who never
die?

Assuming that $30,000 per mile is the maximum cost of existing
railways--as is shown in THE ARENA for February,--and that there are
160,000 miles, it would give a total valuation of $4,800,000,000; but
that there may be no complaint that the nation is dealing unfairly
with the owners of much water, it will be well to add twenty-five per
cent. to what will be found to be the outside value of the railways
when condemned under the law of eminent domain, and assuming that
$6,000,000,000 of three per cent. bonds are issued in order to make
payment therefor, and it involves an interest charge of $180,000,000,
to which add $670,000,000, as the cost of maintenance and operation,
and $50,000,000 as a sinking fund, and we have a total annual cost,
for railway service, of $900,000,000 as against a present cost of
$1,050,000,000 ($950,000,000 from traffic earnings, and $85,000,000
from other sources of railway revenue) resulting in a net annual
saving to the public of $150,000,000 to which must be added the other
various savings which it has been estimated would result from
government control, and which, for the convenience of the reader, are
here recapitulated, namely:--

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