American Railways and American Cities

The practice of regarding railways as purely private property has, in the public mind, greatly obscured the perception of their essentially public character, and the right to equality in their enjoyment. The enormous benefit they have conferred upon the people of this country, the consciousness that they have largely made the country what it is, prevent us from considering sufficiently the evils of an unfair and unequal division of those benefits. Yet there is no instrumentality of human industry whose equal enjoyment is more essential to the general welfare. All the great and small interests of modern life are vitally concerned in this. The cost of railway service is a far greater direct tax upon industry than the entire expense of government, as is seen in the fact that the gross earnings of the railroads of the United States for 1892 were nearly a billion and a quarter dollars. The very existence of cities depends upon transportation, of which the railroad is the principal vehicle. It links the world together, abolishes at once national boundaries and national prejudices, and will produce universal brotherhood if anything can. It is the great inheritance of the race, — a birthright long withheld, and only lately fully enjoyed. It has utterly revolutionized all the conditions of human life, transformed the world, and set before mankind a series of lessons as gigantic, as novel, as perplexing, and as imperatively demanding study and solution as those which faced primeval man when he confronted nature with bare hands.

When this marvelous agency came into perfect use, in the present century, in the form of steam railways in this country, its boundless utility was but dimly perceived by the people. They knew but little how to direct its growth. They had, as a nation, their heads and hands full of the problems of national existence, the first trial of the experiment of free self-government on a large scale; and it was only natural that they permitted a set of clever adventurers to get possession of this Aladdin’s lamp, and with it the genii who are its slaves. In other countries, a long-established and powerful central government took measures looking to the orderly and systematic development of the railway, and in France, for example, the subsequent growth has been almost entirely on the lines at first laid down. Provision was everywhere made for the future purchase of the railways by the government, and a careful supervision was exercised to prevent unnecessary lines becoming a perpetual tax on the resources of the people, as well as the wild and violent fluctuations in charges which have been such an intolerable burden upon our industries. But in America almost the same freedom was allowed to lay down railways as to engage in any other kind of business, and no effectual check upon the construction of useless lines was ever attempted. The business of transportation over these new lines was regarded by railway men, if not by the public, as purely a private money-making business, to be regulated by self-interest, and nothing else. This magnificent engine of civilization, therefore, which should have been jealously guarded for the common and equal enjoyment of all the people, passed even from its infancy into the control of private corporations.

Recommended Reading

But it has not, by its appropriation to private profit, lost its public character, even in the eye of the law; and this notwithstanding the law has been administered by courts and lawyers very generally sensitive to railway influence. The doctrine that the railway is a common carrier was derived from the common law, and is the underlying principle of railway law. It is equally well settled to-day by judicial determination that a railway is a public highway, and subject to most of the rules applicable thereto. The public character of railroads is uniformly, boldly, vigorously asserted by every court. “The railroads are for the people, not the people for the railroads,” said Rufus Choate; and while to-day railroad managers sometimes grow very indignant when grievance committees from labor organizations wait upon them, and marvel much that “any one should undertake to tell us how we shall run our business,” even the railways have long ago admitted that it is not their business, but the public’s business. The accredited representatives of the railway interest are as ready as anybody to admit that, theoretically, the railway is only an arm of the public service. The universal adoption of measures intended to control and regulate commerce, the establishment of state and national commissions clothed with more or less extensive power, the fixing of maximum and minimum rates for freight and passengers, — all are so many attempts to bring the public power to bear upon this public agency.

The right, therefore, of the people to equality in the enjoyment of the benefits of the railway system is everywhere conceded in theory. In the administration of the post office this is not only recognized, but carried into perfect practical operation. The man who sends one letter a year pays for the service at exactly the same rate as the corporation that sends thousands. The smallest country village is served at the same charges and with the same impartiality as the largest city. Here and there it may happen that grounds for dissatisfaction exist, as must always happen as long as human inventions are imperfect; but with the postal system as a whole the people are perfectly content. By so much as the railroad system is greater than the post, by so much more must its practical administration fall short of perfection. But there is one cardinal principle which lies at the basis of its operation, and upon which the people have a right to insist. Neither person nor place should be allowed the slightest preference. It is safe to say that this requirement has never been met on a single railroad in the United States.

By absolute equality in the enjoyment of railways is not meant, necessarily, a uniform rate per hundred pounds per mile, though there are reasons for that rule; no rule could or should be adopted which would have the effect of shutting out of the great markets of the world the products of the Western prairies, or deprive the half-starved populations of the great cities of Europe and America of the necessaries of life, or prevent the cheap transportation of fuel and building materials from mines and sawmills to the remote habitations of the people. That the rates on such articles are now, in general, marvelously low cannot be denied; to raise their level materially is an impossibility, and any scheme which contemplates such a change could be carried into execution only by an absolute despot or an absolute monopoly. These low rates, however, do not constitute an infringement of the principle of equality except where they are so unreasonably low for through traffic as to compel the exaction of unreasonably high rates on local business; for their benefits are diffused throughout the whole community. The thing needed, and which seems so impossible at present, is the establishment of through rates on the articles named, which shall be determined by a thorough study of the interests of the whole people rather than by wild and unscrupulous competition in the supposed interests of the individual railways. It will scarcely be contended that such rates exist at any single point in the United States. So long as the roads are run on the principle that they belong exclusively to their owners, without any public responsibility and for the sole purpose of making money, and each separate road tries to draw to itself the greatest possible amount of business, it is simply inevitable that every imaginable motive will govern the fixing of rates except the general welfare of the whole people. These motives lead to various forms of discrimination, which, by reason of the narrow margin on which the business of modern times is conducted, have put every kind of industry at the mercy of the railroads, and decided, often upon false, unjust, and dishonest principles, the fortunes of many men and most communities.

If an individual be given a fair field and no favors, his failure in business can be attributed, as a rule, only to his own unfitness. But when his ruin is brought about by secret railroad rates granted to his competitor, the evil is great and serious, and one which affects the whole community. When the dry-rot strikes a town, and its industries shrivel from lack of enterprise of its people, it cannot complain; when the inscrutable laws of trade leave its wharfs to decay and its warehouses to the tenancy of the rats, though the spectacle is a melancholy one, the blame lies only with nature. But when, in spite of enterprise and public spirit, a community sees its shops closed, its mills silent, its streets growing up to weeds, its capital and its best talent insensibly drawn away to some neighboring city which enjoys better rates from the railroads, here is an evil as monstrous as it is insidious. Yet these things are occurring continually, in all parts of the country; they are so common that the thoughtless and the indifferent regard them as natural and right. They are neither right nor natural. They are due to the use and management of a mighty public function as if it were nothing but private property, and they are inseparable from such use. The country is covered with dying villages and towns whose expanding life has been stifled by railway discriminations. Who knows what proportion of the ninety per cent of business ventures that result in failure is to be traced to the unfair and unequal distribution of the burden of railway taxation!

This destructive activity is patent to the ordinary traveler, as to the student of economic conditions; and it is no less obvious to the more philosophical and fair-minded among the railway men themselves, who, however, in general, look to a perfection of the pooling system as a solution of the difficulty. To this effect is the testimony of Charles Francis Adams, ex-president of the Union Pacific Railway, before the Senate Committee on Interstate Commerce: —

“Railroad competition, as necessarily practiced, causes for the time being the wildest discrimination and utmost individual hardship. That is, under its operation you will always find certain points, where there is a war of rates going on, which have enormous advantages conferred upon them, which advantages are not and cannot be extended to other points. The point, therefore, which is not influenced by the war of rates suffers terribly. Its business is destroyed. How the business community, under the full working of railroad competition, can carry on its affairs I cannot understand.”

The evil effects of personal discrimination are moral as well as financial, and pervade the whole atmosphere of the business of the country. The system is simply one gigantic falsehood, whose ramifications have penetrated to the very foundations of society. Often this discrimination is made by means of over-charges, followed by special rebates to favorites of the officers, to companies or firms in which officers are interested. Sometimes a shipper will find it impossible to get cars at the time they are wanted; sometimes it will happen that one grain or cattle buyer at a given point will be selected out of several and granted a special private rate, with a view to enabling him to cut into the business of a rival line a few miles away. The one so selected gets all the business, and the others are driven out. The system of secret preferences is as impossible of eradication as any other species of fraud, and it assumes an almost infinite variety of forms. It has its roots in the dark; it grows rank and poisonous in the field of legitimate industry; its fruits are ruin unmerited and success undeserved; it introduces false business methods, false standards of business honor. It becomes known in the town that the published rates are only for the general public who do not know how to evade them. Finesse and collusion, not integrity and enterprise, become the conditions of success. There are not many apologists for this well-nigh universal though generally forbidden practice of personal discrimination. The high officials discountenance it, but the mere prohibition of such a practice is not sufficient to root it out. It is too deeply ingrained in the methods of the railroads to be abandoned at the many thousands of freight offices through the country, simply because it is forbidden. In all but one case out of a thousand it would cost the victim more to invoke the protection of the Interstate Commerce Commission or the federal courts than he could hope to recover, and he knows that he would thereby incur the enmity of an agency which has the power to destroy him.

Railroad officials almost unanimously approve, and quite unanimously enforce, the rule of granting special concessions to large shippers. This practice is rapidly concentrating the business of the country in a few hands. The advantage in freight charges alone is often sufficient to enable a shipper to drive a small competitor out of business. Thus, the railroads, which profess to be the servants of the people, and which ought to know no difference between large and small, rich and poor, are made the most active agency in that mighty movement whereby, yearly, thousands of small enterprises are crushed out of existence by concentrated capital. It is a gross violation of that rule of equality which should govern the administration of the railroads. For this the public is largely to blame, for the public mind is still confused as to the true nature of a railroad, and is not yet fully aware that it is not a private business, but a public business, and ought to be operated as such. The larger the volume of business offered by the shipper, the easier it is to keep secret the rebates granted; and even aside from secret rebates, the magnitude of the business of some shippers enables them to dictate terms to the roads. The railroad officials are much more likely to have a financial interest in the great city mills than in the feeble and struggling enterprises of the country villages; and whatever a road loses by carrying for the great manufacturers below cost can be made up by raising a notch or two the already overburdened local traffic. Open and avowed discrimination in favor of the rich and powerful in the use of the public highways is one of the marvels of the time. We have already progressed far beyond the point where, for discriminations of this kind, any redress is afforded by the courts. The evil is patent enough, but how many times has a judicial remedy been either asked or granted?

Personal preferences and privileges are bad enough, but they may be forbidden, though not prevented by law. There has grown up on all the railroads a practice, very generally defended by railroad men, of “charging what the traffic will bear.” A very common form of this may be shown by an example: The business of a company is done at a rate which covers all expenses and leaves a profit. At a certain point where there is a rival line it is possible to get a large amount of extra business, provided the rate is made one fourth of that for the same class of goods at other points on the road, or even at any rate whatever which is more than sufficient to cover the bare cost of handling and transportation. The excess over such bare cost is clear profit, but the road would be bankrupt if compelled to carry all its freight at the same rate. The railroads justify the practice by saying that if it were not for the small profit made on this through business the local tariff would have to be higher. But the consequence is that the inhabitants of the towns along the line of this road, having to pay four times as high a rate as the people of the competing town, close up their stores and mills, trade dies away, the atmosphere of the tomb pervades the streets, and every man who can sell his property moves away. The townspeople wonder why their town does not thrive. They hold meetings, and offer inducements to strangers to come and locate manufacturing industries there; the strangers come, ascertain what can be done with the railroads, and decide to locate somewhere else. The soil is rich, the inhabitants are industrious, but nothing can give prosperity to a town that is strangled by a railroad. The evil done by the one-fourth rate is not confined to this road. The rival road at the competing point is compelled to put its through rate down to a corresponding figure, and a string of dying towns along its line is the result. At the end of the year the railroad officials publish statistics showing how low their average rates have been, but they do not state that the average has been brought down by hauling its through freight at less than cost, by charging some of its patrons four times as much as others, or that the policy of getting business at any price at competing points has resulted in the ruin of scores of promising villages from one end of the road to another. Such a policy, defended with any amount of ingenuity, is pernicious to the last degree. It is a violation of the principle of equality, and, however much it may seem to benefit certain localities, results in evil when the general interest is considered.

Occasionally the town realizes that as long as it has but a single railroad it can be nothing but a wretched way station. The fever for building railroads sometimes pervades a whole State, as it did, a few years ago, the State of Kansas. The people think that if two roads are such a fine thing, four roads must insure their greatness. The railroads cleverly take advantage of this mania; emissaries visit every town, stimulating the inhabitants to bid for a new road. Neighboring towns are played against each other; all sorts of iridescent promises are made, and prospects of machine shops and division headquarters held out; bonds are voted; right of way is donated; maps are made, showing all the great railroads of the country centring at the favored spot. The roads are built out of the proceeds of the bonds, and the community wakes up to find itself hopelessly swamped with railroad bonds and faced with the necessity of repudiation, and has to support four railroads where one would have been amply sufficient to do the business. The people have simply jumped out of the frying-pan into the fire. To complete their troubles, the four railroads form a pool, or an “agreement,” rates are put up in order to enable the companies to recoup themselves for their losses on through traffic, and the more discouraged inhabitants, racked with taxes and hopeless of the future, move to the nearest big town and begin life over again.

But whatever the process, the practice of discrimination in favor of certain points draws to the great towns and cities the life and wealth and enterprise of the entire surrounding district. What is more common or more melancholy, throughout the whole extent of the country, than the “dead towns”? They encumber the rich and smiling prairies, hide among the mountains filled with mineral wealth, moulder away on the banks of great rivers. Their streets were once thronged with buyers and sellers, the hearts of the citizens were full of hope and courage, projects of enterprise and improvement were in the air. All this life has vanished, and gloom and dejection brood everywhere. The principal factor in this dilapidation has been the railroad, upon which they built all their hopes, but which has made it practically impossible to do business except at terminal points.

Mr. George W. Parker, vice-president and general manager of the St. Louis & Cairo Short Line, testified before the Senate Committee on Interstate Commerce, in 1885, as to the necessities and the conditions of through and local freight rates on his line between St. Louis and Cairo. The following excerpt from his testimony will be of interest as representing the views of a gentleman thoroughly well informed, and certainly not hostile to the railroads: —

The Chairman. Suppose that you were to carry the freights that you gather along the line of your road for the same rate that you carry through freight to Cairo, or wherever it is going, what would be the consequence?

Mr. Parker. Bankruptcy, inevitably and speedily.

The Chairman. Do you carry freight from St. Louis to Cairo, or from Cairo to St. Louis, at less than it costs you to run the trains or to pay the current expenses of those trains?

Mr. Parker. Yes, sir; sometimes we carry through freight at less than the expense of performing the service. I shall have to answer in the affirmative, though we do as little of this as possible. Circumstances force us to work for nothing, occasionally.

The Chairman. Does that help you, or help anybody else any, except the man who owns the freight?

Mr. Parker. Yes, sir; it frequently helps us in the distribution of our cars, so as to get them to the points where the demands of trade require them without pulling them empty. Very frequently, also, it occurs where this contest between trade centres comes in. My own line is occasionally used by its patrons as an instrument of warfare to protect their territory and their business. We are dependent upon St. Louis for a large share of our patronage, and we must join the army and fight when war is declared.

The Chairman. What do you mean by your patrons? The patrons along the line, inland?

Mr. Parker. No, sir; not so much as I mean my patrons at the terminal points. … It sometimes happens—I wish it were more seldom—that a combination of circumstances arises, by which, in order to protect our patrons here, we are compelled to accept a shipment from them at less, perhaps, than it would cost us to do that particular service.”

When it is considered that in the State of Iowa, for instance, the local business constitutes only about twenty per cent, and the through business about eighty per cent of the total, and the losses on the four-fifths traffic must be made up by overburdening the one-fifth, it is easy to imagine what must be the effect on the business of the small places, and how slender must be their chance when the industrial war is on, and the mighty influence of the railways is thrown wholly on the side of the big cities.

A glance at the census figures shows that some kind of blight has fallen upon the country districts, from which the cities have been exempt. The astounding growth in the population of the cities has been in great measure directly at the expense of the rural communities. While the city of Indianapolis increased 32,389 between 1880 and 1890, or forty-three per cent, forty-nine counties in the State remained practically stationary, and twenty-one counties actually lost population, some of them quite heavily. It is absurd to imagine that there was in 1880 any surplus population in those twenty-one counties; the mere natural excess of births over deaths should have added materially to their numbers. This exodus has not been peculiar to Indiana. Twenty counties in Michigan, between 1884 and 1890, exhibited the same decline, while Detroit, the principal terminal point in the State, showed a steady and rapid advance. It is not difficult to see whence came the hundreds of thousands who have poured into New York and Chicago during the last decade. The map of Michigan illustrates in a striking way the wasting effects of railway discrimination against the rural districts. Of the twenty counties which actually retrograded during the period mentioned, nearly all lie in the southern portion of the State, and Cass, St. Joseph, Branch, Hillsdale, Lenawee, and Monroe constitute one black streak of decaying communities from Detroit to Chicago. It cannot be doubted that the railroads have been the most potent factor in the economic life of the people of these counties. What is it in railroad management which has laid such a heavy hand upon them?

It is not, of course, fancied that the inequality of railroad facilities is the only force driving people cityward. Ambition, the monotony of rural life, the fascinations of the city, the American spirit of restlessness and desire for change, the cheapness and universality of travel, — all these impel the farmer’s boy to leave the farm for the village, and the village boy to long for the metropolis. These tendencies are in the air, in the conditions of the times, and in the character of the people; and when to all these we add that every enterprising village tradesman finds himself handicapped by high railroad rates, and trampled upon in every railroad war, and if he is really ambitious soon transfers his business to a large city, and that in every small town there is literally no opening for young men, and no alternative but to go away, it is manifest that the railroads are greatly aiding the cities in drawing to themselves the best and the worst from the country, and every moment are increasing the magnitude of the municipal problem, which is already one of the most alarming and formidable questions that confront us.

This process has been steadily building up great cities to be the menace of free institutions; the confluence not only of wealth and business, but of pauperism and misery, of political rottenness and industrial slavery. Here labor toils in great prison-pens, and lodges in tenements reeking with disease; here the enemies of society gather, and in the midst of filth and hunger plant seeds of anarchy; here poverty breeds crime, and crime poverty. The mighty centripetal force has sucked into this maelstrom millions of human lives that are daily growing more wretched and helpless. Every neighboring village sends its delegation of exiles, the defeated and broken down, to swell the wretchedness of New York, where one in ten of all the funerals is said to go to the potter’s field.

People have been so long accustomed to “point with pride” to the wonderful growth of our cities that they have failed to note sufficiently the cost at which it has been effected; at most they have regarded it as an inevitable tendency of the times, analogous to the centralization so manifest everywhere. That it is very largely the result of an universal denial of equal transportation privileges; a gross injustice to thousands of isolated communities; a wrong which, if perpetrated by government, would lead to revolution, has been too often overlooked. The refusal of simple justice to a thousand villages in a matter vitally affecting their every interest is the charge now laid at the door of the railroad system. That this injustice has aided the growth and wealth of fifty cities is not an admissible answer.

The part the railroads play in the rush of population to the cities is well worth serious investigation. The problem of our cities is urgent. The control of our largest cities seems to have passed definitely into the hands of their worst citizens. Occasionally things become intolerably bad, and then the better elements combine, and a temporary improvement is effected; but the deep and muddy stream of immigration pours in from Europe; the suction from the country, drawing good and bad alike, continues unabated; and in a year or two a new voting population has come in which has to be educated. The vicious principle of allowing partisan politics to govern in municipal affairs throws the reins once more into the hands of the bosses, and the old shameful round begins again.

The rural districts and the small towns still hold three fourths of the votes, but they do not hold one fourth of the power. The vote of New York city determines nearly every national election. Still, if the small towns and the country could see that the present policy of railway discrimination is powerfully contributing to the influences that are concentrating the national life in the great cities, and immeasurably adding to the burdens of business in every rural community, it is possible that an awakened public opinion would demand such changes in the laws and in the railway practices as would give every locality an equal chance. The home, which is to the workingman of New York as unattainable as a throne, would be possible in a village. The small independent workshop, granted the same access to the public highway as the great factory, would struggle up into life and activity; the industrial population, finding it possible to obtain work elsewhere than in crowded cities, would build up thousands of thriving villages, and the hum of busy and contented toil would fill the streets of towns that are now deserted.

The evils of discrimination are no new thing. They have occupied the attention of Congress and the state legislatures for many years. The existence of the evils cannot be denied. How to remove them is the great problem. Some twenty States, as well as the general government, have tried to control them by means of commissions. They have all undoubtedly done some good; but the States are, by the Constitution, expressly shut out from interfering with interstate commerce, and the larger part of the evils felt have pertained to commerce crossing state lines. The railroads of the country made a grand pretense of trying to prevent the passage of the Interstate Commerce Law and the establishment of the Interstate Commerce Commission; but these few years have been abundantly sufficient to prove that the law was a railroad measure, the chief effect of which has been to enable the railroads partially to suppress the great abuse of free passes, to collect an important body of information, and to attract the attention of many students to this gigantic and difficult problem. The hope of making the commission anything more than a bureau of statistics seems very faint. The law has doubtless been of benefit in securing some publicity of rates, but the inveterate evils of discrimination, especially against localities, remain untouched. As long as freight agents are full of zeal and enterprise, through freight will be captured at whatever it will pay, local traffic will have to pay for itself and through traffic also, and village communities will have the breath of life squeezed out of them in a hopeless struggle with terminal competitors. Both the managers and their critics seem to be coming rapidly to the conclusion that only by operating the railroads as a single organic whole will these evils ever be removed. The railroads have long contended that competition makes discrimination unavoidable; experience appears to be showing every day more conclusively that this is true, and at the same time proving that competitive private ownership means combination alternating with war, accompanied by discriminations, personal and local, of every kind, uncontrollable and destructive, or else a coalition so gigantic and so omnipotent as to hold all the industries of the nation in its grasp. The alternative is nationalization or a universal pool.