Monopolies and the People Part 7

will do for one ill.u.s.tration.

The Central Pacific is eight hundred and eighty-one miles in length. The cost of the road as given is $120,432,717, or $136,700 per mile. The actual cost per mile, taking the whole length of the road into consideration, was less than one-half the amount reported. This information we get through reliable channels, and is undoubtedly correct. The evidence induces the belief that the cost was less than $50,000 per mile, and less than $50,000,000 for the whole road. The company report a capital stock of $54,283,190, and a funded debt of $82,208,000. They also report the liabilities of the road at $136,491,190, being more than $80,000,000 above the actual cost, and $16,000,000 more than the reported cost. The stock of this company was watered to so great an extent, that to pay the interest on the funded debt, and declare a dividend on the stock, and pay operating expenses, and other contingencies, the road must earn at least fifty per cent per annum. Or to put it in plain language, the company must defraud the public in unjust and extortionate charges.

The "Sioux City & Pacific" is the pet road of Ma.s.sachusetts and Iowa congressmen. The cost of this road per mile, as shown by the report of the company, is $34,547. This cost is represented by paid-up capital--$2,067,600, and first mortgage bonds--$1,629,000. The road is one hundred and seven miles long. The actual cost of this road was less than $30,000 per mile.[C] Aside from these government bonds, the reported cost of the road shows that the stock has been _watered_.

[C] NOTE.--This company received $16,000 per mile, government subsidy bonds, amounting in the aggregate to $1,712,000, which does not appear in the report.

The Chicago, Rock Island, & Pacific railroad company has, from Chicago to Davenport, one hundred and eighty-four miles of road, and in Iowa three hundred and sixty miles, making five hundred and forty-four miles in all. The total cost as reported, is $28,496,999, or the sum of $52,384 per mile. The actual cost of the Illinois portion, as shown from official reports, did not amount to $30,000 per mile, and the Iowa extension cost still less, but including the bridge at Davenport, the cost will approximate to $30,000 per mile, making the total actual cost $15,320,000, showing that the stock of this road has been watered to the amount of $13,000,000. The Iowa portion of this road received a grant of five hundred and fifty thousand acres of land, and aid by county and city subscriptions amounting at least to $500,000, that do not appear in the published statement.

The Iowa Falls & Sioux City road is under the special care of congressmen. It has one hundred and eighty-four miles of road, but no rolling stock. The total cost as given is $7,585,000, or $41,222 per mile, while the actual cost was about $31,000. The stock was watered to the amount of $1,800,000, and this, too, after having received a grant of land to the amount of one million two hundred and twenty-six thousand four hundred and six acres.

We might continue this list, but think we have referred to a sufficient number for our purpose. It will be seen, and is now pretty well understood, that the cost of railroads as reported by the companies is not their actual cost, but includes large amounts that are pure fictions--an increase of the capital stock, no part of which is used or needed in the construction of the road, stock that is not even paid up, but is distributed among stockholders in proportion to the amount of _bona fide_ stock each one holds in the company. The capital stock of the company, and bonds issued by it, are supposed to represent the cost of the company's road, rolling stock, &c. But few roads in the country fail to earn large dividends on this actual cost, and but for the custom of watering stock, would show fair profits after running expenses, repairs, &c., are paid. If these corporations were prohibited by statute from increasing their capital stock above the actual cost of their roads, less money would be required for transportation of freights, and there would be no need of resorting to dispatch companies, or any other ring combinations for the purpose of extorting unjust amounts for transportation. But these combinations do not construct roads, simply for the purpose of operating them; this is but a secondary consideration. The main object is to speculate in stock and bonds.

Wall street being the grand center for this kind of speculation, the company, in order to profit by sale of its bonds, must make a showing in this grand mart of receipts sufficient to command public attention, the rule being that stocks and bonds appreciate in value in market in proportion to the dividends declared upon their earnings. They who control these roads have two objects in view: first, to add to their capital stock; and second, to make dividends upon such increase of stock. If a line of road cost $2,000,000, and the company owning it can by any means make it pay dividends on three or four millions, they can issue to themselves stock representing this increase. Having thus increased their stock, under the pretense that they wish to construct more road, or improve or repair what they already have, they issue their bonds to the amount of the increased stock (sometimes to an amount equal to more than their entire capital) and put them upon the market. The first object is to get dividends upon whatever stock they have paid up (if any is paid up), and next to make their roads earn enough to pay the interest on their bonds, and then, if possible, to force the earnings of their roads to a point where dividends can be paid on the increase of stock. Having increased their capital stock, and issued and sold their bonds, they are in no haste to add to, or improve or repair, their roads; for they have already consummated the object in view, to-wit: made in cash the market value of their bonds. This same operation is repeated as often as their capital stock will bear reducing, and in some instances it has been repeated until the stocks and bonds became almost worthless. This species of speculation does not add one dollar to the wealth of the country, nor aid commerce. It only enriches that cla.s.s of speculators who prey upon the public.

We have shown that one and one-fourth cents per mile per ton will compensate for transporting freights over railroads, provided the business is conducted fairly and honestly, and we can now begin to understand why such enormous rates are charged. The roads must earn enough to pay the interest upon all the bonds sold and upon the capital stock issued by these companies. The people, the producers, are taxed for this purpose. One-half of the products of every farm in the west goes into the pockets of these Wall street speculators, and the rates for transportation are increased in the same proportion that these stocks and bonds are increased. When more money is demanded in Wall street, telegrams are sent throughout the country by these railroad kings to their agents and employes to advance the rates on transportation. This reduces the price of the farm products, and puts the earnings of the farmer into the pockets of the railroad monopolist, and the stock and bond gambler in Wall street.

It would look as though the combinations of this oligarchy were perfect; that the system of extorting from the people and robbing the producers could not be improved, and that these most unscrupulous oppressors ought to be satisfied. Such is not the case. Either because they wish to have fewer numbers with whom to divide the spoils, or because they have reduced the value of their stocks and bonds until it is necessary that their roads pa.s.s under other management, or because they must have still higher rates for transportation, of late a new combination for transportation has been formed, called Dispatch agencies or companies--a kind of "Credit Mobilier" arrangement. These dispatch companies are comparatively new in the west, and we know but little of their organization save that it costs still more to s.h.i.+p with them than with railroad companies. These dispatch agencies are not formed to compete with railroad companies in the transportation of freights, nor are they, in any measure, rivals or opponents of railroad companies. In the nature of things there must be perfect accord between these two corporations, for the railroad companies could and would at once destroy the dispatch business, if the same in any manner conflicted with the interests of railroad managers. The dispatch companies depend entirely upon the railroad companies for cars, locomotives, and railroads for carrying their freight. Enough is known of railroad management to satisfy the most skeptical, that the organization of dispatch companies is for purposes other than the more expeditious transportation of freight.

These dispatch companies are composed mainly of railroad directors and superintendents, with a few figure heads to represent the outside world.

After the formation of the dispatch companies, contracts for the use of cars, locomotives, and roads are made upon the same principle and for the same objects as in the case of the Union Pacific railroad company and the Credit Mobilier company. The directors of the railway company, representing the company, contract with themselves as a dispatch company, to supply themselves cars, locomotives, and roads for the prosecution of the business of the dispatch company, and for a certain consideration agree to pay themselves, as directors of the railway company, for what is so leased to themselves as a dispatch company; and then in order to promote the business interests of the dispatch company, and secure to themselves as its directors higher rates for transportation of freight, they make it a point at all times to give the preference to the said dispatch company. As a result of this arrangement the dispatch companies monopolize the princ.i.p.al part of the business.

They are in appearance opposition lines to the roads on whose tracks they are carried, and are really so, when the interest of the railroad stockholders not concerned in the dispatch companies are considered.

These stockholders get their dividends upon their capital stock and their share of "watered stock" and bonds, but do not partic.i.p.ate in the profits of the dispatch business.

Like the Credit Mobilier, it pays large dividends which it extorts from the people, charging even higher rates than the railroad companies; but it only divides among its members, and not with the stockholders of the railroad company whose track it uses. The interest of these stockholders is not considered. They have built and equipped the road, and selected their directors and managers; but these managers and directors turn the road over to a hostile company, composed of themselves and select friends. To promote the business of the dispatch companies, their trains are transported from one end of the railroad to the other in less than half the time required to transport a train of freight cars belonging to the road. The effect of this course of procedure is obvious. s.h.i.+ppers, finding that these railroad managers discriminate against the cars belonging to the road proper, and that they grant extraordinary favors and facilities to the _opposition_ lines, quit patronizing the former and do business with the dispatch companies. The result is that the dispatch companies now control the freight business, and the railroads have, as a rule, quit providing themselves with freight cars. When applied to for cars, the answer is, "We have none," while at the same time the side tracks are filled with freight cars belonging to these dispatch companies, demanding much higher rates than the regular charges. At the first glance we fail to understand why a course so suicidal to the best interests of the railroad company is pursued by its directors and managers, nor can we readily comprehend why they permit these dispatch companies to monopolize their tracks and destroy the business of their roads. We think we can solve the problem. These managers of the railroads, and such stockholders as are admitted to a partic.i.p.ation in the conspiracy, are the proprietors and incorporators of the dispatch companies. After payment of the running and other expenses of the road, and their own salaries (fixed by themselves) the dividends on their railroad stock is small. Their position as stockholders in both the railroad and dispatch companies is the same as was that of the stockholders of the Pacific railroad companies and the Credit Mobilier, who could well afford to sacrifice the interests of the road and its stockholders who had no interest in the Credit Mobilier, provided they received large dividends from their Credit Mobilier stock.

So, in organizing the dispatch companies and giving them the preference over the roads, with the absolute control of the freighting business, while the railroad stocks pay no dividends and depreciate in value, and the roads and rolling stock are being worn out, the dispatch business thrives and pays large dividends to this inside ring--comparatively small in numbers--which controls the road, and in addition to preying upon the public, so arrange the business as to exclude the stockholders of the road from any share in the profits of the dispatch company.

Having oppressed the public by extortionate charges for transportation, increased the stock of the railroad company to an amount that precludes profitable dividends, even from the highest of tariffs, and issued and sold bonds of the company to so large an extent as to make it impossible to pay the interest on them, and at the same time meet the running expenses of the road, including their own salaries as officers and managers, having, in short, loaded the railroad companies with burdens greater than they can bear, as a last master stroke of financiering they organize themselves into dispatch companies, and while they enrich themselves they reduce the railroad companies in which they are managing directors to absolute bankruptcy. The stockholders who, confiding in the integrity of these men, elected them directors and managers, are swindled out of their legitimate dividends, their stock becomes worthless, debts acc.u.mulate against the company, locomotives, tracks, and cars are worn out in transporting freights for the dispatch company, at rates ruinous to the railroad company, and as a grand _finale_ the road pa.s.ses into the hands of these conspirators, under the orders or judgments of courts. In the meantime s.h.i.+ppers are compelled to pay double prices for freights, because the _railroad companies_ have not the necessary facilities for s.h.i.+pping; all has pa.s.sed into the hands and under the control of the dispatch companies. By a mere fiction, the managers of the road contracting with themselves as dispatch companies, a compet.i.tion is permitted to take the control of the carrying trade over the road, control the track and rolling stock, as well as the officers of the railroad company, destroy their business and drive them into bankruptcy. Those not in the secret of the organization fail to comprehend its necessity; why, for example, a train of cars run in the interest of the dispatch companies can travel at double the rate of speed of the trains run in the interest of the railroad company, or why higher rates for transportation should be taxed and paid. The only solution we can give is, that it presents additional means for taking from the producer an additional portion of his product, in the shape of charges supposed to be paid to a company organized for the purpose of aiding in the transportation of freights, but which is, as a matter of fact, a combination in the interest of the managers of the road with the real purpose of making personal gain to themselves at the sacrifice of the interests of the stockholders.

As a result of this new mode of conducting business, let us see how the price of freights is affected. During the summer and fall of 1872 the price of freights by water from Chicago to New York was $4.25 per ton, and by railroad from $7.00 to $8.00. With the close of navigation the rates, under the management of the dispatch companies, advanced to from $25.00 to $28.00 per ton. While the railroad companies can carry for $7.00, the dispatch companies charge $25.00. The margin for profit on the stock of these dispatch companies promises to equal the dividends of the Credit Mobilier stock, and from this showing we can have some idea of the robbery being practiced upon the people, particularly the farmers. Well may the producers of the west complain of these swindling monopolies, and band together for mutual protection.

CHAPTER XVI.

A PRIVILEGED CLa.s.s--THE MONOPOLISTS RELIEVED OF THE BURDENS OF TAXATION--AN OUTRAGE UPON REPUBLICAN GOVERNMENT.

Another evil resulting from the railroad system of the country is the partiality shown railroad companies in the matter of taxation. The const.i.tutions of all the states provide that the levy of taxes shall be uniform; and in contemplation of law each owner of property subject to taxation must bear a proportionate share of the taxes levied for the support of the government. Indeed, it is a part of the compact entered into among all civilized people, that each will contribute a proportionate share towards defraying the expenses of the government under which he lives, and which affords him protection, and secures to him the enjoyment of his rights as a citizen. In a republic where all have, or are supposed to have, equal rights, this contribution to the support of the government is a duty weighing upon all, and to make a discrimination in favor of any man or cla.s.s of men, or of any companies or corporations, contradicts the fundamental principles of republican government, and recognizes favored or privileged cla.s.ses. To compel the property of individuals to alone bear the burdens which should be shared by that of corporations violates both the letter and spirit of the const.i.tution. All public burdens should bear equally upon all people, a.s.sociations, and corporations. The legislature has as much right to say that the property of one-half of the citizens of a state shall pay the entire expenses of the government, while no taxes shall be imposed upon the property of the other half; or to provide that they who engage in particular branches of business shall supply all the means for defraying the expenses of the government, as to provide for the partial or total exemption from taxation of the property of corporations. Yet as a matter-of-fact railroad corporations are not required to pay their proportionate share of taxes, nor is their property subjected to the same rules of taxation as that of individuals. In almost all the states these corporations are taxed upon their earnings; their own officers keep the books, and once in each year make a showing, and upon this showing a small tax is levied. If they are honest and present a correct statement of the earnings of their road, the amount of tax fixed by the legislature of the state is paid; but if they choose to suppress the truth a less amount must suffice. Take the state of Iowa as an ill.u.s.tration. Prior to 1872 railroad property in this state did not pay more than one-seventh as much tax upon its value as the property of individuals, and under the present law it does not pay more than one-half as much. Yet no property in the state has yielded such large profits on its actual cost and value as railroad property. Iowa had in 1872, subject to taxation, 3,160 miles of railroad. Take the value of their roads as fixed by the companies and reported in the Railroad Manual, and the average per mile is over, rather than under, $40,000.

Then for the purpose of taxation reduce the valuation to about the same rates as are fixed upon the property of individuals, and the average would be about $18,000 per mile. This would make the grand aggregate for tax purposes $56,000,000. Now if a two per cent tax (which is less than the average rate for all purposes) was a.s.sessed upon this property, the revenue to the state and counties would amount to the sum of $1,120,000.

But if the same rule of taxation were applied alike to all property in the state the rate demanded of individuals would be less than at present, while railroad companies would only be required to do what the const.i.tution exacts of them, to-wit: pay their just proportion of taxes for the support of state government. Is it any wonder that we complain of high rates of taxes when so large a portion of the property in the state is exempt from taxation? In Muscatine county there is at present about eighty-five miles of railroad. At an a.s.sessed value of $18,000 per mile the total for taxation would be $1,530,000, which, on a two per cent tax would afford a revenue of $30,600, of which, if divided between the state and county as other taxes are divided, there would be paid into the county treasury about $24,500, which would be a large increase over the amount now paid to the county. The same would be the result in all the other counties in the state were the manner of taxing railroads so changed as to make no discriminations in their favor. The same kind of discrimination is made in most of the states in favor of the railroads and against the people. No good reason has ever been given for this kind of discrimination, nor can it be supported or justified upon principle or upon const.i.tutional grounds. The value of a mile of railroad can be as easily ascertained as that of an acre of ground, or of a house and lot. The depot, and station grounds and buildings can be a.s.sessed as readily as any grounds or buildings. The value of their rolling stock is always included by the companies in giving the cost of their roads, and the value of the roads, including rolling stock, can be more easily ascertained by the a.s.sessor than the value of many kinds of personal property, yet it has never been considered necessary or permissible under the const.i.tution to discriminate in favor of individuals or cla.s.ses of individuals when a.s.sessing property for the purposes of taxation. But when the property of these gigantic corporations is to be taxed, when they are called upon for their share of taxes to aid in defraying the expenses of the governments that are granting them extraordinary and exclusive privileges, they refuse to submit to the law which prescribes the manner of collecting taxes from the people and ask special legislative enactments in their favor. To secure such enactments they use their great influence in filling the legislative halls with their stockholders, directors, and attorneys.

Thus far they have generally succeeded, and in most of the states special statutes, discriminating in their favor, are now in force.

Because of this special legislation the people are paying taxes that should be paid by railroad companies, and in return for favors shown, these companies are constantly increasing their extortions, and imposing additional burdens upon the people.

We can more fully realize the extent of the unjust burdens imposed upon the people by ascertaining the amount of capital invested in railroads in the United States, and showing its relative value compared with the taxable property of the country. For this purpose it will not be unfair to take the value of railroad property as given by the different companies and published in the Railroad Manual. The reported cost of all but forty-six roads in the United States is $2,070,980,285. If we add to this amount the probable cost of those not reported, among which is the Union Pacific, this large sum will be swollen to nearly $3,000,000,000.

The taxable property in the United States, reported in the census of 1870, was $14,178,986,732. If this railroad property was included, these corporations should pay about one-fifth of all the taxes collected in the country. The method of taxing railroad property that has always obtained in Iowa, and some of the other states, relieves it of at least three-fourths of the taxes justly due from it, and requires the people to supply the deficiency created by this exemption. But, as will appear from the census returns, a small portion only of the vast railroad wealth of the country is included in the valuation of property returned; nor is it listed and returned by local a.s.sessors as is the case with the property of individuals. In Iowa the census returns show the value of the property in the state to be $302,515,418. The value of railroads in Iowa, as shown by the different companies, is $84,067,663. An equal a.s.sessment and levy of taxes upon all the property in the state subject to taxation would require this railroad property to pay over one-fourth of all the taxes levied in the state; yet as a matter of fact not one-twentieth of this amount has ever been collected, unless we except the year 1872, when a small increase over old rates was required. While all acknowledge the injustice of this system of discrimination in favor of railroad companies, and while the people are burdened with more than their just proportion of taxes, all efforts to correct the evil seem to have proved abortive. The fact that more than eighty-four millions of dollars, being over one-fourth of the entire wealth of the state, is held and controlled by corporations, possessing under their charters special privileges, who have combined to prevent legislation that would require of them a contribution of their just share for the support of the government, explains the reasons for these discriminations in the collection of taxes. The power of this railroad oligarchy is now so great that it shapes and controls all revenue statutes. In all cases where the interests of the people and those of these corporations conflict, the corporations acting in concert, are triumphant, and the interests of the people are disregarded. Taxes justly due from the corporations, by special legislation, are extorted from the people, because this anti-republican combination, controlling the wealth of the country, demands it.

CHAPTER XVII.

THE STRONG GRASP OF CONSOLIDATED CAPITAL ON AMERICAN LEGISLATION--BEECHER ON "REFORMATION OR REVOLUTION"--"HISTORY OF RAILWAY LEGISLATION IN IOWA."

However much we may boast of our purity, patriotism, and political integrity, the history of the legislation of the United States, both state and national, proves that legislators, like other men, are subject to temptation, and that they do not always successfully resist the tempter. It is not a pleasant truth to acknowledge, that the acquisition of money is the controlling motive in the American mind; yet it is a truth. Nor is it pleasing to admit that corporations control the legislation of our nation and state; but the fact is too patent to be denied. Nor will any one who, without prejudice, examines the history of legislation upon the subject of railroads, deny that legislators have been controlled in their acts by the desire, and from the prospect of receiving personal pecuniary benefit by the pa.s.sage of acts granting special favors to railroad companies. If the instances of corrupt legislation were rare, or if the persons who acted from personal considerations, rather than for the public good, were few in number, we would not feel justified in devoting time to the discussion of the subject. But when this species of legislation becomes the rule, and legislation in favor of the people the exception, as has been the case for years past, we feel fully justified in calling the reader's attention to the matter.

If we were asked what acts pa.s.sed by the forty-second congress were of benefit to the people, we would be expected to answer that the internal revenue and tariff laws had been modified, and a part of their burdens lifted from the people; but nothing else of benefit to the public. If, however, we were to look through the acts of this congress, we would find almost all conceivable acts in favor of corporations, companies, and individuals, granting special privileges, which, in almost every instance, might be characterized a "congressional job." Patent right extensions; grants to railroad companies; for the sale of Indian reservations; amendments to railroad charters, bridge charters, and other like interests, have monopolized the time of the national legislature not consumed in investigating alleged irregularities of some of its members. As a rule, lobbyists and rings have shaped and controlled legislation for years, and have const.i.tuted themselves one of the established inst.i.tutions at the national capital. The successful lobbyist demands and receives for his services larger pay than the salary of congressmen. These men never appear at Was.h.i.+ngton unless they have a congressional job on hand. To them the ear of the average congressman is always open. A measure without any merit, save to advance the interest of a patentee, or contractor, or a railroad company, will become a law, while measures of interest to the whole people are suffered to slumber, and die at the close of the session from sheer neglect. It is known to congressmen that these lobbyists are paid to influence legislation by the parties interested, and that dishonest and corrupt means are resorted to for the accomplishment of the object they have undertaken; that they are a species of brokers whose business it is to beg and buy congressional votes for some pet scheme; to do acts which in former times would have disgraced all parties concerned, but who are now looked upon as a necessary part of the legislative machinery. Of course those interests that can employ the greatest number of these _congressional brokers_, and wield the greatest influence throughout the country, are in the best shape to secure favorable legislation. No one interest in the country, nor all other interests combined, are as powerful as the railroad interest. Railroad corporations, by constantly asking and receiving, have acquired such strength as to control legislation in all cases where their interests are affected. With a net-work of roads throughout the country; with a large capital at command; with an organization perfect in all its parts; controlled by a few leading spirits like Scott, Vanderbilt, Gould, Jay, Tracy, and a dozen others, the whole strength and wealth of this corporate power can be put into operation at any moment, and congressmen are bought and sold by it like any article of merchandise.

We have already shown the value of the railroad property in the United States, and some of the practices of companies, and their abuse of the privileges granted them. We are now treating of their influence upon legislators and legislation, and of the great power their wealth and combination secure for the purpose of controlling legislation. In this connection we must not forget that the vast sums owed by railroad companies in the United States, for which their bonds have been issued and sold, is a powerful persuasion for legislation in their favor.

We look upon the national debt as being enormous, and are apt to complain of the burdens it imposes; but great as it is, these railroad corporations, after showing a paid-up capital equal to the cost of all the roads in the country, less $865,357,195, show a bonded indebtedness of $2,874,149,667, being two billions over and above the entire cost of all the roads in the United States, showing that the total amount chargeable against the railroads of the country, exclusive of floating debts, is the sum of $5,169,129,664. This vast sum, amounting to more than one-third in value of the entire taxable property of the nation, is concentrated in these corporations, whose interests are at war with the people's. Controlled as it is by a few leading men, who have their partners, agents, and servants everywhere, it is not strange that the champions of these monopolists should be found in congress. The power of this great monopoly is felt in the nomination and election of congressmen. One-third of the wealth of the nation combined under the control of a few men is a dangerous power in a republic. When the object sought to be accomplished by this power has been to take control of the government, and administer all its departments in the interest of anti-republican inst.i.tutions, to build up monopolies, and trample upon the rights of the people, it has had no trouble to secure the number of congressmen sufficient for its purposes. In proof of this a.s.sertion we have only to look at the history of congressional legislation upon the subject of railroads as shown in a former part of this work. We cannot shut our eyes to the fact that the consolidation and combination of wealth and influence of railroad companies have procured the pa.s.sage of acts of congress under, and by means of which, these corporations have added largely to their wealth, and strengthened themselves for the desperate struggle soon to come between them and the people. Mr. Henry Ward Beecher has had his attention drawn to some of the more alarming phases of our present political condition. In a recent address delivered in St. Louis, he used the following language:

"I must, however, make haste to say, that among the dangers of the times, is one which has developed out of the prodigious rapidity of the acc.u.mulation of enormous and consolidated wealth. If I stand in the city of New York and look southward, I see a railroad--the Pennsylvania Central, that runs across the continent with all its connections. Its leases and branches represent a capital of some hundreds of millions of dollars. If I turn my eyes to the north, I see the Erie, where many hundreds of millions dollars lie. If still further to the north, I see the great New York Central, that represents hundreds of millions of dollars. These three roads represent thousands of millions of consolidated capital. Now suppose, in any emergency the railroad interest demands--suppose there were some great national question which demanded that the president of the United States should be a man, and the senate should be composed of men playing into the hands of the great national railroads' concentrated capitalists, what power is there on the continent that could for a moment resist them? It is not a great many years since it would seem almost atrocious to have suggested that thought. But legislatures have been bought and sold, until we think no more about it than of selling so many sheep and cattle. Does any body suppose that if it were a national interest that these vast corporations were seeking to subserve, that there is any legislature on this continent that could not be crushed or bought out by this despot, compared with which even slavery itself were a small danger. One of the greatest humiliations of a nation that is justly proud of so many things, is that disaster which has fallen upon our congress. When we see the slimy track of the monster, we may justly ask: 'What are we coming to?' There has got to be a public sentiment created on this subject, or we will be swept away by a common ruin. I tell you that the shadow that is already cast upon the land is prodigious. I do not believe in the sociologists, in the international, nor the communists; but when I see what rich men, as cla.s.ses, are doing with our legislatures, what laws they have pa.s.sed, what disregard there is to the great common interest, I fear that the time will come when the workingmen will rise up and say, that they have no appeal to courts, no appeal to legislatures; that they are bought and owned by consolidated capital, and when that time comes, unless it brings reformation, it will bring revolution; and if any such time does come, I do not hesitate to say I will stand by the common people for the encouragement of the working people, and against the wealth of the consolidated capital of the land."

This great consolidated railroad interest now has its champions in the halls of congress. In the senate is Dorsey, president of the Arkansas Central railroad. Patterson, senator-elect from South Carolina, is a railroad man. Jones, of Nevada, Allison, of Iowa, Mitch.e.l.l, of Oregon, Carpenter, of Wisconsin, and Windom, of Minnesota, and others are recognized as reliable railroad men. In the house we have Brooks, Kelly, Schofield, and many more who have proved their fealty to this great monopoly on many occasions. In addition to the friends of these corporations in the legislative halls, paid lobbyists throng the capital, supplied with stocks and money, to be used "where it will do the most good." This money is supplied by the railroad companies for purchasing votes for favorite measures, and the recent startling developments show that this fund does not lie idle. All this has resulted in corrupt legislation. Congressmen have aided in procuring grants and special privileges to companies of which they are members, and other congressmen have listened to the arguments of lobbyists, and sacrificed the best interests of the people to promote the interests of these monopolies.

The influence of railroad companies over legislation is not confined to the general government. It develops its full strength in state legislatures. There it manifests itself openly. Railroad companies nominate and elect their own men for the avowed purpose of securing the enactment of laws favorable to themselves. Railroad directors, stockholders, and attorneys are elected to the legislature because their interests are adverse to those of the people; they are selected to defeat all legislation tending to protect or relieve the people from the oppression of these corporations. Paid lobbyists are kept in attendance during the legislative session for the same purpose. Free pa.s.ses are given to legislators as cheap bribes, and money and railroad stock and bonds are placed "where they will do the most good" to the railroad interest. By the use of all these means, majorities in the interest of railroad companies are secured, or such strong minorities as will prevent unfriendly legislation. As a fact, now a part of the history of the country, the legislatures of many of the states are in the interest of, and controlled by, these corporations. They shape all public legislation, and rule the affairs of the state. The people are taxed and robbed by their own legislatures. Immense sums of money, or state bonds, are donated to these corporations, and the people are taxed to pay them, while the railroad property is practically exempt from taxation. The legislature of the state of Louisiana donated to a single railroad company $3,000,000, and guaranteed the bonds of the same company for about as much more. The legislature of the state of Alabama has voted to different railroad companies many millions of dollars. The same is true of Georgia, Texas, North and South Carolina, and many other states. In some of these states men who were elected to represent the people, and who were pledged in their interest, have openly sold themselves to this railroad monopoly. For a consideration paid to them they have a.s.sisted in bankrupting their states, and reducing the people who trusted and honored them to a state of servitude, scarcely less oppressive than the old system of African slavery. The value of property is destroyed by excessive taxation, and the political and judicial power of the states is handed over to railroad men, who, by combining their interests, have created a great central power, antagonistic to the people, and destructive of republican inst.i.tutions. In the northern states it has been found impossible to procure just legislation where the interests of railroads and of the people conflict. In addition to the license given to railroad companies, by legislative grants and special privileges, to plunder the people, legislators, in violation of const.i.tutional provisions, and of every principle of justice, have persistently refused to require of these corporations their just proportion of taxes, and have just as persistently provided for taxing the people to aid railroad corporations. Take the state of Indiana as an ill.u.s.tration. Counties, cities, and towns have been burdened for years with unjust taxation because of legislation in favor of local aid to railroads. In that state there are now three thousand five hundred and twenty-nine miles of railroads, representing about $100,000,000. For the purposes of taxation, all of this railroad property represents but $10,000,000. Some of these roads, for the purposes of taxation, are appraised at $3,000 per mile, and some as low as $500, and $400. While the property of individuals is appraised at about one-third of its estimated value, this railroad property does not pay taxes upon more than one-tenth part of its estimated value, and when at a recent session of the legislature an effort was made to amend the statute so as to make taxation more equal, it was defeated by the railroad men in the legislature, supported as they were by the strong lobby whom they had paid to be in attendance.

The history of railroad legislation in the state of Iowa is of the same glaring character. We have the pleasure of laying before our readers the following succinct history of this Iowa legislation, from the pen of Hon. Samuel Mc.n.u.tt, who, for the last ten years, has been a member of the legislature (six years in the house and four years in the senate), and who kindly furnishes this communication at our request.

HISTORY OF RAILWAY LEGISLATION IN IOWA.

HON. D. C. CLOUD, Muscatine, Iowa:--

DEAR SIR: The progress of the railroad question is remarkable in our own state. As a member of the Iowa legislature, for ten consecutive years, I have had occasion to note that progress, and to observe the advancement of that interest from struggling infancy to vigorous growth--from feebleness to a strength that is fearful to contemplate.

The people of Iowa, through their legislature, have always been eminently friendly to the construction of railroads and the promotion of the railway interests. In proof of this, witness the whole history of our legislation; witness our magnificent land grants, subsidies, bonds, subscriptions, and taxes, to the amount of five per cent of our entire valuation, in one year, as free gifts to railroad corporations. And yet some of these corporations have cheated us as people never were cheated before. We have afforded immunities to capital invested in railroads that are not afforded to any other kind of capital in the state. Witness the hitherto almost entire exemption from taxation of that kind of property. But, more than this, we have laws regulating the charges to be made by those engaged in several of the industrial pursuits, while up to the present time there has been no law upon our statute books interfering with the charges made by railroad corporations; and only _the right_ to interfere has been claimed in cases of public necessity, where those corporations are guilty of gross extortion or unjust discrimination.

The first grant of lands to aid in the construction of railroads in our state is known as the "Iowa Land Bill," which pa.s.sed congress and was approved by the president, May 15th, 1856. Under this act there has been certified to the state, to aid the four original land grant roads, as follows: to the Burlington & Missouri River railroad, two hundred and eighty-seven thousand acres; to the Mississippi & Missouri (now part of the Chicago, Rock Island, & Pacific) railroad, four hundred and seventy-four thousand six hundred and seventy-five acres; to the Iowa Central (afterwards the Cedar Rapids & Missouri River) railroad, seven hundred and seventy-five thousand and ninety-five acres; and, to the Dubuque & Sioux City railroad, one million two hundred and twenty-six thousand five hundred and fifty-nine acres. On the 12th of May, 1864, congress pa.s.sed an act granting lands to aid in the construction of another railroad across the state, from the city of McGregor, westward, on or near the forty-third parallel, to Sioux City. The lands in this grant were supposed to exceed a million of acres, but were found afterwards to be less than half a million. On the 12th of July, 1862, congress authorized the diversion of a portion of the Des Moines River Improvement company's land grant to the Des Moines Valley railroad company, the amount of which I have not before me. It is safe to say that all these railroad land grants, taken together, amount to _over four millions of acres_, or nearly one-eighth of the land of the state; or, more approximately, _one acre out of every eight and a half acres_ of the entire area of Iowa has been given away to railroad corporations.

In addition to this immense subsidy, the people along the several lines contributed largely toward their construction.

On the 14th of July, 1856, the general a.s.sembly, in extra session, pa.s.sed an act conveying the land to the four first mentioned companies, upon certain conditions. Section 14 of that act (which act is the original "charter" of those corporations), now found as section 1,311 of the Revision of 1860, reads thus: "Said railroad companies accepting the provisions of this act shall at all times be subject to such rules and regulations as may, from time to time, be enacted by the general a.s.sembly of Iowa, not inconsistent with the provisions of this act, and the act of congress making the grant."

Under this "charter" the companies went to work, and when some of their roads were extended toward the interior, complaints began to arise that the railroad tariffs were so arranged as to seriously discriminate against the trade and commerce of Iowa towns and in favor of points out of and beyond the state; that these tariff rates were also so arranged as to deprive our people of a choice of markets, rendering the Mississippi river useless as a highway of trade and commerce, and compelling our people either to pay tribute to Chicago or go without a market. The evidence in this matter was of a character that could not be questioned, and although the subject was brought before the general a.s.sembly of 1864, we refused to take any action at that time, hoping that the companies which had been so liberally dealt with by our people would, upon remonstrance, deal fairly and justly by them.

When the general a.s.sembly met again, in 1866, the matter of railroad discriminations against our people had a.s.sumed a still more momentous shape. The greater portion of our time during that session was occupied with that question. Weeks after weeks were spent mainly discussing whether or not the state had the right to prevent unjust discrimination or in any way control railroad corporations as to their charges. The then attorney general (Hon. F. E. Bissell, now deceased) gave it as his official opinion that the state possessed no such right; but that in the matter of tariff charges, those corporations were above and beyond all legislative control. Whether the fact that he was a "railroad attorney,"

as well as attorney general for the state, had anything to do with influencing his "opinion," is not for me to say. We had able lawyers of the very opposite opinion, but the fact of this announcement gave great encouragement to the railroad party, and was calculated to dishearten those of us who believed that the people had some rights which even corporations should respect. It was now openly declared by eminent attorneys, both in the legislature and in the powerful "lobby" that hung around us, that in the original "charter," or grant, the state, while reserving the right to "enact rules and regulations," had either failed or neglected to reserve, in specific and "_express terms_," the particular right to regulate and limit tariff charges, and therefore she could not now exercise that right, and could never regain it.

Listening to these astounding claims, put forth by the attorneys for the corporations, some of us declared that if G.o.d and the good people of Iowa ever gave us a chance to reserve, in a railroad charter, the right of control, we would surely do it in such specific and "express terms"

as even a railroad attorney could neither mystify nor explain away. The golden opportunity to do this very thing occurred in 1868. A certain state of facts existed regarding the management of the Chicago, Rock Island, & Pacific railroad company, which rendered new legislation necessary. The executive committee, headed by John F. Tracy, had issued and put upon the New York money market nearly _four million dollars'_ worth of "watered stock," and realized the cash for it before certain other parties were aware of what had been done. With this money the Tracy party claimed that they intended to build the road from Des Moines to Council Bluffs (the road at this time being completed only to Des Moines). The immediate result of this "stock operation" was a bitter quarrel between the Tracy and the anti-Tracy parties of the stockholders. The Tracy party were said to be in the minority, but they had the money and the executive committee. Suits were commenced against them in the New York courts to forbid their construction of the road west of Des Moines, and to compel them to disgorge the four millions of dollars for distribution among the stockholders. In the meantime the company had forfeited their right to the land grant in consequence of the non-construction of the road beyond Des Moines, according to the terms of the original act. The consolidation of the Chicago, Rock Island, & Pacific railroad company's stock (a company organized under the laws of Illinois) with that of the Mississippi & Missouri railroad company (organized under the laws of Iowa), needed legislative sanction by the general a.s.sembly of Iowa; and further, the directors of the consolidated company wanted not only a legalizing act covering the above points, but also an extension of their term of office for one year beyond the time for which they had been elected by the stockholders.

Under this state of things, the "Tracy party," legally representing the consolidated company, applied to our legislature for relief and protection; and, accordingly, a bill was introduced covering the desired points, and re-granting the lands to the company under certain conditions and restrictions, which, when agreed to by the company, should remain forever _a contract_ between the state and the company.

At this juncture, one of the judges of the supreme court of New York issued a solemn injunction upon the general a.s.sembly of Iowa, forbidding that body to legislate, in any way, upon the matters I have above recited. Some of us, not having the fear of New York courts nor the majesty of Judge Cardozo before our eyes, fairly laughed at that judicial functionary's lordly impudence. We thought that the grand opportunity had now arrived when the state could justly step in and pa.s.s an act compelling the company to construct the road, for the sake of the extraordinary relief sought, and in that act _reserve, in "express terms,"_ as a matter of _contract_, the right to control the tariff rates of at least one powerful corporation, connecting with the Pacific railroad at Council Bluffs, and thereby control the rates of other lines crossing the state with similar connections. This express reservation of right, in the form of what was known as the "Doud Amendment," was inserted in the act in relation to the Chicago, Rock Island, & Pacific railroad company, and will be found as the first proviso in the second section of that act (chapter 13, on page 14, Acts of Twelfth General a.s.sembly), and is in the following words: "_Provided_, said railroad company, accepting the provisions of this act, shall at all times be subject to such rules and regulations, and rates for the transportation of freight and pa.s.sengers, as may, from time to time, be enacted by the general a.s.sembly of Iowa."

The company, through its proper officers, accepted the terms of this act, and filed that acceptance in the office of the secretary of state, thus closing _a contract_ between the state and the company, and setting at rest forever the question of controlling and regulating the charges for freight and pa.s.sengers in favor of the state. The same proviso was afterwards inserted in the act in relation to the Des Moines Valley railroad company (chapter 57, page 63); also in the act relating to the McGregor Western railroad company (chapter 58, page 67); also, in the act relating to the Dubuque & Sioux City railroad company (chapter 124, page 164); all acts of the twelfth general a.s.sembly.

The pa.s.sage of the last named act aroused unusual commotion along the proposed railroad line from Cedar Falls, via Fort Dodge, to Sioux City, in consequence of the railroad managers declaring that not another mile of that road would ever be built until the proviso for control should be repealed. Work ceased along the line; the laborers were discharged; the people who expected a railroad through their country became alarmed.

Meetings were held at Fort Dodge, Sioux City, and other points, and extraordinary efforts were put forth to induce Governor Stone to call an extra session of the legislature for the purpose of repealing the so-called "_Doud Amendment_." A committee of prominent citizens was appointed to visit, in person, the members of the general a.s.sembly, and have them sign a request to the governor in favor of an extra session.