Minority Report of the Committee on Railways in Relation to the Hoosac Tunnel and the Railroads Part 2

We can raise but a small proportion of the food necessary to feed the people of the State; under such circ.u.mstances the transportation must weigh heavily upon our industry. We feel it in the increased cost of living, which increases the cost of every article we produce. We feel it in the increased cost of the raw materials of our manufactures, which makes us less able to compete successfully with more favored locations. We feel it finally in the increased cost of marketing our goods. This position has been so well stated by the Railroad Commissioners in their report of 1870, page 39, that I may repeat it here:

"It may safely be a.s.serted that there is no branch of Ma.s.sachusetts industry which is not carried on against compet.i.tion more advantageously located. The State has very few natural advantages; but everything with her depends on the intelligence of her people, and the cost of transportation. The West, in producing cereals, has at least a soil of unsurpa.s.sed fertility: Pennsylvania in manufacturing iron has the ore and the coal in close proximity to the furnace. The English mill-owner has his power and his labor in cheap profusion. Almost every article, however, which enters into the industries of Ma.s.sachusetts has to be brought within her limits from a distance. Her very water powers are subject to inclement winters and dry summers, while she has to make her ingenuity supply a deficiency in labor. Her food is brought from the North-West: her wool and her leather from South America, Texas, California and the Central States: her cotton from the South: her ores from the Adirondacks: her coal from Pennsylvania; her copper from Superior,--and the list would admit of infinite extension.

Ma.s.sachusetts is thus merely an artificial point of meeting for all kinds and descriptions of raw material which is here worked up, and then sent abroad again to find a customer At every point, coming and going, and in process of manufacture, it has to be transported, and it has to bear all costs of transportation in compet.i.tion with articles of the same description produced elsewhere and by others.

Every reduction of the transportation tax acts then as a direct encouragement to the industry of Ma.s.sachusetts, just as much so as if it were a bounty or bonus: it is just so much weight taken off in the race of compet.i.tion."

No words of mine can add any force to this plain statement of facts; but yet we are told that transportation is only _one_ element in the cost and price of goods, and frequently not that of the greatest consequence, but the importance of this _one_ element is fourfold, and often more, to the Ma.s.sachusetts manufacturer, making the transportation of more importance in many cases than the cost of materials transported. This transportation tax is the _very_ element that is to build up a compet.i.tion in these favored localities that will either extinguish or transfer many cla.s.ses of our industrial interests that we can ill afford to lose.

It is only necessary for one to travel West and South and observe the great development and success of the manufacturing interest in these sections to be convinced that New England cannot long hold the prestige as the "workshop" of the country with so heavy a transportation tax imposed upon her industrial productions.

The importance of this ONE element will be more fully realized by the Eastern manufacturer when he finds that his Southern and Western rivals save it altogether by having the raw material at hand, and a home market with all the other elements (save skilled labor which can be transported) that make manufacturing industry profitable at a much less cost.

A combination of our manufacturers to establish cheap transportation, and the sale of their goods upon a home market, would be far more to their interest and profit than the exaction of an extra hour's labor and would confer a great blessing upon their overtasked employees.

EFFORTS TO REDUCE THE TRANSPORTATION TAX.

Since the railroad system was inaugurated in 1831, the statutes of this Commonwealth bear yearly evidence of the persistent and liberal policy pursued by the legislature toward the railroads.

It would be tedious to enumerate the many acts which have been pa.s.sed loaning the credit of the State to aid the struggling corporations in establis.h.i.+ng and completing their lines.

Almost all the leading lines in the State sought and obtained this aid, without which there must have been a great delay, if not failure in accomplis.h.i.+ng these enterprises; and here let me say, that with the exception of the Hartford and Erie loan, and the losses arising from the repayment by the Eastern, and Norwich and Worcester railroads in legal tender instead of gold, there has never been a dollar lost by the railroad loans of the State. The result has been to build up a system of railroads, centering in the city of Boston, having no superior, if equal, for completeness on this continent. Ma.s.sachusetts has more miles of railroad in proportion to population and territory than any similar extent of territory in America.

And there can be no question that the prosperity of the State has grown more from its railroad facilities, than from all other causes combined.

There is another cla.s.s of legislation to which we cannot look with equal satisfaction. Every railroad charter contains provisions for the regulation of fares and freights; and yet since the railroads were established, no single act has been pa.s.sed directly for this regulation.

The question has involved so great difficulties that no legislature has yet ventured to grapple with it. The tendency of legislation in that direction is obvious. Commissioners have been appointed to consider the subject and no result has followed. A Board of Railroad Commissioners has been formed, which has been productive of great good both to the railroad corporations, and to the people.

This board has been directed to fully consider and report some plan of regulating fares and freights; and has reported that it cannot recommend any means of reducing this transportation tax, by direct legislation, but strongly advises the trial of State owners.h.i.+p, as the only means of attaining the desired end.

THE EFFECT IN OUR EXISTING SYSTEM.

While it may be said that under the present system of railroads, the Commonwealth has been prosperous, there are drawbacks and defects which need careful examination, and if possible a remedy. To those who are familiar with the condition of our manufactures, the most striking want is the failure of our home market for our productions.

We are tributary to New York in many ways. The great sale of our manufactured goods is made in New York, and goes to build up a rival city. Our great commission houses have been compelled to establish branches in New York, which in a short time have surpa.s.sed in business and in importance the home establishments.

If we could have kept at home the sale of our manufactured goods--have retained here in Boston the great houses through which the exchanges are made--could have brought to New England the purchasers from the West and South, it would have vastly increased the prosperity of Boston and of New England.

Business can be done cheaper in Boston than in New York; and yet New York has drawn away from us a large proportion of our legitimate business,--the sale of our manufactured goods; and this loss can be directly attributed to a defect in our railroad system, which can and should be remedied. I say defect, but, more properly, the want of a strong and independent line of railroad through to the West, controlled in the interest of Ma.s.sachusetts. Why, Mr. President, if we could withdraw from New York the firms and business that represent the sale of Ma.s.sachusetts goods, it would more than cover the burnt district of this city, and double the business of Boston; and New York would feel that her loss was much greater than the Boston fire. And why is it that our goods are sent to New York to be sold? Simply because New York has _three_ great trunk routes to the West, which control the transportation of the Southern and Western productions, and the owners, who are the merchants, follow their goods, and are the customers who purchase our manufactured goods of New York houses, and s.h.i.+p them in return over these same trunk lines, giving them a large and profitable business; which should be and can be controlled, by proper management, in the interest and for the benefit of a through line or lines from Boston to the West.

To-day Boston is without a through and independent line to the West, and while we are s.h.i.+pping our goods to New York to be sold, to be transported over the great lines leading South and West, our _own_ Western road, so called, in 1872, according to the annual report of the directors, carried through from Boston to Albany 112,071 tons of freight, and from Albany to Boston 556,202 tons--more than four times as much _from_ the West than is carried _to_ the West; which state of things would be reversed if the sale of our goods was made here instead of New York; but this can only be accomplished by a through line West, controlled in the interests of Ma.s.sachusetts, and not in the interest of New York.

A line to the Lakes in compet.i.tion,--not with the Boston and Albany Railroad, as that is dependent upon the New York Central Railroad in a great measure for its Western freights,--but an independent line, so organized as to guard against any combination, that will force by compet.i.tion the New York lines to give to the Boston and Albany and the Boston, Hartford and Erie Railroads less rates, making Boston a competing point, thus securing the advantages of four competing Western lines, including the great Northern line, which must bring to our seaboard the products of the great West, and thus secure an exchange of trade that will increase the growth, and prosperity of Ma.s.sachusetts, that will equal the prophecies of those who are called _visionary theorists_. It was by compet.i.tion of the three great trunk lines running to New York--discriminating against Boston--that forced the removal of the sale of Ma.s.sachusetts productions to that city; and it is estimated these sales amount to more than two hundred and fifty millions of dollars per annum at the present time; and the golden opportunity is now at hand to restore in a great measure the advantages lost by not having a strong and efficient line of railroad leading to the great West, in the interest of the State.

THE RELATIVE ADVANTAGES OF BOSTON AND NEW YORK.

The great advantages of New York arise from the fact that it is a great emporium of exportation and importation. A very large proportion of the exports of the country have been made from New York. She has gained control of the export trade--and the export trade governs the import trade. s.h.i.+ps go where they can find a return cargo, and merchants follow their goods. The possession of the great bulk of the export trade, has given to New York the great bulk of importations, and equally the control of the domestic trade. How can we, in Boston and Ma.s.sachusetts, get our fair share of the importing and domestic trade of the country? There is but one way--by reducing the transportation tax. In many respects Boston has great advantages for the export trade. The chief exports of the country are to Europe. We are two hundred miles nearer Europe than any of the other of the great seaboard cities. We have a harbor unrivaled on the American coast for easy entrance--for depth of water--for protection from storms.

Its great water-front, at which vessels of burden may lie to an extent (as is stated by the Harbor Commissioners) of fifty miles--every foot of which is, or may be directly connected with our railroads. There is not a wharf along the whole circuit which may not, without great expense, be made available for the export of the productions of the country, brought by the railroad car to the side of the s.h.i.+p, which shall convey it to the freight market. If we can secure to Boston a fair share of the export trade of the country, the import and domestic trade will follow, and we ensure the building of a city within the limits of my friend's annexation project, that will equal the greatest city of the continent.

THE EFFECT ON THE STATE OF MAKING BOSTON AN EXPORTING CITY.

It is hardly necessary to allude to the close connection which Boston holds to Ma.s.sachusetts. One-third of the population of the State and one-half its valuation are combined within a circle of five miles from this building. The prosperity of Boston is inseparable from the prosperity of Ma.s.sachusetts. The recent calamity of Boston was felt throughout the limits of the State. But the great benefit to the State from making Boston an exporting city is not the prosperity of the city itself. It grows out of the condition which alone can make Boston a city of export for the productions of the country.

This can only result from a reduction in the transportation tax which will make such productions relatively cheaper in Boston than in New York. In the profits of such a result the remotest corner of the State will directly share. Transportation cannot be reduced to Boston without a corresponding reduction upon every line of railroad leading to or from this city. It was with a hope of such a result that the State entered upon the project of building the Hoosac Tunnel, and it rests with us to say, now that this great enterprise is so near completion, whether this hope can be realized.

THE HOOSAC TUNNEL.

It is needless to explain at any length what the Hoosac Tunnel is.

There can be no member of this board who does not know that we in Ma.s.sachusetts are separated from the West by a mountain barrier extending from near Long Island Sound to near the Canada line. This barrier must be pa.s.sed to bring us into connection with the West.

It has been turned on the north by the Vermont Central, on the south by the Hartford and Erie. It has been pa.s.sed over steep grades by the Boston and Albany. At North Adams it is compressed into narrow limits in the Hoosac Mountain, and the bold conception was formed to pierce directly through it at this point. First, the effort was made to accomplish the great undertaking by private capital, aided by a state loan. The difficulties were underrated and the plan failed. Finally, the State a.s.sumed the enterprise and has since, with varying fortunes but unfaltering energy, prosecuted it to a successful result. Within the current year there can be little doubt of the completion of the work. The Tunnel will be opened for traffic and a new line formed between Boston and the West, shorter by eleven miles than any existing route; with easy grades, which, making the usual allowance for the obstruction caused by heavy grades to railroad traffic--will render it constructively shorter than any route by at least twenty miles, or ten per cent., between Boston and Albany.

Its cost to the State, including the Troy and Greenfield Railroad, will be at least twelve millions, raised by loans, on which the interest is paid by taxation. Since the plan of the Tunnel was formed new lines of road have been projected and built, connecting it with every part of the State, and there is scarcely a town from Berks.h.i.+re to Provincetown, which does not to-day stand in position to reap its share of the benefit expected to follow the completion of this great public enterprise.

Having expended so large a sum on the Tunnel, the question arises, How shall we use it to derive the greatest good to the whole people? The State now holds, as owner substantially, the Troy and Greenfield Railroad and the Tunnel, at a cost of about twelve millions. Its value depends wholly upon the future development of business, but its relations are such to other railroad interests, that I have no doubt that, if the State desires to sell the Tunnel, notwithstanding its great cost, negotiations could be made to dispose of it at a price that would return to the State the moneys expended, but it would be at the risk of sacrificing the prosperity of its own industrial interests. There are various and conflicting opinions expressed in regard to the business that may be done. Some parties who appeared before the committee declared that the completion of the Tunnel could only be compared to the removal of a dam, to be followed by a flood of business beyond our power to properly care for; while others were equally confident that the traffic now flowing through other channels would be diverted to the new one only through the influence of time and energetic labor. All, however, agreed in the opinion that, under proper management it was destined to become, at no very distant day, perhaps, the great avenue for trade between the East and West. The eagerness with which various railroad corporations seek its control by "_ways_ and _means_," if honest, should be convincing proof of the great importance of the Tunnel to the public, and if not honest, it should merit the condemnation of every honest man in the community.

POSITION OF THE COMMITTEE.

On certain points the committee were unanimous. _First:_ That the State should own and control the Tunnel in such manner as to secure to the whole State the ultimate benefit to be derived from its construction, and to secure to all persons and corporations seeking to use it, equal rights. _Second:_ That to attain the highest benefit to be derived from this new line, a corporation strong enough to provide sufficient equipment and terminal facilities should be formed, able to command connections with roads outside of the State and to compete with a fair share of success with the existing corporations. How best to attain these ends with a view to cheapness of transportation and efficiency of action the members of the committee differ. The majority reported a bill providing for the consolidation of the Boston and Lowell Railroad Company, the Fitchburg Railroad Company, the Vermont and Ma.s.sachusetts Railroad Company, the Commonwealth and the Troy and Boston Railroad Company into one corporation, with authority to purchase or lease certain other roads, which will make a capital of not less than twenty-five to thirty millions and give control to about five hundred miles of railroad. From this plan the minority have dissented and reported a plan which will place the direct line from Boston to Troy substantially under one direction, and subject it not to state management but to _state control_.

THE BILL OF THE MAJORITY.

To the bill reported by the majority of the committee we have the strongest objections.

_First._--It sanctions an enormous inflation of capital. It authorizes a consolidation upon the basis of an appraisal of the value of the several properties to be made by the parties themselves. The railroads of this Commonwealth are prohibited by law from making stock dividends, and yet here stock dividends are allowed to such extent as the parties think proper. One of the greatest impositions ever practised upon the public, from which the people of this Commonwealth now suffer, is the watered stock of the railroads between Albany and Chicago. The amount of stock in these roads issued without any equivalent, upon which our traffic is now taxed, is variously estimated at from forty-four millions to one hundred and five millions. The annual tax levied is from three millions to six millions, of which we pay a large share. The majority bill provides for just such a watering of stock, to the extent of perhaps ten millions, according to the appraisal by the parties in interest. We believe this to be all wrong, and should not be sanctioned by the Commonwealth.

_Second._--We utterly dissent from the opinion of the majority in allowing the Boston and Lowell Railroad to come into such a consolidation. The Boston and Lowell forms no part of the Tunnel line.

Every witness before the committee, except the agents of the corporations themselves, was emphatic against such a consolidation.

See Governor Claflin's testimony, 7th Hearing, page 26.

" J. T. Joy " " " " 37.

" C. F. Adams, Jr., " " " " "

" N. C. Nash " 9th " " 4.

" Q. A. Vinal " 14th " " 10.

" Col. Faulkner " " " " 12.

" J. W. Brooks " 17th " " 13.

The Northern line has been of very great value to the business of Boston and Ma.s.sachusetts; more than any other it has effected that reduction of rates which has returned to Boston within the past few years a portion of the export trade. It forms the shortest line at present existing between Boston and the Lakes, and while lake navigation is open substantially controls the rates over the other lines. Mr. Nathaniel C. Nash says (9th hearing, page 6), "We have derived more advantage from that line than from any other source."

(See Railroad Commissioners' Report of 1870, page 36.) While the Lowell railroad provided the terminus and the representation in this Commonwealth, the other railroads in the line have cooperated in producing this result. It has cheapened food to the people of this Commonwealth, and of all New England. The Lowell Railroad is bound by contracts to continue in this Northern line for twenty years to come.

Although some of the corporations are under financial difficulties, this does not affect the operations of the line. The railroads still exist and must continue to do business, and so far as the advantage of the traffic extends, it matters little who owns or operates the railroads. So impressed are the majority of the committee with the importance of maintaining the northern line that they impose upon the Lowell Railroad Company, as they say, the conditions of withdrawing from the Northern line, and make provision for transfer of the business to another line--the Boston and Maine. They propose to do this in a manner which seems to us weak and futile. The majority bill provides for repeal of the charter of the Great Northern Railroad Company, pa.s.sed in 1869, which authorized the Boston and Lowell Railroad Company to consolidate with certain companies in New Hamps.h.i.+re, with authority to lease or purchase other railroads leading to Ogdensburg and other points in the North and West, and lines of boats on the lakes. As all the other companies in this consolidated line are in New Hamps.h.i.+re this charter was ineffective without the cooperation of New Hamps.h.i.+re, and to this bill New Hamps.h.i.+re has never a.s.sented--not from any hostility to through lines, but because it contained objectionable features, such as the consolidation of competing lines, the creation of a monstrous corporation with power to combine in one gigantic monopoly all the railroads within her borders.

This charter is mere waste paper, and its repeal would have no more effect than the burning of waste paper. The Lowell Railroad remains bound by contracts to the Northern line, and the majority bill effectually places the Northern and Tunnel lines under one control.

The proposal to transfer the Northern line and northern business to the Boston and Maine Railroad seems to us an absurdity. The Boston and Maine is practically an Eastern line; of its whole length, one hundred and twelve miles, only twenty-six could be used in connection with the Northern line. It never could or would give that exclusive attention to the business necessary to make such a line successful. Its only means of connection is over the Manchester and Lawrence Railroad, the grades of which are too heavy for a successful freight business with the West.