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ARGUMENT

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I Ex-GOVERNOR JOSEPH E. BROWN, j

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Pr.si.fen! 4 '''" l'V.'.'I<'!'I! aile! Atlantic Railroad Com} wy.

I l, EFVRE THE

-REVISION COMlVIITTEE

.,,.. n;o

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i C()NS'fiTUTIONAL CONVEN'fiON, 1

ON THE QUESTION OF THE RAILROAD INTERESTS j'I

OF GEORGIA, AND MORE ESPECIALLY ON THE

INJURIES THAT WOULD RESULT TO THE

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RAILROADS AND THE PEOPLE FRO:\I THE

POLICY OF ESTABLISHING UNIFORM

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RATES ON ALL FREIGHTS OVER

OUR RAILROAD LINES.

ATLANTA, GEORGIA:
THE CONSTITUTION PUBLISHING CO:.\iPANY.
1877.

ARGUMENT
OF
Ex-GOVERNOR JOSEPH E. J3ROWN,
President of the Western and Atlantic Railroad Company,
BEFORE TilE
REVISION COMMITTEE
OF THE
CONSTITUTIONAL CONVENTION,
ON THE QUESTION OF THE RAILROAD INTERESTS OF GEORGIA, AND MORE ESPECIALLY ON THE INJURIES THAT WOULD RESULT TO THE RAILROADS AND THE PEOPLE FROM THE POLICY OF ESTABLISHING UNIFORM RATES ON ALL FREIGHTS OVER OUR RAILROAD LINES.
ATLANTA, GEORGIA:
THE CONSTITUTION PUBLISIIING COMPANY. 1877.

Gentlemen of t!te Committee :
From the best estimates in our reach, which are known to be correct, for all practical purposes, there had been invested in the Southern States of the Union, up to the early part of 1875, the enormous sum of $571,968,000 in railroads, including stock and debts incurred for that purpose. The net earnings received by the railroads constructed with this vast sum of money, according to statements l'nade in what is considered one of our most reliable railroad manuals, are only sufficient to pay interest on one hundred and two million six hundred and thirty-nine thousand dollars, leaving four hundred and sixtynine million three hundred and twenty-nine thousand dollars, without return to the stockholders or full return to creditors, either in interest or dividends. This immense sum was invested by innocent parties, many of them widows and orphans, under the encouragement of the authorities of the different States, and has, for the present, been virtually confiscated by legislatures, courts, juries and popular opinion, or wasted by reckless competition between themselves, demanded by popular opinion, which is always crying for still further reduction of rates. And if popular opinion does not soon change on this subject, this vast sum of the hard earnings, and capital of our people, invested in railroads, will be irrevocably sunk and forever lost to its owners. Much the larger portion of it has already been sunk and lost, or is now in the hands of receivers or bankruptcy courts.
In our own State alone there have been invested in railroads over sixty-one millions of dollars; and of this investment, which, compared with the whole capital of our State, is very large, there are now but few roads in Georgia paying any dividend, or making any return to the stockholders. Considerably less than one-third of the amount invested in railroads in this State pays any dividend. There is, therefore, over forty millions of dollars of the people's money in Georgia that has been put into railroads, under the encouragement of the Legislature, of public meetings, am1 under the approving smiles of the populace, that will be a total loss to those who made the investment.
'rhis vast interest in Georgia,, which, by its investments, has added greatly to the wealth and iniluence of the State, is certainly entitled to a respectful consideration at the hands of the people in Convention assembled; and I feel that the owners and managers of the railroad interests in the State have a

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right to appeal to the Convention, that jmtice be done to this

interest as well r.s to others. I am aware of the popular pre-

judice thai- has been excited agni.nst railroad corporations, and

of the tem1)tation to those who desire to make political capital

by appeals to the populace, to indulge in abuse of this great

interest. But I apprehend no such 111otive will control, or for

a moment influence the action of the statesmen here assem-

bled.

The business of railroading is fast becoming a sciGmce of

great complicntion and perple21cit.r; a~1cl_ to unc1erstand it, in all

its bearings, is becoming a study of grea,t labor and care, such

as few men can afford to giYe to the subject, unless their

praetica1 daily business is that of concl11cting transportation.

Like all other systems, wllenJ it is necessary, as far as prac-

ticable, to have general rules, there must be some exceptions;

and when the best is done that can be, there will be in-

stanetJs of apparent ha,rdship which cannot be obviated with-

out doing greater injustice at son1e other point. I must,

therefore, ask your indnlgeneP while I call your attention to

a few practical points on this subject.

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Take the whole tonnage of the vV. & A. R. R. for the last

year, which amounted to something less than fifty millions of

tons, transported one mile. The actual cost of' transporting

fifty millions of tons for a single mile is about seven hunched

and eighty-Jive thousand dollars, including the rental as part

of' the cost ; or, if it were a pl"ivate company, including the

interest upon the investment. Of this total expense five hun-

dred thousand dollars, in round nnmbeTs, including the

rental, is afixed e.xpense, not altered by increase or decrease

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in the amount of business so fa,r as the :wtnal sum in dollars is concerned, being on the amount of tonnage mentioned

about one cent per ton per mile, making the actual cost of

transportation, apart from fixed expense, about fifty-seven

one hundredths of a cent per ton per mile, on our business

of last year. This might, however, be increased or diminished

by an increase or decrease of business.

By fixed expense, I mean the rental paid the State, or the

interest upon the investment, if it be a private compa,ny, and

the salaries of the officers, Pr~Csident, Superintendent, Treas-

urer, etc., which the road muEt have, whether it does a large

or a small business-keeping the track in order, including

~oad-bed, bridges, cross-ties, iron, etc., which must be kept

m order, whether we transport a larger or ~1 smaller tonnage

over it ; the maintenance of' machine shops and car shops,

including their officers and the force which is necessary to

keep the engines, ears, etc., in running order, so far as rust

and natural decay are concerned; and the natural wear and

tear, such as the decay of cross-ties, within a given number

of years, whether you run one train or fifty trains per day ;

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the wear of engines, cars, irmi, etc., which is varied by the amount of business done. A portion of this is fixed expense, as the cars would rot down in a given number of years, whether run nuon the n'lain track or &itting upon a side-tr:1ck; the ditches will fill UP- and e,nbankme11ts wasn down, whether trains run or not. 'rhi::; g-ives you a sufficient idea of my meaning when I say "flxea expen,:;e."
Of the above amount of tonnage, smnething less than five mHlions of tons was strictly local, when we confine the local within the limits of Georg1a. To make this local business pay the fixed and certain expenses of the road, as above referred to, it would be nece&&ary to charge ten cents per ton per mile upon the local, while our :1utual c11arge upon that local business averaged about one-thinl of that sum, the balance of our incomes being ma,de up on through business.
The rate charged on our local business averaged last year (.03.4)three cents and four mills per ton per mile. Our through business, .01. 7, one cent and seven mills per ton per mile. Through and local, taken together, averaged one cent and nine mills per ton per mile. This is very low, when contrasted with other States. In the year 1875, the railroads of Connecticut averaged on all freights six and a half cents (06.5) per ton per mile. See the report of the Commissioners for that year. The report of the Commissioners of Maine shows that the average in that State for 1874 was (.04.5) four and a half cents. In Massachusetts, as shown by the Commissioners' Report for 1875, it was four and a fourth cents. S0ven of the roads in Pennsylvania in 1874 averaged five cents per ton per mile. See report of the Auditor General. Twenty-three roads in Ohio in the year 1874 averaged 6f cents per mile. See Hailwcty Reports for 1874. And the railroads of New York, including the New York Central, 3! cents per ton per mile. See State Engineer's report for 1875.
In Europe: the average rate per ton per mile, in Belgium, where freights were cheapest, was 2-} cents; in France, 3 cents; in England, 3f cents; in Germany, 4 cents. See Royal Commission on Hys., pages 71 and 72. 'rhus you will see, gentlemen, that the average rate in the leading States of this Union, and in the leading European Emp:res is higher than our local, and that our average is bel0w that of the European powers or either of the States above mentioned, and does not amount to one half the average in many of them.
Now, if we had only transported twenty millions of tons one mile, including through and local, the cost of the fixed expense would have been two and a, half cents per ton per mile upon the whole, upon the basis above mentioned; which ~deled to the actual cost, ~tbove fixed expense, which was a lit-

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tle over one-half of one cent per ton -per mile on the business done by us, would make 3.07 cents per ton per mile.
But if, on tlH-l other hand, we had transported one hundred and fifty millions of tons one mile, the cost infixed expense would ha,ve been one-third of one cent per ton per mile, when divided among so largely inereased a number of tons, which, added to the fifty seven one hundredths of a cent approximate cost over fixed expense, would make a total cost of say nine-tenths of a cent per ton per mile.
Thus you will see, gentlemen, that the cost of transportation depends, in a very great degree, upon the quantity carried. If the quantity carried is very srnall the fixed expense not only eats up all profit, but leaves the company in debt, and the smaller the quantity carried the larger the indebtedness. But if the quantity carried is very large, then the expense of carrying per ton per mile can be redneed and the company still make money.
As each railroad in a country is supposed to be dependent in a great degree upon the local business that properly belongs to it, it is necessary, if confined to that local business, that it fix a rate of freight sufficient to make the capital invested renmnerative on the local business done. And it is true, in case of many of the railroads, that they are obliged to depend almost entirely upon their loeal business. In such cases of eourse the Tate of freight must be made higher to ena,ble them to live, as the local business done affords a much smaller tonage tlum is done upon other roads with large through business. If, however, a company has a through business, then much depends again in the cost of transportation on the fact whetherthe through.fl,nd local business are all c::uriecl one way, or whether it is something like equal both ways. As an illustration, more than eight-tenths of all the cars that eome loaded over the IV. & A. R. R to Atlanta, return empty. Now, if we had freight to carry baek the other way so as to load these cars, the eost of' transportation would be much less than it is where we run them loaded one way and empty the other. And this rule applies almost as well to local as to through freight in ease of' that particular road and probably some others, as most of the local frlilight on the road eomes from North to South.
Now, if a :policy should be adopted that cuts off all the through freights over the IN. & A. R. R., the Georgia, the Central, and other railroads in this State, then each is left to rely exclusively upon its local business for its sup11ort. This loeal business being very small compared with the present tonnage of these roads must support the road, if at all, by a heavy inCI'ease on the rate charged for transportation, and the companies whe1e they have that protection, as some do, would
be obliged to fall back upon their charters and charge possi-

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blythe highest limit that the law would allow upon the local business. This, in case of the Georgia and probably some of the other roads, is :fifty cents for one hundred pounds one hundred miles for heavy goods, and about a like remuneration on goods in boxes, etc. If this rate were made uniform, and applied to all heavy commodities carried. over these roads, it would probably make the rate of freight about three times what it now is.
Take, for instance, a hundred pounds of pig iron, which is worth about three-fourths of a cent a nound, and it would cost to transport it from Atlanta to Dalton :fifty cents, or twothirds of its whole value. Take lime, which is worth still less, and it would not bear transportation. There are many other heavy articles that might be mentioned where the cost for carrying a single hundred miles would be worth a large proportion of the value of the article.
Take a bale of cotton weighing 450 pounds, and at this rate it would cost $5.85 to transport it from Americus, Ga., to Savannah. The same bale would cost from Cartersville to Savannah $7. 65, at the same rate. This the :planter would say was enormous. But if the railroads were confined to the productions of Georgia for their support, they would be obliged to charge much higher rates than they now do.
It may be asked, however, how a law of Georgia, compelling railroads to carry all freights at the same rate -per mile through her territory, would have the effect of driving off through freights. The answer is a very easy one. The railroad system of the United States is at present so arranged that there are scarcely any two commercial points of any importance between which there are not several competing lines of transportation. The competition between these lines puts freight at the lowest rate that it will bear transportation, and in many instances, in a :fight or struggle between them, it is carried much below the actual cost of transportation. And whenever freight is to be transported between said. given points, the shipper always seeks the line that will carrry it for the least money.
Take the shipment of bacon, lard, flour, or other provisions, from St. Louis, Mo., to Savannah, or to Charleston, or any other one of the Southern coast cities. This is a very natural business, as St. Louis is a great commercial centre, in the Mississippi Valley, where the productions needed by the coast cities, are made very cheaply, and they seek a market over lines of transportation into the Southern cities. Now there are a number of competing lines for this business. One passes over the Western & Atlantic Railroad and through Nashville, at which point it is divided by several competing lines, between Nashville and St. Louis. Another passes through Atlanta rmd over the West Point Road to Vicksburg on the Mississippi

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River. And another and still more formidable one, is the great through railroad line from St. Louis to Baltimore, where the freight is carried each way in large and nearly equal quantities, enabling the roads to transport it at the lowest possible figure. And then the steamers from Baltimore bring the freights by ocean down to the Southern eWes.
Now, it really matters nothing to a man living at any village in G-eorgia, whether the bacon, lard or flour which is needed in Charleston, and which is transported from St. l~onis, passes over one of the lines of road through G-eorgia, or passes by Baltimore and around by water to its destination, as the interest of a citizen of G-eorgia is no way affected by this, unless it may be incidentally affected by a rise in the rates he is to pay upon other freight, which follows the loss of this business by lines through Georgia. But if the freight is going from St. Louis to any one of the coast cities, it does the citizen of G-eorgia no injury if it passes over a line through G-eorgia, rather than through Baltimore.
Now, whenever you fix a rate of freight per mile in Georgia which shall be uniform, you compel the railroads in G-eorgia to carry at a higher rate than the very low rate usually given this through freight, for the reason that if the railroads in Georgia attempt to carry all the freights including local at as low a rate as they would carry this through business, they could not possibly live, as the.fixed expense already mentioned would largely more than consume all the profit. But if the local business enables them to pay the fixed expense, or the
most of it, so as to cheapen the rate of transportation above
the fixed expense, they can then carry through business, on account of the large quantity, at a rate of freight that could not be given to it under other circumstances, and at a rate that enables them to compete with other lines. They will, therefore, be compelled, on account of the fixed expense, taking the whole together, to bring the rate of through freight up to the local rate, or very near it, as they could not live and reduce the rate on local freight to the through rate now charged. What would be the result~ \Vhenever the present through rate over the Georgia roads is increased, the whole business between St. Louis, Louisville and other Western cities, and the coast cities, is at once turned down through Alabama or New Orleans, and out by water, or out through Baltimore and down by water. In either case, it goes around G-eorgia, and what the railroads lose on the freights thus driven around them, they are obliged to make up by an increased local on the productions of the State.
Take another illustration. A large part of the cotton raised in Alabama goes to market through G-eorgia over the Atlanta and vVest Point, and G-eorgia roads, or through Columbus and over the Central road, or through Rome and Dalton, over

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the Selma, Rome and Dalton and the East Tennessee lines. It does this bPcause it gets a through rate from the terminal point nearest the point of production to New York, or to the New England mills. But whenever you are driven to increase even slightly the cost on this through freight, in order to make the average on freight through the State the same per mile, you turn the whole of it around Georgia, and it goes out through Mobile or other points along the coast, or else it goes up into Tennessee and around Georgia by other interior lines. So with all through business.
It is done at the lowest figure at which any reasonable profit
can be made ; and whenever any line fails to carry a.t that
figure, another competing line which is under no constraint, carries it and takes the business. 'rhe effect, therefore, of this character of legislation would be to drive all the business of the other States around Georgia, and leave her isolated in the enjoyment of her own peculiar system of laws.
In England the respective rights of the railways and of the public were defined in the general railroad law, (see the railway clauses of the consolidated act), by the declaration : "It is expedient that the companies should be enabled to vary the tolls upon the railway so as to accommodate them to the circumstances of traffic." And the company was authorized "from time to time to alter or vary the tolls, either upon the whole, or upon any particular portion of a railway, as they shall see fit."
In the year 1867 a royal commission, after investigating the subject in all its bearings, reported that "inequality of charge in respect to distance, besides being a necessary consequence of
* * * competition, is an essential element iu the carrying trade;
that is to say, the principle which governs a railway company in fixing the rate is that of creating a tarift~ by charging such a sum for conveyance as will induce the produce of one district to compete with that of another in a common market."
"The power of granting; special rates thus promotes a development of trade which would not otherwise exist. It is abundantly evident that a large portion of the trade of the country at the present time has been created by and is continued on the faith of special rates." And they add, "the conditions under which such rates are granted, are so numerous that no special law could be framed to regulate them."
We will see by investigating this subject, however, that in England the Parliament is always mindful in regulating a rate on railways, of the interests of stockholders, and have never fixed a rate so low as to destroy the payment of dividends upon the investment. In the year 1844 ParEameut enacted that if, after twenty-one years, any new railway had made ten per cent. or three years, the government might reduce the rates charged; but should, at the same time, guarantee the company ten per

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cent. net for the next twenty-one years. And I am not aware

that this act bas been repealed. Before they will take from a

company its incomes, or reduce them by fixing the rate of

freights, it must make ten per cent. And if the Parliament

then reduces the rates it must guarantee ten per cent for the next

twenty-one years. Ten per cent. guaranteed where money is

plenty at three per cent. is a very fine rate of interest. This

shows how careful the Parliament of Great Britain is in dealing

with this matter, to respect the rights of property in railroads,

and not to destroy investments by cutting off:' regular and pro-

fitable incomes to stockholders.

.Again, it is a rule among connecting roads that carry

through business, that each link in the line claims the same

rate per ton per mile that is allowed to any other link. Sup-

pose the rule which I am now combating should be adopted

in Georgia, and the roads here should fix their rate at fifty

cents per one hundred pounds per one hundred miles, as the

charters of at least part of them permit; this would be ten

cents per ton per mile, or ten dollars for transporting a ton

one hundred miles. And if the Georgia roads charge this,

the roads in Tennessee and other States would charge the

same on the same freight under the usual rule of pro rating

according to the nnmb2r of miles.

Now suppose an Atlanta merchant orders a ton of bacon

from Louisville at this rate, which is the chartered rate of the

Georgia Railroad; it would cost $47.90 to deliver it in Atlanta.

Then apply the rule in the other States, and we will see how

it would work to our detriment. The roads, for instance, in

East rl'enm'ssee and towan1s the coast of Virginia, in connec-

tion with the N. C. & St. L. and other roads, will carry

through freight at about a cent and a quarter a ton a mile

from Louisville, say to Norfolk, and at about a cent and a

half a, ton per mile from Louisville to Chattanooga. In this

case, the shipment would be made from Louisville to Chatta-

nooga; as a Chattanooga merchant desiring to supply the

.Atlanta market, would at once see how to avail himself of

the benefit. And as the Western & Atlantic Railroad would

have nothing to do with the shipment, the other roads from

Louisville to Chattanooga not touching the State of Georgia

would pro-rate upon say a cent and a half per ton a mile.

The ton of bacon would, therefore, when shipped from Louis-

ville, cost the Chattanooga merchant, delivered in that city,

$5.11.g.. And then it would cost him from Chattanooga to

Atlanta, over the Western & Atlantic Railroad, at the char-

tered limit, ten cents per ton a mile, or $13.80. Add this to

the $5.1l?t, and it would cost the Chattanooga me'rchant

$18.91-/t to deliver his ton of bacon from Louisville into At-

lanta, as against the $47.90 which it would cost the Atlanta

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merchant on a direct shipment. The result would be, much

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of the business of Atlanta would be done in Chattanooga. All shipments of through freight would be made to Chattanooga at the usual rates there; and the Atlanta merchant would go to Chattanooga and buy, and pay the uniform local freight from Chattanooga to Atlanta, or he must submit to the humiliation of being obliged to ship his freight to a consignee in Chattanooga, and then re-ship it to Atlanta. And if Macon, or any other central point in Georgia, desired to consume the bacon, the rates would have to be added, according to the usual avexage rate to that point, making it still more ruinous to the interests of Middle Georgia.
I may be met, however, with the remark that a number of the railroads in Georgia have no such chartered right, and that the Legislature could put them down to a lower rate per ton per mile. This could not be done~ however, if the rate were made uniform all over Georgia, which the people of the different sections would demand, as part of the roads have, by their charters, the right to charge the rate above mentioned; and neither the Legislature nor any other power in the State can impair the obligation of their contract, or take from them this right. It would be protected by the Supreme Court of the United States. Then to make the freight uniform, and treat the people of all S(cJctions of the State alike, the other roads must be permitted to charge the rate that part of the roads under their charters have a right to charge.
Again, let us see how this would work on the interior interests of Georgia. In all the lower belt of the State we have immense timber interests, and our forests are soon to become a source of great revenue to the people who own them. This business, like all other business, is governed by the general rules applicable to transportation; and the producer in Georgia must be able to ship his timber out a.s chea.ply as it can be done from the Carolinas, Alabama, or Mississippi, or he cannot ship at all. Those living very near the coast, and having mills there, could do this, as the local rate upon the lumber would not amount to a prohibition. But those living fifty or a hundred miles back in the interior could not pay the local freight that the uniform rate would compel the railroads to charge, and ship their timber, in competition with the timber of other States. 'rhe result would be to leave all the interior of Georgia hopelessly beyond the reach of a market for their timber.
Apply the same rule to upper Georgia, where our timbered interest is not so important, but where we have vast mineral interests, and we look to this as a source of great wealth. 'rake, as an illustration, our iron ores, which are boundless in quantity, and rich in variety and quality. There is already a demand springing up for those ores from about Cartersville and below Rome and other points, to Chattanooga, Cincinnati, Pitts-

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burg and other vVestern points. There are other valuable ores, however, which come in competjtion with ours, from East 'rennessee and North Alabama. Now, if we establish the rule of uniform rates in Georgia, and place the iron ore subject to those rules, we at once cut oif all shipments from Georgia to the points of demand, as the roads in Alabama and East Tennessee would not be subject to this rule of uniform rates, and they could deliver in Chattanooga, for instance, and ship to Western points in cars going empty in that direetion, at little ovrr half a cent a ton a mile, while we should have to charge a rate that would completely cut off the development of Georgia's mineral resources.
Again, this rule forbidding the shipment of productions of any sort, timbeT and ol'es included, from any points at reduced rates, would give to the people living near the line of Georgia, at all points, greatly the advantage in the transport'\ tion of their productions to market over their fellow citizens of the interior. As they, by going a few miles, would get beyond the limits of Georgia, reaching a point where the usual rates for the transportation of freights would apply, and they could then meet the outer world and get their productions to market. But their lPss favored fellow-citizens in the interior, having to pay a heavy local, to the line of the State, before they could get their productions into the world of free competition and transportation, would not be able to sell their products with profit. So that the rule would act very injuriously upon the interiOT of the State, both in the importation of supplies and the exportation of productions, and would, indeed~ soon lead to the destruction of the material interests of the interior section.
As it is, those living, for instance, within twenty miles of Macon get the benefit of through rates from Macon to distant commercial points which put::< them more nearly upon an equality with those living within twenty miles of Savannah or Brunswick who ship their productions out and get the benefit of through rates also. If the people near Macon, however, are denied the benefit of through rates, then they are placed at great di3advantage as compared with those living near the borcler of the State.
But I may be told that the policy advocated by many in Georgia, and possibly in this Convention, is not to make all freights in Georgia uniform, by compelling the roads to be guilty of the absurdity of carryiJ?-g through and local freights at the same rate per ton per mile, or per hunclred pounds. But the relief sought by one class may be to make local rates between the different terminal points of each road uniform, so as to have uniformity along the line of each road. This is certainly plausible, and appears to be a just proposition.
But let us see how it would work practically under the uni-

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form rule. I will begin at the Western and Atlantic Railroad, with which I am most familiar. There are near Ringgold very valuable beds of iron ore, which are, as already stated, in demand in Chattanooga and \Vestern cities. There are near Cartersville and Rome still more valuable and extensive beds of iron ore. We can carry in cars which went loaded to Atlanta from Chattr:mooga, and which are returning empty, iron ore between Cartersvilleand Chattanooga, at about a half a cent a ton a mile, charging it with none of our fixed expense, on account of the length of the road or distance which we carry it. But we cannot carry ore between Ringgold and Chattanooga at a half a cent a ton a mile, as it would not pay for hauling. The distance being but twenty-three miles, at a half a cent a ton a mile, the ten tons, which is the usual car load, would only pay $1.15 per car. \Ve cannot afford to lose the use of the cars, for the length of time required for them to stand on the side track and be loaded, and then take them on and transport them to Chattanooga for less than say $4.50 per car. This would be as much as the freight from Cartersville to Chattanooga at a half a cent a ton per mile. And, in fact, the loss of time on the cars switched off to be loaded and standing on the side track, at the point of destination to be unloaded, would be the same in either case. After a car is taken up ::tnd annexed to a train, it makes very little difference to us whether we carry it from Cartersville or from Ringgold into Chattanooga.
Let me try to simplify this a little. As already shown, the fixed expenses of the \Vestern and Atlantic Ra,ilroad which must be incurred, no matter how small the business, is about $500,000 per annum for the freight department. vVe have in round numbers 1,000 freight cars, and there are 313 working days. This makes it necessaTy that each one of those cars shall earn each day $1.61 as its part of the fixed expense of the transportation department. Now, exercising the greatest dispatch that we can practically do, it takes three days for a car to make the round trip from Ringgold to Chattanooga a.nd back to Ringgold. rrhat is, we have to switch off the car at the mine near Ringgold, and the miners have one day to load it with ore. The next day it is taken on the regular train and carried to Chattanooga, making two days. Then the rule is that the consignee has one day to unload the car, making three days' use of it, or three times $1. 61, which is $4.83. And I may remark that practically it is impossible to get that sort of prom1)tness established in loading and unloading which would be nt:ccessary to make the trip regularly in three days.
Now, instead of dropping the car off at Ringgold, if we put it on the side-track near Cartersville at the mine, it is loaded in one day, and goes to Chattanooga in a day, and a day is allowed for unloading, taking the same time of the car,

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to-wit: three days, to make the trip. The only difference in cost to us, therefore, in shipping the car-load of ore from Ringgold or Cartersville to Chattanooga is the additional wear and tear of the car and track from Cartersville to Ringgold, which is a mere fraction. In other words, the difference between delivering the car-load between each of the two points is to us in cost almost imperceptible.
But if you apply the uniform rule of charging the same per mile for all distances on the road, this would make ov_er 2 cents a ton a mile from Ringgold. And two cents a ton a m1le from Cartersville, instead of half a cent a ton a mile, would amount to pTOhibition, and cut off all :ilhipments of ore from that section.
In this connection, I should state that there are iron furnaces along the line of the W. & A. R. R. that can only be supported by giving them a very low rate on coke, coal, ore, lime-stone an_d such. other material as they are obliged to transport. Iron 1s now so low that they have to figure down to the closest point, and then it is with great difficulty that they continue to run. At Chattanooga, near our line, there are other valuable iron interests. The coal mines are beyond Chattanooga. Now, if the railroads charge the furnaces and the rolling mills in Georgia the same rate per ton per mile that they do for the shorter distance on freights delivered to the Chattanooga furnaces and mills, those in Chattanooga can still continue to run, while those in Georgia must go out of blast, as they cannot pay the increased rate and continue to operate.
So much for the shipment of ore under uniform rates. Now, let us contrast this with the shipment of lumber on the Atlantic and Gulf Road.
By reference to the report of Mr. Haynes, Superintendent of that road for 1876, I find that he has transportation of freights charged with $401,192.72 expense for the year. He also reports his road as owning 347 freight cars. To meet this expense, it was necessary for each one of the cars to produce $1,156.18 per annum, or $3.69 per working day. Now, suppose he is shipping lumber or rosin from a point twenty miles from Savannah. It takes three days' use of a car to make the round trip. This would make the cost for the use of the car $11.07for the rounc1 trip, or 55-ft cents per mile. Now, if rosin be the material with which he loads, fifty barrels make a carload, and estimating the car at 55-?t cents per mile, each barrel ofrosin costs one cent and one mill per mile. Suppose the shipment be one hundred and fifty miles instead of twenty, under the uniform rate, and let us see how the account would stand. The barrel of rosin at eleven mills per mile would cost $1.66 from the point of shipment to Savannah ; while the rosin is now worth in the New York market from $1.50 to $3.50 per

Hi
barrel, dependent upon the quality, and as you have to pay the through rate from Savannah to New York, this, as you will readily see, amounts to absolute prohibition to ship rosin from the interior.
Now let us look for a moment to the shipment of lumber. Four thousand feet is a car load of green lumber. At fiftyfive and a half cents per mile, this would be 13 cents and 8 milLs per thousand per mile, or for 150 miles would be $20.81i- per 1,000. Lumber is worth from ten to eighteen dollars per 1,000 in Savannah, dependent u-pon the qualfty. The $401,192.70 mentioned is the actual cost of transportation, and does not include interest upon the investment, or the bonded debt of the road. Under the uniform Tule of freight, it is evident, therefore, that the road cannot ship lumber or rosin, OT any other production of the forest from any interior point along its line.
After considering these facts, I trust you will readily see the impropriety and bad policy of establishing such a rule. It would, in every case, operate in favor of the point near the line of the State, and against the interior point, on all shipments from the State. In this case it happens that the finest ores of Georgia, and the finest fon'lsts of timber, are further interior; and all who are familiar with the subject know tbatitis with difficulty that the Georgia ores or lumber can compete with those outside of the State, even when they have the most favorable terms of transportation. But should an arbitrary rule of this character be fixed on the subject of transportation, it cuts off hopelessly the future development of the great mineral, lumber, and other resources of the State.
And in this connection, it should not be forgotten by the representatives of the people of the State, that in a little over thirteen years, the present lease of the Western and Atlantic Railroad expires. The State will then have received as rent for the use of the same, six millions of dollars, and she will again own the property unencumbered. But looking to her future interest in it, it is very essential that the mineral resources of the section through which it runs be fostered and developed; the more especially is this so, when we consider the fact that so soon as our people are wise enough to raise their own supplies at home, the most of our present commerce with the \:Vest will be cut off, and the road will lose that large inco;me from through freights, which hat> heretofore supported it, and then it must look to its local business as its chief support. Would it be wise then to adopt a policy which, during the remainder of the lease, would cripple instead of foster the development of our mineral resources~ And I may here remark, as I go along, that the Executive Committee of our company have adopted a resolution that they will carry in empty returning cars, ores or minerals necessary to be transported to encourage development at little more than the actual cost of

16
transportation. If you adopt the uniform rule, this cannot be done, and you build Ul) the mineral wealth of other States while you crush out our own.
.Again, there is another reason why this rule should not apply. Take the through freights coming into Georgia, and under our present Green Line rule, a car is loaded, say at St. Louis, and sealed for Charleston. This car, or probably a train of such cars, is shipped to the terminal point of the first road. There it is delivered to the next road, and is con plt>d to the engine without being opened, or interferred with, and is carried to its terminal point, being brought successively from point to point until itreaches N ashvi1le, Chattanooga, .Atlanta, .Augusta, and thence to Charleston; the end of each road being a distributing point. This all works smoothly in carrying train loads. Now, suppose in the shipment from St. Louis there is a car for Cartersville. Any one will see at once that it is a great deal more trouble to us, after a train is made up in Chattanooga, to stop at Cartersville and switch off, even one car, thus delaying our through train and hazarding our schedule, than it would be to come immediately through with the train to Atlanta and deliver the car here. It is not, therefore, reasonable or just, to compel the road to deliver through freight at all the way stations, at the same rate per mile, even by the car load, that they bring it by train load :from the terminus of one road to the terminus of another.
I may also remark here that the through business of the character I mention is done by the car load, and where a car load of freight is intended to be divided and distributed beyond a terminal point, as, for instance, a car load is made up at St. Louis and is intended partly for Barnesville, on the Central, and partly for Covington, on the Gemgia; this comes as a through car to Atlanta, the terminal or distributing point of the Western and Atlantic, where it must be un]oaded to make the division, and after it is unloaded and distributed, the portion due to Barnesville goes as local fTOm Atlanta over the Central, and the portion due to Covington goes as local from Atlanta over the Georgia. As any one who will examine the subject will readily see this is about the only practical mode of conducting the large business of transportation.
If we were bound to stop the throu~h trains at local stations and distribute the fractional p~Lrt of a car load due at each station, we could not make the speed in delivery within the time required by the demands of the public, and it would be much more costly and inconvenient to us. Practically, there is no better mode of working it, -probably, than that which we n()w h<tve; at least, railroad men have never been able to devise a better. There must be distributing points somewhere for broken c~trgoes, and it is but natural that these should be the terminal points of the different roads connected with the

17

line. Everything by the car load comes as through freight to

the terminal point where the car load is to be distributed; and

then in the distribution, the fractional parts go as local freight

over connecting roads upon the lines on which the distribution

is to be made. Indeed, justice seems to require this. When

the cargo is broken in Atlanta, in the case supposed, and a

fractional shipment is made to a town on either of the roads be-

low, it becomes local freight withuut regard to the place where

it was produced, or the rate at which it reached Atlanta by

the car load; and it would be unjust to him who produces

freight in or near Atlanta and desiTes to ship it to Covington,

that freight brought from St. Louis by car l0r.d to Atlanta,

and the cargo there broken and the freight distributed should

be shipped on the same car with his at a lower rate than is

allowed for that produced at home. In a wOTd, the local

mtes between Atlanta and Covington should be the same on

like articles, no matter where the article shipped was pro-

duced.

Again, while the local rate may be twice as high per mile as

the through rate, the actual net earnings to the road from the

local may be but little if anything more than upon the through

freight. Take, for instance, a train load of through freight.

It is coupled to a Central engine at Atlanta, and passes rapidly

through without stopping at stations, or breaking bulk, or

switching cars on or off, and the road gets the benefit of the

rate, say from Atlanta to Savannah, for about three hundred

miles.

_

Now, take a train load of the same number of cars of local

freight, and say it is double the price per mile of through

freight. 'l'he train starts out from Atlanta and must stop at

the first station to deliver some small article. It passes to an-

other station or town, and may deliver as much as a car-load.

This, say, has been carried but twenty miles, and tbe road re-

cieves freight upon it onlyfmthat distance. The train goes on to

another point and delivers a half car-load; and to another

and delivers the Test of the car-load; and as it passes down

the road, one car after another is emptied, and by the time it

reaches Savannah it may not have more than a single car that

has any freight in it, as the local shipment over the road from

Atlanta to Savannah may have been very little compared with

the freiR,ht distributed at the towns and stations between the

two. 'Ihe train of through freight wae carried immediately

through, consuming, say, but a day and night to make the

whole trip, being taxed with the expense of engineers, con-

ductors, etc., for only that period of time. But it will take

three days to make the trip with the local train stopping at

all the stations and delivering what is for each, thus taxing

the company with the expense of the train for three times as

long as in the case of the through freight. And the company

18
has the expense of running the local train through with most of the cars empty most of the way, or of switching them off and going over the road again to gather them up.
Again, you must add to the cost of local freight the expense of building and keeping up all the way-stations, with all the salaries and wages of agents and employees at the stations. If all the freight were carried through there would be no use for these, and no expense on account of them. As it is, all know they are a heavy part of onr expense.
Again, in case of the through train as the cars were all loaded and sealed, and not interferred with on the way, there is no danger of a loss of freights, or of claims for damage on that account. In the case of the local train, as the distribution is to be made at probably from twenty to forty points on the line of road, there is always more danger of getting something that is valuable misplaced, stolen or lost, which is to be paid for; so that when the whole cost and the whole loss on each train is compared with the whole income on each, we very often make more money on the through train at half the rates of freight than we make on the local train at double those rates. This again seems to me to show the injustice and impolicy of placing all _freights going over the road upon an equality of rates per m1le.
Suppose the stockholders of the railroad companies of Georgia had not invested their money in building roads, what would have been the result? Georgia would be to-day with out railroads, and the people who are constantly clamoring for a reduction of rates on railroads, but who have invested no money in their construction, would be left to carry their produce to market by wagons, as was the case a quarter of a century ago. Is it just that those who have invested nothing in this business, being a very large majority of the people of the State, and who have reaped more benefit from it than those who have made the investment, should now demand such restrictions thrown upon this business as to destroy entirely the sixty-one millions invested by others, and thus virtually confiscate it to their own benefit~ No just mind can entertain such a proposition without revolt. It is selfish, unjust and illiberal. What would the plantations and farms and mineral wealth and forests of Georgia be worth to day, as compared with those of the other States, if the confiding stockholders of the railroad companies had not put their money into this business and afforded the facilities of transportation~ No one questions the benefit ; no one denies that they have doubled the value of the property of Georgia. Does not common honesty forbid, therefore, that statesmen shall enact such ]a,ws as will destroy their investments~
Thus far I have not discussed either the cost or the practical points connected with the passenger business over our

19
roads. On that subject I wish to make a single remark. Snp:J?ose yon adopt the uniform rate that all persons passmg over a railroad in Georgia shall pay the same fare per mile, how does it work~ The r::tilroads all over the Union give very low rates on through tickets where persons travel long distances. If the merchant in Americus desires to go to New York to lay in his stock of goods, he must pay five cents a mile, for the railroads will not likely put it below this, to Augusta, or to Greenville, S.C., being the first point where through tickets are sold beyond the State on the AiT-Line Road; or to Knoxville, Tenn., being the first "]JOint where through tickets are sold outside of the State upon the E. Tennessee line; or to Chattanooga, if he goes by way of the West, before he can buy a through ticket. He can then from that point get the benefit of through rates allowed to the other citizens of the United States. And on his return, he must buy his through ticket to the same point on the border of the State, or to a point where through tickets are sold nearest the border of the State, and pay his local back to his home. The same rnle would apply to all the cities and other points in the interior of the State. And it would drive all through passengers who are not obliged to stop in Georgia around the State. Think yon this would be a benefit to the people of Georgia 1 I imagine they would not feel thankful for it, when they came to a practical realization of it.
I believe no enlightened State of this Union has disturbed, or attempted to disturb, the difference between through and localfreight and passenger rates for any considerable length of time. There have been some instances of such legislation, but finding the injustice growing out of it, and the injury both to the railroads and the people, there has soon grown up a greater clamor for the repeal than there was for the enactment of the law. As this is an interference with the regular course and currents of commerce, which is a hazardous experiment wherever made, it seems to me it should .always be left to the Leg islature, and should, in no case, become a lJart of the fundamental law. If placed in the Constitution, and it does not work well, another Convention must be callecl to make the change; but if left where the law now leaves it, with the Legislature, it can enact and repeal as the necessities and interests of commerce and the people require.
l do not question the power oi the General Assembly to regulate freights, if they should be unreasonable, on any railroad which has no protection in its charter against such regulation. Indeed, I admit the power, and have never at any time questioned it.
But in the exercise of this power, the Legislature of every well governed State would always be careful not to place the rates
at a figure, so low as to drive this interest into bankruptcy.

20
From a late publication, I see that the Pennsylvania legislation on this subject has taken the form of prescribing maximum rates, and that the companies are allowed to charge an average of four cents per ton per mile, which is higher th<:tn our average local. That rate of freight is named in the charter of the Philadelphia & Reading Railroad, which a year or two ago averaged a daily freight tonnage of 35,000 tons, making as much as a train sixteen miles in length. The president of that road says "such a train is coming down the road every day." The railroads in New Jersey, by general law, are authorized to charge ten cents per ton per mile.
In Ohio, the railroads are unlimited up to thirty miles, beyond which they are authorized to charge :five cents per ton per mile. The six leading roads of New England are empowered to charge six cents per ton per mile. And the parliamentary committee in England say, in reference to the :fixing of rates, "they are always fixed so high that it is or becomes, sooner or later, the interest of the companies to carry at lower rates."
vVhen you go to fixing rates by legislation, or to prescibing the maximum, justice requires that you should look very carefully into the cost of the different roads, and the grades which each has. Some have cost a great deal less than others. Some have much less grade than others. Those that are comparatively level can carry much heavier trains, with the same motive power, than others. All this must naturally be taken into the account in fixing rates.
The W. & A. R. R., for instance, in a distance of 138 miles, has over one mile of bridging. The Macon & Western, a distance of 103 miles, has not a single bridge, and was built upon ground much more favorable than that on which the W. & A. was constructed. Neither the cost of building nor the cost of keeping up the two are at all equal; and it would be unjust to :fix the rate the same on each. Take a road in perfect condition, and a locomotive that will move 90 loaded cars on a level grade will haul only :fifty-six cars on a grade of ten feet to the mile; and on a grade of twenty feet it will only haul forty cars, showing the difference between the grade of twenty feet and a level of two and a fourth to one. OrJ. a thirty foot grade the same engine will haul 31 cars; on a forty foot grade, 25 cars; on a 50 foot, 21, and on a sixty foot, 18.
Still another fact worthy of note in this connection, is the one already mentioned, whether the tonnage and passage are nearly equal both ways, or whether nearly all the tonnage goes but one way. If it nearly all goes one way, and then there is a particular season of the year when a great portion of the business is clone that way, the road as you will readily see, must keep more rolling stock than it would otherwise need. On some of our roads in Georgia, the greater portion of the business is done

21
within a period of from four to five months for the year, while the freight nearly all goes one way. In that case there must be cars and engines enough to move the freight when offered; and the balance of the year most of them must remain idle. But if the busines.:; were done with more uniformity during the different seasons, and were pretty nearly equal both ways, it would only be necessary for the company to maintain, say one-half the rolling stock, to do the same amount of business.
Yon will readily see, therefore, the great difference in the cost of working the diffenmt roads. But if you attempt to fix rates and make them uniform, according to the cost of building or operating the different roads, the citizens of each section come in with a complaint that you give one an advantage over the other; that you are discriminating in favor of the people in one section against another; so that yon are met by complications attending this question at every step.
'rherefore, the Legislature should never exercise thiB power unless in cases of plain and palpable abuse of privilege by the railroad company; nor should it exercise its power so as to make unjust discriminations between compAting companies, part of which have protection in their charters and others not.
As an illustration, the Georgia road and the Central are competing lines for a large portion of the business of the State. The Georgia, unquestionably, has protection in its charter up to a very high rate of freight. If the Central has not and you put a provision in the fundamental law or enact a statute limiting it to a lower rate than the Georgia road can charge and then destroy the difference that exists everywhere between local and through rates, the Georgia has a very decided and a very unjust advantage over its competetor, the Central. If you do justice between the different roads and maintain uniformity of rates you must, therefore, in your legislation allow to those who have not the protection in the charters the same privilege which is guaranteed to others by their char ters.
In the late case of the Chicago, Burlington and Quincy Railroad Company, cited by those who seek this legislation, which has been quoted in a pamphlet laid upon your desks, the Supreme Court of the United States distinctly lay down the doctrine that the charter of a railroad company is a contract, and that the Legislature cannot interfere with its chartered rights. The court says it is now too late to contend that the charter of a corporation is not a contract, within the meaning of that clause of the Constitution of the United States, which prohibits a State from passing any law impairing the obligation of a contract. Then it is clearly not in the power of the Legislature to take from the Georgia road any right or privilege that is granted to it in the charter, and it would be most unjust to put its rivals upon less favored ground than it has a right to occupy.

22
What is really most needed in this country is a law to prevent the ruinous competition which is practiced between railroad companies, and compel uniformity and maintenance of rates between competing lines at competing points. If the whole subject were under the jurisdiction of the general government, such a law might possibly be enacted.
To illustrate what I mean: there are three different railroads terminating at Albany, Ga., the Southwestern, the Brunswick & Albany, and the road to Thomasville, now part of the Atlantic & Gulf. These three companies come in competition for the business of Albany, and put it down to an unreasonably low rate, a rate at which neither of them could live if bound to charge the same rate from the other towns, cities and stations along their lines. This gives Albany greatly the advantage, say over Americus. But if the roads give Americus the same rate which the competition has caused in Albany, they must give every other local town the same rate; and this reduces it below a living point when the whole is taken together. And if you compel each to charge on this Albany business the same rate per ton per mile, you turn it all over the shortest line, and give it a monopoly of the business, to the exclusion of the other two.
Now, what is really necessary, if it could be legally enacted, is, that reasonable local rates be fixed all along the lines, such as would pay a reasonable income upon the capital invested; and that the roads centering at Albany each be required to maintain such competitive rates at that point as will not do injustice to Americus and other points along their lines. There is probably no just cause of complaint that the rates at Americus or other places on the line are too high in themselves. They are only too high when compared with Albany.
The gxeatest injustice that is done to the commerce of Georgia grows out of the bad faith of railroad men who agree to maintain rates on competitive business between competing points, and then violate their faith, and, seeking to get the advantage of the other lines, take the freight at lower rates, paying rebates in order to obtain it. The rates fixed by the different railroad conventions for the last several years have, as the merchants everywhere admit, been reasonable, and if all the roads had maintained them, it would have worked equally and justly.
But when a particular road or line fails to maintain rates and pays rebates, this compels others at the competitive point to reduce also and pay rebates; and probably this soon leads for a time to a railroad war, when they reduce the rates of frei<Yht below the actual cost of transportation.
Now, what is the effect of this upon the merchants of Georgia~ Take two wholesale houses in Atlanta. One goes to

23
New York to make its purchases at a time when the rates are reasonable, and all the roads are maintaining them. It buys its goods, can get no rebate, and ships at the regular rate. Two weeks after that time some railroad mal}. has cut rates, which compels others to reduce, and a railroad war has ensued, and freights at that time between New York and Atlanta are fifty per cent. lower than they were when the first commercial house laid in its supplies and paid the regular rates. At this period, the other house lays in its supplies, and gets a rebate of fifty per cent. on its freights. This gives it a very decided, unreasonable and unjust advantage over its competitor. On the single article of calico, it would make, say; half a cent a yard of difference, and that much difference would control the market, and take the trade from the other house.
There is where the great evil exists, and the legislation most needed, if the State had the power over it, is a law to put any railroad man in the penitentiary who, when all the roads have agreed upon a reasonable rate of through freight between competingpoints, violates it by cutting mtes, or unjustly paying rebates to one house or person which at another time are notal lowed to others. If this practice could be stopped, we would find much less difficulty in satisfying the public on the question of rates of freight.
But there is one other point which I should not pass without notice. The objection is frequently made, with great plausibility, that we do wrong on the through lines when we carry to the more remote points at as low or lower rate than we charge at a point nearer the point of shipment; or, in oth.er words, when we carry through freight to Charleston as low as we do to Augusta; or freight to Augusta almost as cheaply as we do to Atlanta. And yet, this becomes necessary to our self-preservation and protection under the present loose system of competition.
As alraady explained, the freight between St. Louis and Charleston is frequently car-ried through Baltimore at a very low rate; sometimes at a rate so low that the same freight carried over the through lines of railroads between the two points will not pay the cost of transportation. Here, to use a military phrase, we are compelled to guard our outpost, and however low we may have to carry it, we must meet the Baltimore freights at Charleston, carrying as low as the other line does. In doing this we rnay, and sometimes we do, sustain actual loss. But if we fail to do it, especially in periods when rates are cut upon the roads to Baltimore, the freight would come in from Charleston to Augusta, and invade our territory in the rear. To protect our territory, looking to our own self-preservation, we are therefore compelled to make this difference and carry freights between these distant points

24
at a rate ruinously low, and at a rate that seems unjust when. compared with charges at interior points, and at a rate at which we could not live and run six months if we charged the same rate uniformly along the line.
These are practical difficulties that we have to contend with all the while. They require tlJe earnest thought of every just minded railroad man who desires to maintain the interest of his company, and at the same time promote the interest of the public. Many times injustice results when it is beyond our power to control it without absolutely ruining our companies.
And just here let me say to you, gentlemen, as the representatives of the interests of Georgia, that it is necessary for us, looking to the future value of your own property, the State Road, to gua,rd these outposts, and prevent the habitual practice of bringing the productions of the West into the Georgia market through the coast; or else the future value of your great property is destroyed. Our own interest as lessees, and our sense of duty which requires us to protect the interests of the State while in possession of this valnable property, prompt us
to the course heretofore pursued. vVe would gladly adopt a
better one if it could be sug12;ested to us, and could be made practicable. And you should not forget that the Macon and Brunswick Railroad is also the property of the State. If you, by an unwise system of uniform rates, destroy the lumber trade, the turpentine business, and other like interests, you destroythe value ofthat large property in the hands of the State.
In Europe, where the whole length of a railroad in the empire is subject to the laws of the empire, these matters can be regulated. Tak@ England as an instance. Located upon an island, no railroad in the country has any connection with the outer world. The whole is subject to the will of Parliament. They can regulate freights, because they have power to control all competing lines. And if they fix a rate between Liverpool and London, they can compel all competitors to take that rate and to maintain it. In other words, the government has the power to prevent the ruinous competition, which, in this country, exists between roads by fixing uniform remunerative: rates, and placing all upon the same equality. And in that case it may well regulate the whole matter upon a just basis, and protect the capital invested in railroads. The government has power to leave all the roads atlibertytocompete as they chooseatcompetitivepoints; but when that is so, they will never tie thehandsofone and turn the others all loose; nor will they ever bind one road or one line, or the roads in one locality, to uniform rates, and permit all the others to go upon the principle of free commerce, bound by no rate. They know this would be ruinous to the interest of the company or section limited to particular rates, or compelled to charge uniform rates, while the others were left free.
l

25
Take France as another instance. There the railroad system is wisely adjusted and the different great through lines over the territory of France are all subject to the will of the Empire, now the Republic, and the whole matter is regulated by law so as to protect the capital invested in the railroads as well as the other capital of the Empire, giving them such rates as are reasonable and remunerative, and controlling competition in such way as not to destroy this. There if they choose to regulate the rates by requiring uniformity with one company, they do the same with all companies. They do not bind one company or one section in chains, while they turn all the balance loose to free commerce or free competition.
But with us the system is entirely different. We claim that the States are sovereign and independent of each other in all matters, except where they have delegated a portion of their :powers or sovereignty to the federal government, and each State with us claims and possesses the right to regulate these matters for itself.
Now, take a train load of freight between St. Louis and Charleston, as in the case already supposed, and it passes through Missouri, Kentucky, Tennessee, Alabama, Georgia, and South Carolina, going over the usually traveled line, thus passing through six different sovereignties, each, so far as this question is concerned, independent of the other, and neither having the power to regulate the fr~ight on the same line, within the territory of the other. If one of these sovereignties on this line loads the through freights with such burdens as they will not bear in competition with other lines, the freight is at once turned off by other competing lines, and simply passes around that sovereignty and goes to its destination.
If the United States Government had the same power and control over this question which the European monarchies have over it, and they would make laws declaring that all ,companies carrying freight between St. Louis and Charleston, or all lines made up of separate companies, should be governed by the same rules, and if one were required to carry all freight at uniform rates per mile, that all the others should
be, there would be no injustice in it. Indeed, it would seem to be the more just rule, and it could then be regulated without ruin to any particular line or any particular company or section.
But I am satisfied, gentlemen, when you study this question, you will see that this is impracticable on account of the peculiar nature of our government, and on account of the sovereign rights of our States in matters where the power is not delegated.
There is another particular in which our system would differ somewhat from the European systems, even if the whole matter of milroad transportation were under the power of the

26
general government, and that is this: our territory ia vastly larger than the tenitories of England, France, Germany, Austria, or Italy, though each of them has sovereighty over its whole territory. There, on account of the lines being shorter from the border of the empire to the metropolis than they are in this country, the regulation of freights, so as to compel a uniformity of charge per mile, would do less harm to those more remote from the commercial metropolis. In this country the lines are so long from the commercial metropolis, or other leading commercial cities, to the interior, that a uniform rate on grain would, at a given point, amount to a prohibition to ship to market.
Take New York as our commercial metropolis. A farmer lives in New Jersey, twenty miles from New York, and wishes to send his wheat to market. He would not object to two cents a bushel for the twenty miles. Indeed, it would be a very reasonable rate. But now let us make this uniform back to the West, and see where it places the producer in Colorado. Two cents per bushel for twenty miles would be ten cents for each hundred miles, and would be one dollar for one thousand miles. As the distance by rail from New York to Denver is nearly two thousand miles, the freight would be about two dollars a bushel on their wheat. This would amount, as yon will readily see, to exclusion by the time it would have gone five hundred miles, as wheat in the interior cannot bear fifty cents a bushel freight to the port of exportation. And yet a rate less than two cents a bushel upon the farmer who lives within twenty miles of New York would be deemed by everybody a reasonable rate. To allow the farmer in Kansas to ship his wheat to market at all, he must have a through rate upon it, which is so low as to enable him to reach the coast without paying too large a proportion of the value of the wheat. Otherwise, you shut off the interior of the continent from exportation of its productions.
I simply mention this to show that the difference between our system of government and that in Europe makes it absolutely necessary to have a different rule here to the rule which prevails there; and that the vast extent of our territory is such that if we establish uniform rates for such a long distance, we exclude almost one half of the territory of the United States from the exportation of its grain to market, or we put the local rate on freights near the coast cities so low that it is impossible for the railroads to operate.
But I may be asked how we can carry this through business at so low a rate as to enable it to reach the coast. The reply is, that the local along the line of each company's road must pay the fixed expense of running the road, and then the fixed expense being paid, the actual cost of transportation is cheap enough, not charging it with the fixed expense, to ena-

27
ble railroad companies to carry through freight long distances at rates that enable it to reach market at a small profit to the carrier, part of which profit, if it amounts to anything considerable, can be, and is, applied to the reduction of local rates. But if you establish a rule that cuts off the through business, or amounts to prohibition, then the country through which the road passes, must, upon the local business, pay not only the fixed expense, but all the other expenses of railroading, with interest or dividends, if any are ever to be paid.
Now, gentlemen, a word in conclusion upon the experience of other States which have undertaken to deal with this important and delicate question by throwing restraints around the freedom of commerce and transportation. In the State of Wisconsin, the law known as the Potter law substantially required equalization of freights, both through and local, per mile. A.nd while this law greatly embarrassed and crippled the railroads of the State, it was never enforced on freight coming from or going to points outside of the State. It worked great detriment to the people of the State, and they became more clamorous for its repeal than they were for 1ts enactment. And it has been repealed.
A similar law in Minnesota gave great dissatisfaction, and has also been repealed.
In Iowa the law does not require equalization of freights per mile. Roads may charge a larger rate per mile for a shorter haul, if not more than the maximum rate fixed by law. But our information from Iowa is that the people are dissatisfied with the law, and all the probabilities are that it will be repealed at the next session of the General Assembly. The effect of it has been to stop the building of all new roads almost entirely.
In Missouri the new Constitution also provides for a uniform rate of freight without regard to the well-established distinction between through and loca,l, and declares that suitable laws shall be passed by the General Assemhly to enforce the provision. From this State, we are informed that the Legislature, seeing the unwise policy foreshadowed by the Constitution, has passed no law providing for the enforcement of this provision of the Constitution ; and the railroad interests and the interests of the people in connection with transportation remain undisturbed.
The Constitution of Pennsylvania has a provision that also seems, upon its face, to requiTe uniform charges for transportation; but we are informed that it is construed to apply only to local traffic within the State, and not to through traffic or inter-State business. Most of the roads in that State have provisions in their charters fixing the maximum rates which they can charge for freight and passengers, and it is held that the new Constitution does not affect charters granted

28

to railroad companies before its adoption. There may be

other States where there has been some legislation or Con-

stitutional provision on this subject. But it does not seem

in any case to have been construed to destroy the difference

between through and local rates, except in the States above

mentioned, where the law worked so badly that it was soon

repealed.

Under all these circumstances, and in view of all the diffi-

culties connected with the complex system of transportation,

growing, in a great me?"sure, out of the large territory and pe-

culiar character of our government, I submit the question to the

statesmen of Georgia, now representing the sovereign will of

her people, whether it is not wiser to leave this question where

you find it, trusting to the competition which in this country

cannot be contr0lled, and the mutual interest of the people

and the railroad companies to adjust the whole question from

time to time, as the exigencies may require, upon a liberal and

fair basis. As already stated, I believe all reasonable men ad-

mit that the freights are as low as they ought to be. Indeed,

most reasonable men admit that they should be r-aised to a

point that will make the vast sum of money invested in rail-

roading remunerative to stockholders, and encourage the con-

struction of other roads.

This cannot, however, be expected, as most of it is already

lost to stockholders. And one of the causes which produce

the ruinous competition referred to, grows out of the fact that

many of the roads are in the hands of receivers, who are

neither called on to pay interest to bondholders, nor dividends

to stockholders. While they run under order of court, they

feel themselves bound by no rule. Under these circumstances,

the few companies that are yet solvent are bound to come into

competition with'insolvency, which drags one after another

down to the bankruptcy court. The picture is a dark one.

The railroad interests are in a deplorable condition. Instead

of being vast monopolies, or bloated capitalists, they have

generally been reduced to insolvency, fmd are in condition ~it

tle better than beggary.

While this is so, Legislatures seem to feel it their duty fre-

quently to embarrass them, and courts and juries too often

join in the popular clamor, and render most unreasonable and

unjust verdicts and judgments against them. If the represen-

tatives of the people of Georgia, in Convention assembled,

turn a deaf ear to the story of their misfortunes and attempt to

embarrass them by isolating the Georgia roads, and compell-

ing them while, one after another, they are driven into bank-

ruptcy, to drag the people of the State down with them, to

whom shall they appeal !



As the Supreme Court of the United States has held that the

Legislature has power, if their rates should become u.nreasona~

29
ble, where their charters do not protect them, to regulate and control them; and as all intelligent lawyers know that the legistion of a State can neither divest their vested rights, nor impair the obligation of their contracts with the State, why, in the fundamental law, should anything be said on this subject? You can neither enlarge the power which the Legislature already possesses in the premises, nor can you by anything you put into the Constitution of the State take from them either the vested rights or chartered privileges which they now possess.
You, as the representatives of the people in convention, have no more power over the subject than the Legislature possesses. The language of the Constitution of the United btates is not tha1 the Legislatwe of a State shall not impair the obligation of a contract, but that the State shall not do it. It matters nQt, therefore, whether it is attempted by the Legislature or a convention of the people. In either case, it is equally out of the reach of the State.
I think yon will concur with me in approving the sentiment expressed by the Supreme Court of the United States, in the late Chicago, Burlington & Quincy Railroad case, when it says; "That government is the best which, while performing all its duties, interferes the least with the lawful pursuits of ittJ peopl"B."
Let me suggest, therefore, that this question be left where the laws place it. As you can neither enlarge the powers which the Legislature now possesses over the subject, nor divest the vested rights or destroy the particular exemptions or privileges now possessed by the railroad companies, let the question rest where it is; and let us all, whether our occupation be that of railroad men, planters, merchants, mechanics, or any other honorable employment or profession, unite in one harmonious effort t.o form a Constitution that will give the people good government, and to secure its ratification when submitted to the people by the Convention now in session.
It seems to me we may have embarrassing questions enough, growing out of differences of opinion, when we go before the people, without raising new issues, which, as I think I have already shown, could be of no practical utility, and must result in great harm.
Hoping that your action may in this matter be liberal and just, I submit the question for your decision, with confidence that you will act wisely. And I cordially thank you ior your kind invitation to appear before you and present my views on ~his important question.