Minority Report of the Committee on Railways in Relation to the Hoosac Tunnel and the Railroads Part 3

The Boston and Lowell Railroad is the natural terminus of this Northern line, and no legislation can remove it from this position.

Moreover the majority bill, placing the Boston and Lowell Railroad and the Fitchburg in the same control, and authorizing a lease of the Ches.h.i.+re, gives the consolidated company such a substantial control of the whole northern business that its transfer to the Boston and Maine would necessarily be followed by such disastrous compet.i.tion as to preclude such a connection. It must inevitably result in a consolidation of the Tunnel and the Northern line under one management. In creating a new line we destroy one which already exists.

Our true policy is to maintain unimpaired our four routes to the West, and under whatever management they may be, at all events maintain that they shall be independent of each other. If a consolidation is to be made of the Tunnel line we are clearly of the opinion that it should be of the direct line only between Boston and Troy, including the Fitchburg, Vermont and Ma.s.sachusetts, Troy and Greenfield, and Troy and Boston, and the Ma.s.sachusetts Central if it desires to form part of such a line. The Boston and Lowell Railroad, and Nashua Railroad should be studiously kept apart from such a line, because it forms no natural part, and does form a natural part of another line. It is urged that the possession of terminal facilities in Boston should be allowed a controlling influence in this matter; that the Boston and Lowell Railroad has obtained the only convenient terminus in Boston for a great Western line--more than is needed for its own business, or the business of the Northern line, and therefore that the railroad policy of the Commonwealth should be compelled to yield to its position. To this there are two answers.

_First._--That these facilities were obtained for the Northern line, and by urgent representations of its necessities, and if they are not needed for that business they should be transferred to other corporations that do need them.

The Commonwealth has full power in the case, and it is only necessary to invoke the same power which the majority bill gives the consolidation company to take property from the Fitchburg, to take from the Lowell Railroad Company the property which it now represents as not needed for its business which it has obtained under the representation of a public necessity.

_Secondly._--The question of terminal facilities is too unimportant in itself to be permitted to determine in the least degree the decision of a great State policy; other facilities can be obtained as good as the Lowell.

_Finally._--We object to the plan of the majority because it continues the policy of placing our last remaining line to the West under the control and management of a stock corporation.

It cannot be denied that there is great and wide-spread dissatisfaction with our present railroad system, and its management.

We have tried in vain to control by special legislation, and it may well be acknowledged that the trial has not been very successful.

REGULATION BY SPECIAL LEGISLATION.

No system has ever been devised better calculated to introduce corruption into our state government than the present method of regulating railroads by special laws. Every senator knows what influences are brought to bear to promote and defeat the various projects of special legislation. No! Mr. President, I have over-stated--I am sure that no senator at this board does know _all_ the "ways and means" that are used to influence members to secure votes for the pa.s.sage of various bills in the interest of railroads.

Every senator is aware how powerful and wide-spread is the pressure when public railroad legislation is under consideration. If these influences were confined to the questions of special or general railroad legislation, great as the evil is, it would not be irreparable. But unhappily the evil does not stop here. Hardly a question of special or general legislation is decided by either branch of the legislature without being affected in a greater or less degree by these railroad questions. It prolongs our sessions and fills our lobbies with the advocates of private corporations, and these special guardians of the rights of the people in the service and pay of railroad corporations astonish the members from the rural districts by their disinterestedness in their "labors of love" and benevolence--making their stay at the capital so pleasant and agreeable without money, but not without price--as to create a strong desire to serve the "dear people" another term, and obligations are exchanged that demand the presence and service of these men. No I not men alone, but men and women at our town caucuses and conventions, that favors granted may be reciprocated in securing the nomination, and thereby the election of the men who are willing to be run by rail road interests.

If this state of things does not corrupt legislators, it is because legislators are incorruptible. We know its results in other States, and we may well fear it here. Special legislation has totally failed in securing the results intended, and left behind a train of unmitigated evils which must increase with the increased magnitude of the railroad interest, and the growth of railroad corporations. The establishment of such a corporation as is provided for in the majority bill may well be dreaded. The creature will be more powerful than its creator.

CONTROL OF THE TUNNEL.

The committee were clear and unanimous in the opinion that the State should under no circ.u.mstances part with the absolute control of the Tunnel to a private corporation.

The majority bill is the first step in giving up the control of the Tunnel to a private corporation. It gives to that corporation control of the whole line, except the Tunnel; and entrusts it with the operators of the Tunnel itself.

The pressure upon the State to part with the Tunnel will grow with the increase of business; the whole power and usefulness of the line must rest in the hands of the corporation which owns the railroad entering the Tunnel on either side. I am not old in railroad tactics--but, Mr.

President--with the bill reported by the majority of the committee, I think I should have no difficulty--with less than one-half of the amount of the money expended in the efforts to pa.s.s the bill--to capture the Tunnel from the State in three years, and it would be accomplished in such a manner through the representatives of the people, that no one would presume to question my honesty.

The Commonwealth, owning the Tunnel,--the most valuable portion of the line, the _key_ to the whole line,--has no voice in its management except a minority in the board of direction; no voice in fixing rates, no influence in its operations. This is all placed in the hands of a private corporation, governed by stockholders, whose stock is at all times in the market, and may be purchased at any time by any parties who deem it for their interest to control the line. The corporation may at any time combine with existing corporations to fix rates, and thus the main object sought by the State in constructing the Tunnel--an independent and competing line--be defeated.

THE PURPOSES OF THE MINORITY.

The minority of the committee in the plan which they propose to the legislature, have had two purposes in view. _First:_ Absolute and perpetual control of the Tunnel, built with the public money for the benefit of the people of the whole Commonwealth; and _second:_ _state control_ of the Tunnel line. I use the words _state control_ designedly, as distinguished from state owners.h.i.+p, or state management.

State owners.h.i.+p of a railroad without state management is useless.

State management may sink into political management which might be disastrous to the public, and to the railroad. But state control is a very different thing; precisely what legislatures have sought in vain to attain. We have endeavored to give it by special legislation, but all in vain; and yet just this is what we want.

The idea is too firmly fixed in the public mind to be eradicated without a fair and conclusive trial, that fares and freights are now too high--that cheap transportation _is_ necessary, and can be furnished without interfering with a fair return for the capital invested. You cannot expect private corporations whose whole object is to make money for stockholders, to try this experiment fairly, and ascertain how cheaply transportation can be afforded. Railroad corporations do sometimes compete, but the sole object and purpose of such compet.i.tion is eventual combination, and in that combination, the public must suffer. We want to establish a corporation which shall compete to increase its business without any ulterior view of combination to raise rates, and such a corporation is found under the plan presented by the minority of the committee.

THE MINORITY BILL.

This bill proposes first that the Troy and Greenfield Railroad and Tunnel shall remain the property of the State.

_Second._ That the State shall obtain by lease the control of the railroads forming the direct Tunnel line. We have reason to believe that this can be effected. We have a.s.surances that the Fitchburg Railroad Company will a.s.sent to the terms of this bill. If the only result of this bill is to secure the control of the Fitchburg Railroad it will be worth the trial. The Fitchburg Railroad with its connection with the Tunnel, has a commanding position with reference to the railroads of the State. What we want to secure is a free system of compet.i.tion, without the power of combination, which is now the bane of our railroad system, in the hands of private corporations.

Rates are now fixed to a remarkable extent by combination, and not by compet.i.tion. Every business man knows that the freight rates between important points are fixed at meetings of freight agents, who consider not what is a fair price for rendering the service, but what will best pay the corporations which control the business.

The great need of the business community of Boston and Ma.s.sachusetts, is a line to the West, making the nearest connection with the Lakes, which will do the business at fair and uniform rates, and which shall be managed in the interest of the public, and not of stockholders.

Such a line can be secured under the provisions of the minority bill, which will establish a through line with power to connect with Lake navigation at Oswego, on Lake Ontario, and be substantially under state control. The necessity of extending the line to Oswego, to some point on the Lake is obvious, because every other railroad communicating with the West, except the Great Northern route, is now under the control of New York. At any Lake port navigation is open for seven or eight months in the year, and gives a direct communication with the great centres of Western commerce.

The Tunnel line ending at Troy can give little advantage over the present Western line--the Boston and Albany Railroad.

THE EFFECT OF STATE CONTROL OF THE TUNNEL LINE.

One great purpose of controlling one important line, is the effect upon other lines. Our system of railroads is so interwoven that all our railroads are to some extent competing, and the operation of one railroad by a corporation in the interest of the public will to a great extent control the whole railroad system of the State. The direct Tunnel line probably now occupies the most important controlling position of any in the State. It can be made a regulator of the Western business of the State. It can by its connections with the Ches.h.i.+re and other Vermont and Ma.s.sachusetts railroads, largely control the northern lines.

It will, by its many connections, bring the whole State in direct connection with the North and West. The great success of the so-called Belgium system is founded on this principle,--the control of the whole by the direct operation of a small portion. The position of our Ma.s.sachusetts railroads is, in this respect, not unlike that of Belgium. Our railroads are so closely connected together that the state control of one road will be felt throughout the whole system.

THE POPULAR FEELING IN FAVOR OF STATE CONTROL.

It cannot be denied that the popular feeling has been steadily growing in favor of state operation of railroads in spite of all that has been said of the danger of corruption and of the inefficiency of state management. The people, confident in their own integrity and their own power, have not indistinctly shown their desire to fairly try the experiment, and the circ.u.mstances are more favorable for such an experiment than will probably again occur. The State now owns the important part of the line,--that part which is necessary to change the line from a disconnected local line of railroads to a great through line. It has been built at great cost. Its opening gives great value to the connecting roads. If it was worth the cost of construction, this value can only be shown by a development of business which will require a series of years, and will be attended with corresponding advantages to all connecting roads. This development of business can hardly be expected without substantially giving up the control of the Tunnel to the line which operates it. The majority bill does give such a control. We deem it the best way for the State retaining the Tunnel to obtain upon fair terms the control of the connecting roads, and fairly try the experiment of operating a railroad to ascertain how cheaply transportation can be furnished, and yet return a fair remuneration for the capital employed. The public demands such an experiment to be tried, and a better opportunity to try can never exist.

SAFETY OF THE EXPERIMENT.

Of this there can be no reasonable doubt, for a corporation formed under the provisions of the minority bill possesses all the advantages that can be obtained by consolidation under one private corporation, as authorized by the majority bill, and the additional advantages of state and corporate management combined, which would be efficient and reliable, beyond that of ordinary railroad corporations, inasmuch as their acts would be most carefully watched and criticised by others than stockholders, and the honor of securing a successful result to so great an experiment and enterprise in the interests of the people, would be a far greater incentive to even political ambition, than the compensation received; for "great deeds foreshadow great men," and the people are not slow in their rewards to those who are honest and earnest in their service.

Why, Mr. President, if I had the ability to manage this enterprise, I should hold the _honor_ of making this enterprise in the interest of the State a success of more importance than the honor of being the governor of Ma.s.sachusetts. And when a man's reputation is thus at stake, he cannot afford to cheat himself by withholding from the State his best talents and energies. It has another and still greater advantage,--the endors.e.m.e.nt of the Commonwealth of Ma.s.sachusetts, which furnishes power and capital for terminal facilities, equipment and the improvement of the line at a cheaper rate than any consolidated company can procure it; and cheap capital in disinterested hands secures _cheap_ transportation.

Can there be any doubt that a corporation thus formed and managed will prove a financial success? If not a success, then we have great reason to distrust a private corporation; with far less advantages, and a larger capital, for doing the same business must prove a financial failure.

To demonstrate this point in a more practical manner, we will a.s.sume a proposition and verify this proposition by figures.

Judging from the present local business now done on the several roads--forming what is antic.i.p.ated as the Tunnel line, and the testimony of eminent railroad men of the business that is sure to come to this great through route to the West--it is fair to a.s.sume that the whole will do a business that will average six millions a year for the first five years; twenty-five per cent. of the gross earnings of the leased roads, and property are reserved to provide for settlement of the conditions of the said leases; and as they are not guaranteed the payment of any amount beyond what their present business pays, can there be any doubt but what the twenty-five per cent. on the increased business will pay the six per cent. interest on the capital loaned to increase the facilities for extending the business over the line?

The Railroad Commissioners report that the average expenses of all the railroads of the Commonwealth is seventy-five per cent. of their gross earnings; but there is no doubt but what it can be proved that it cost less than seventy per cent. on the great trunk lines, and one of the oldest and most successful railroad managers a.s.sured me that this Tunnel line could be run for sixty per cent., but we will call it seventy per cent., which makes with the twenty-five per cent.

ninety-five per cent., leaving five per cent. for net profit on the whole business of six millions, which is $300,000. What next? We have for the credit of the corporation or State, twenty-five per cent. of the gross earnings of the business done on the Troy and Greenfield Railroad and through the Tunnel. Calling the Tunnel twenty-three miles in length,--which it is conceded it should be called for what it saves in distance and grades,--and with the Troy and Greenfield Railroad, which is forty-four miles, we have one-third of the whole distance, and it is the judgment of practical railroad men that out of the six millions of business, two millions would pa.s.s over this division and through the Tunnel; and twenty-five per cent. on two millions is $500,000 income, which, added to the $300,000, gives a net income of $800,000 to the State, which is nearly six per cent. on thirteen and one-half millions, the cost of the Tunnel and Troy and Greenfield Railroad, with an additional expenditure of one and one-half millions needed to make this division of the route what it should be as a part of the great through line. In proportion as the business increases, in that same proportion will the profits increase, and when the business shall amount to ten millions, which I have no doubt it will in less than ten years, you create a fund over and above the interest on the whole cost that can be used for extinguis.h.i.+ng the debt, purchasing the stock of the leased roads, as the value is fixed by the terms of the lease, or for the reduction of rates of fares and freights. If this proposition will not bear investigation, pray tell me how the stockholders of the consolidated corporations are to receive dividends on their watered stock, with increased cost of improvements of the line, and equipment for doing the same business.

THE ALLEGED DANGER OF POLITICAL CORRUPTION.

A chief argument against the system proposed is the danger of political corruption likely to follow the employment of a large number of men in public business.

_Second._--It is alleged that the public management of any great public service is less efficient than private management.

The purpose of the minority of the Committee in proposing their plan, was to provide a corporate body removed as far as possible from political influence.

The State Trustees are appointed by the Governor and Council. They are appointed for _five_ years. A single vacancy occurs each year. They hold nearly the same position in regard to the operatives employed ill the operation of the corporation, as directors of corporations, and no one ever heard of directors exerting any great political influence, particularly State directors. I doubt if any director of any railroad corporation in the State ever knew or thought to influence the political vote of an operative.