PETITION FOR REHEARING. Before the Honorable Board of Railroad Commissioners of the State of California. W. H. ROBINSON, Plaintiff, VS. THE SOUTH PACIFIC COAST RAILWAY COMPANY and SOUTHERN PACIFIC COMPANY, Defendants. In accordance with Rule XIII, regulating procedure before this honorable Commission, we petition you for a rehearing and change of your decision in the case herein stated, for the following reasons, as shown by the record of the case: I.-Your decision of September 5, 1888, is in plain violation of the law and facts in the case. This honorable Board has twice before found the facts and declared the law, and your own interpretations of the laws have been that the defendant has been violating the Constitution of the State since March 1. 1887, and is now doing so. II.-Your decision of September fifth is a plain violation of your rules of procedure, specially Rule XIII. III. The data on which the honorable Commissioner from the Third District passes his opinion, does not justify his conclusions. and we think there are errors in his statement of facts, and that he has no authority to disregard the law. We, therefore, ask you to rehear this case and decide on its merits and in accordance with the facts and the law, as twice placed on record by you. W. H. ROBINSON, Plaintiff. On October 18, 1888, Commissioner Rea offered a resolution, as follows: In the Matter of the Ferry and Local Trains between San Francisco and Oakland and Alameda. Resolved, That the present ferry and local train service system and passenger rates of the Southern Pacific Company between San Francisco and Oakland and Alameda, with single trip, round trip, and special rate individual monthly commutation tickets, good for passage over either the broad gauge line or the narrow gauge line, and giving a choice of routes and alternating boats and trains at intervals of fifteen minutes during the day, as heretofore adopted and now in operation, have, and are hereby declared to have, the consent and approval of this Board. And, in the judgment of this Board, it would be detrimental to the best interests of the large majority of the people affected thereby to compel a return to any former system, or service, under which the issue and use of tickets would be limited to the single line for which they were sold, and which would result in depriving the ticket-holder of a choice of routes, and in forcing him either to wait for the boat and train of the single line for which his ticket was purchased, or to purchase an additional ticket over the other line. And it is therefore ordered that the petition of W. H. Robinson, to change the decision and judgment of this Board, made and rendered on the fifth day of September, A. D. 1888, and for a rehearing in the matter of W. H. Robinson vs. Southern Pacific Company (a corporation) and South Pacific Coast Railway Company (a corporation), be and the same is hereby denied. A. ABBOTT. The same was adopted on following vote: Commissioners Abbott and Rea, aye; Commissioner White, no. At meeting on October 18, 1888, Commissioner Abbott offered resolution as follows: Resolved, That the bill of J. F. Gawthorne of $2,116 60, for services as stenographer from July 1, 1887, to June 30, 1888, be approved and allowed, as the same is a reasonable and just compensation for such services. Adopted by unanimous vote. WESTERN CLASSIFICATION. At meeting of the Board, held on November twelfth, the Secretary was instructed to notify the managers of all roads in the State that are not now using the Joint Western Classification to appear before the Board on December 10, 1888, at 11 o'clock A. M., and show cause why they should not adopt the same. In obedience to instructions the Secretary sent out said notices, of which the following is a sample: Mr. A. N. TOWNE, General Manager Southern Pacific Company, San Francisco, Cal.: DEAR SIR: You are hereby cited to appear before this Commission on Monday, December tenth, at 11 o'clock A. M., and show cause, if any you have, why you should not adopt for the use of your company and leased lines within this State the "Western Classification." Yours very respectfully, V. W. GASKILL, Secretary. To the foregoing citation of the Secretary, Mr. A. N. Towne replied by letter as follows: SOUTHERN PACIFIC COMPANY, P. J. WHITE, Esq., President State Board of Railroad Commissioners, San Francisco: DEAR SIR: I am in receipt of letter, under date of the fourteenth instant, from Secretary Gaskill by order of the Board, citing me to appear before you on Monday, December tenth, at 11 o'clock A. M., and show cause, if any, why we should not adopt for the use of our company and leased lines that which is known as the "Western Classification." In this connection permit me to ask your favorable consideration to carry the meeting over to some later period; for the reason that the officers at the head of our traffic department, and the leading working forces, are now in St. Louis engaged in interstate matters, and it is not at all probable that they will be here as early as the tenth proximo, as they have a great work before them. If you will kindly consider my appeal for more time, I will advise you promptly on their return, that you may fix an early date thereafter, when we will take much pleasure in meeting you at your rooms to consider this matter. Yours truly, A. N. TOWNE, General Manager. The appeal for more time on the part of General Manager Towne was granted by the Commission, and the time for the hearing was postponed to some future date to be fixed by the Board. COMMUNICATION FROM A. N. TOWNE. On December 19, 1888, a letter was received from Mr. A. N. Towne, bearing on the subject-matter of the adoption of the so called "Western Classification," and as the subject is of such interest to the public, and is so exhaustively treated in said letter, the same is here published in full: The honorable Board of State Railroad Commissioners: DECEMBER 18, 1888. GENTLEMEN: I am not unmindful of your kindly consideration in postponing, at my request, the meeting called at your office for the tenth instant, until after the return from the East of our traffic officers, who are so familiar with the subject-matter relating to a change of classification; and agreeably to promise, I shall hasten to inform you just as soon as they return, when they will most cheerfully respond to your wishes should you still desire to bring them before you to consider this matter-a subject which has had more thought, perhaps, than any other which comes before us. This, and the general "railroad problem," which is one of the most complex and decidedly difficult to thoroughly understand and intelligently comprehend of all the questions of the age, has engrossed the attention of the wisest men of our generation. It has taxed the untiring lawmakers of the various States and the Nation to their utmost to devise and frame acts, whereby the roads of the country shall be consistently controlled and successfully operated, under some other law than that which governs trade and commerce; and until this sophistry is abandoned no good will result to the roads or their patrons. In the needless attempt to control the roads, the small amount of dollars and cents involved, per capita of the population, does not ever seem to have been considered, which is only equal in the aggregate to the amount of money expended annually for spirituous liquors, including malt liquors, used in the United States, which tax if directly levied by the Government at per capita tax of $14 33, would produce a sum representing the entire annual receipts of the railroads in this country. The Interstate Commerce Commission has given uniform classification much consideration, as have the traffic managers of all the lines of the country. These men have been in conference at different times for more than a year; meetings have been held at various places in the East, and have resulted in a failure to reach a satisfactory conclusion. The Interstate Commerce Commission has expressed wishes that a uniform classification be brought about if possible, and to this end these trafficmen have devoted their best endeavors. They found the country too large, the topography too varied, the resources too far extended, the conditions of trade and commerce too complex, and the railroad interests generally too greatly diversified, to classify and impartially measure them by fixed and unyielding principles. These traffic officers, by education and constant training, have acquired a knowledge of the laws of trade and commerce; they are thoroughly familiar with the country through which their various roads run, and the resources tributary to their respective lines; they are students of science, and the basis of their penetrating and comprehensive information is founded on life-long experience, upon the fixed and immutable laws of nature, and upon events that are constantly changing; and I am satisfied when you, gentlemen, have listened to what they have to say on the subject of classification, applied alike to all the roads and sections of the country, that you will be induced to forego any action, because it would establish unreasonable restraint upon our ability to fairly adjust the rates to the satisfaction of the public and to the company's requirements; and you will permit me, in this connection, to say that it would seem to be the province of the Commission, in its wisdom, to bring the people and the roads into sympathetic, instead of hostile relations, which would likely follow the necessary advance in our first class rates, in order to accomplish the results sought for by your honorable Board. No person, Legislature, or Congressional body, can fairly and honestly meet out even-handed justice to all by arbitrary or ill-considered acts, especially if unfamiliar with all the conditions surrounding and influencing the subject, and not particularly concerned in that which they would control. There are few or no complaints from our patrons, who are well and cheaply served, and I need not add a word to the universal testimony of the past as to the prosperity and contentment sure to continue in the future under our present classification; and it follows that every individual of this vast State is directly concerned in the welfare, the relations, and the prosperity of the road, which are assured with the guarantee of fixed and stable rates. Every change that is made in rates or classification disturbs commercial relations and results in annoyance to the people. Railroad history and practical experience has taught all fair-minded people two great fundamental truths in respect to their management. The first is: That the roads must be permitted to earn sufficient to meet their obligations. The second is: That if the first is denied them, the owners must be deprived of fair returns upon their investment and the people must accept an inferior and very unsatisfactory service. Therefore, the management cannot, in the very nature of things, be subject to arbitrary and capricious rule; they should be left to exercise as wide a range of control in the internal affairs of the roads as the circumstances which ever surround them will admit, always having due regard to the development of the State by establishing fair, reasonable, and stable rates, which are of immeasurably greater importance to the people than a classification which is especially applicable to a section of the country differing in every essential from our own. That the railroads have, from the beginning and everywhere, been great civilizers and distributors of the nation's wealth, no one will question. They are among if not the most potent agencies which have transformed outlying, worthless, and uninhabitable places into empires of wealth and population; they have, with their facilities for moving traffic, made possible the settlement of all sections of the republic; their construction has made us exceptionally rich in all that which goes to make a nation great and prosperous. Especially is this true respecting our own California. This great rich State has, within its boundaries, about three thousand five hundred and eighty-four miles of railroad; there are three trunk lines leading from the great basin out beyond its confines, which, together with all the side and tributary lines, make up, so to speak, a great harmonious whole, serving well and satisfactorily the people dependent upon them. These people, for far and near, have much to be thankful for and little to complain of. A change of classification, as proposed, to conform to that of Eastern States, would necessitate an advance of the first-class rate above the limit of those fixed by our charters for short distances, and which is less by one half than what is allowed in many of the States east of the Rocky Mountains. Since commencing this communication, I have felt it necessary to travel beyond the lines which were contemplated, and I trust I may be permitted to add a few observations upon the question of railroad rates and their relation to the consumer. This is a subject little considered by those who are constantly purchasing of the merchants that which goes to make up the requirements of the daily demand, which embraces nearly all the articles of consumption. Space will not admit of this being considered with any completeness, but I will make a few illustrations. Take the articles in daily use in the line of clothing: The business suit, the retail price of which would be, say, $25, the weight five pounds. Six cents would cover the freight charges on the suit for a distance of more than three hundred miles from this city. No one would expect a merchant to make a reduction from the price of the suit, even though the company should throw off all the freight charges. The same is applicable to boots, shoes, hats and caps, dress goods generally, groceries, and to nearly all the articles of consumption. The prevailing misconception of railroad usages, rights, and privileges, arises from the attempt to regulate them by that class of legislative enactments which are not applicable to any other kind of business. Apply the uniform classification principle to other callings, if you will, and take the press as an example. No two papers of the country enjoy the same patronage and circulation, and no two are burdened with the same character of expenses. Does any one believe that this all-powerful agency would not double-lead its columns in resistance to a law compelling them, little and large, in city and hamlet, to adopt a uniform classification of prices, which the public might enjoy of that which the newspapers have to sell, and further enforce upon them the requirement that they should post their rates and classifications in a conspicuous place, wherever their papers were for sale, the same as required of the roads for that which they have to sell; i. e, transportation. It might be convenient to the great army of business men and to servants seeking places, who may desire to purchase advertising space, to know that the published classification and schedule of rates should be the same, under all circumstances and in all places, just alike, but I submit that it would not be practicable, nor would it be right or fair to the papers, any more than it would be just or reasonable to enforce upon the roads this inconsistent requirement. This communication would, deservedly, be deemed incomplete did I not at least mention that important factor, the element of cost, the expenses to which we are subject and from which other roads are exempt. Take, for instance, the item of fuel. The average cost per train mile, of all the roads of the United States, including our own (according to the tenth census reports, which contain the latest complete compilation of such data), is but 7.01 cents, while our cost for the year 1887 was 21.25 cents per mile run, which is 36 per cent greater than the entire locomotive expenses of the New York Central Railroad Company, including all items of every kind, such as general and running repairs, fuel, light, waste, and engine men, and 32 per cent greater than the Lake Shore and Michigan Southern Railroad Company's entire locomotive expenses. We are placed at a still greater disadvantage when compared with the Pennsylvania Central Railroad, which runs over great coal deposits for nearly its entire length. If the Southern Pacific Company (Pacific system) had obtained fuel at the Pennsylvania Company's prices, its operating expenses would have been decreased, and the net earnings increased over $2,000,000; while on the other hand, if the Pennsylvania road had paid our prices its operating expenses would have been increased and its net earnings decreased, in round numbers, $5,000,000. At the Chicago, Milwaukee, and St. Paul's prices, our operating expenses would have been decreased and the net earnings increased, even figures, $1,800,000; while, at our fuel prices, the Chicago, Milwaukee, and St. Paul's expenses would have been increased and its net earnings decreased $3,000,000. At the Illinois Central fuel prices, our operating expenses would have been decreased and the net earnings increased $2,300,000; while, at our prices, the Illinois Central's expenses would have been increased and the net earnings decreased, in even figures, $2,300,000. At the Chicago and Northwestern's prices, our operating expenses would have decreased and the net earnings increased $2,200,000; while, at our figures, the Chicago and Northwestern's expenses would have been increased and its net earnings decreased $4,200,000. At the Lake Shore and Michigan Southern's prices, our operating expenses would have been decreased and the net earnings increased $2,400,000; while the Lake Shore and Michigan Southern's expenses, at our prices for fuel, would have been increased and its net earnings decreased, in round numbers, $2,700,000. Certainly, no one would say that it was just to require us to adopt a classification which is applicable to these great lines, especially since the traffic (per mile of road), is on the Union Pacific road 58.01 per cent greater than on the Southern Pacific Company's lines; on the Chicago and Northwestern, 8.83 per cent greater than on the Southern Pacific Company's lines; on the Lake Shore and Michigan Southern, 234.13 per cent greater than on the Southern Pacific Company's lines; and on the New York Central, 388.66 per cent greater than on the Southern Pacific Company's lines. And, on the other hand, the cost of moving one ton of freight or one passenger (either or both), one mile on the Southern Pacific Company's lines (Pacific system), is 35.27 per cent greater than on the Union Pacific; 42.66 per cent greater than on the Chicago and Northwestern (which carries, practically, the same amount of traffic); 98.88 per cent greater than on the Lake Shore and Michigan Southern; and 54.62 per cent greater than on the New York Central. This mere brief outline of facts plainly and convincingly demonstrates that classifications and rates reasonable, fair, and just to the public and to the great systems of railroads in the Eastern States, could not be fairly and justly applied to the traffic of the Southern Pacific Company's lines. In passing, I must not forget to call your attention to another important factor entering into the cost of transportation. None of these great roads east have so many adverse physical characteristics to overcome as our own roads here. The total rise of all grades (or the sum of the ascent plus the sum of the descent, in feet,) per mile of road on the Southern Pacific Company's lines is 154.7 per cent greater than on the New York Central; 162.13 per cent greater than on the Lake Shore and Michigan Southern Railway; 34.40 per cent greater than on the Chicago, Milwaukee, and St. Paul; and 60.5 per cent greater than on the Illinois Central. We estimate by comparison, and as the basis of value upon nearly all things is founded upon their relative worth or excellence, we will say, with all these great advantages in favor of eastern lines and against our own, that there should not be urged upon us a classification in full and perfect harmony with the conditions of population, traffic, and other circumstances that ever surround them. In any and all comparisons with railroads in the Mississippi Valley and Atlantic States, and the Pacific Coast lines, the much higher cost of labor, fuel, and supplies of all kinds for the operation of the latter roads should be carefully considered. In general, the roads east of the Rocky Mountains have low and short maximum grades, and attain at no point any high elevation; while, on the other hand, the Central and Southern Pacific lines have maximum grades running up as high as one hundred and seventy-four feet to the mile, and in passing from the great Central Valley of California northward, eastward, and southward, cross high mountain ranges which have been very costly to construct and are expensive to operate. The railroads are constantly cheapening their charges for the carriage of persons and property, and they are entitled to the same generous treatment accorded to other kinds of business. They expect this, and they ask for nothing further. Our own roads here are cheapening their charges more in proportion than the roads of the East. Take, as an illustration, the State of Massachusetts for the year 1887. The average charge per ton per mile for freight transported was 1.58, while, on our Southern Pacific Company's lines (Pacific system), it was but 1.43. Their average rate per mile for passengers, for the same period, was 1.87 against our own of 2.09; and all this with the great disproportionate expense account running against our roads. Some writer has told us of the decline of the New England States. The occupation of the farmer of the past has gone; he no longer "hauls grist to the nearest mill;" all this is changed; the miller takes in city boarders, and grinds no grain; the sturdy intelligent farmer has moved westward. In the West this sturdy farmer finds cheap lands from which he produces great food staples. The low rate the railroads have quoted make possible the profitable cultivation of the lands of the great West, and, at the same time, gives to the consumer of New England his food supplies cheaper than he can produce them at home. All will see and admit that the agricultural decay of New England has been very marked, but in its place there comes a development of other industries which profitably occupy the people, who are nearly all fed from the cultivated farms two thousand miles away. Let us reflect upon the all-absorbing topic which has for years so greatly disturbed the tranquillity of that all-powerful nation, Great Britain. The industrious Irish tenant farmer, in his deplorable condition, finds no development of other industries, and in his distress appeals for and demands of the nearly bankrupt landlord, more favorable terms for the land he cultivates in competition with the farmer five thousand miles removed, and with the ranchmen here in our own State more than seven thousand miles by the shortest rails and ocean lines which separates the producer and consumer, all of which is overcome by the carriers, and the feeding of millions of people made possible by the low prices charged by transportation lines. The poor Irish tenant farmer can scarcely live in competition with the American farmer, even in his hovel, poorly fed and ill clothed. The rents charged him, from $1 50 to $1 75 per acre, for lands superior to the average cultivated by the smaller holdings of that people, to us would not seem unreasonable; but to give to the landlords the remunerative rentals of the past, and to once again make a successful agricultural country of Ireland, the carriers of this country will have to be regulated up instead of down, in their rates. Narrow-minded men say that the railroads are reaching out to control arbitrarily the cost of all the necessaries of life; they fear that our republican institutions will suffer under the present system of tolerating what they term "unequal opportunities;" but a moment's reflection will convince any fair-minded person that it is the "unequal opportunities" which make possible the feeding of the hungry millions of Europe from the grainfed live-stock farms of America. I have endeavored to show you how small a factor the charges for the carriage of freight is in the cost of articles purchased by the consumer for what we term, in this country, a short distance, viz., three hundred miles. Apply this same reasoning, for example, to the great food staple, grain, from this country to Liverpool, and the fact remains that freight rates cut little or no figure in the price paid by the consumer for his daily supplies. Wheat has been taken by rail and ocean from California to Liverpool at a rate which adds but 2.12 mills to the price of a family loaf of bread, weighing one-half pound; and in large quantities, rates from Minnesota to Liverpool have been so low at times, as to increase the cost of the same sized loaf but .73 of a mill. Uniformity of regulation, without corresponding uniformity of condition, will necessarily be a failure, since all regulation should have reference to the condition which makes it necessary or advisable. Completely analagous conditions cannot exist over a widely extended territorial area, existing under the same government. Governmental regulation must, therefore, adapt itself by wise variation, so that the reason which called forth the regulation, shall have complete justification in the condition to which such regulation is addressed. In conclusion, I will add that our State has grown rich and prosperous under the classification which was made necessary in consequence of the arbitrary and unreasonable low maximum for the higher class of goods under which our charters were granted; and, in view of this and other facts set forth, I am confident that these reasons will be sufficiently clear to convince your honorable Board that there should be no change, and I believe that these arguments, founded on facts, will persuade you to hesitate before introducing such important innovations. Yours very truly, A. N. TOWNE. |