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Title: Minority Report of the Committee on Railways in Relation to the Hoosac Tunnel and the Railroads
Author: Court, Massachusetts General, Carpenter, Erastus Payson
Language: English
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MINORITY REPORT
OF THE
COMMITTEE ON RAILWAYS
IN RELATION TO
THE HOOSAC TUNNEL
AND THE
RAILROADS LEADING THERETO,
WITH
A BILL
TO INCORPORATE THE STATE BOARD OF TRUSTEES
OF THE HOOSAC TUNNEL RAILROAD;
ALSO THE
SPEECH DELIVERED BY
HON. E. P. CARPENTER,
IN THE
Senate of Massachusetts, June 3, 1873,
IN SUPPORT OF THE SAME.
BOSTON:
WRIGHT & POTTER, STATE PRINTERS,
NO. 19 PROVINCE STREET.
1873.
TABLE OF CONTENTS
PAGE
MINORITY REPORT 3
THE BILL 12
SPEECH 24
EFFORTS TO REDUCE THE TRANSPORTATION TAX. 29
THE EFFECT IN OUR EXISTING SYSTEM. 31
THE RELATIVE ADVANTAGES OF BOSTON AND NEW YORK. 34
THE EFFECT ON THE STATE OF MAKING BOSTON AN EXPORTING CITY. 36
THE HOOSAC TUNNEL. 37
POSITION OF THE COMMITTEE. 39
THE BILL OF THE MAJORITY. 40
REGULATION BY SPECIAL LEGISLATION. 46
CONTROL OF THE TUNNEL. 48
THE PURPOSES OF THE MINORITY. 50
THE MINORITY BILL. 51
THE EFFECT OF STATE CONTROL OF THE TUNNEL LINE. 53
THE POPULAR FEELING IN FAVOR OF STATE CONTROL. 54
SAFETY OF THE EXPERIMENT. 55
THE ALLEGED DANGER OF POLITICAL CORRUPTION. 58
STATE PENSIONERS. 63
THE BENEFITS OF THE PROPOSED PLAN. 64
Commonwealth of Massachusetts.
HOUSE OF REPRESENTATIVES, April 23, 1873.
The undersigned, members of the Committee on Railways, to whom was
referred "An Act to provide for the Consolidation of the Hoosac Tunnel
line of Railroads from Boston to Troy," and the petition of the Boston
and Lowell Railroad Company for amendment of the charter of the Great
Northern Railroad, and many petitions and remonstrances relative to
the disposal of the Troy and Greenfield Railroad and Hoosac Tunnel,
respectfully submit a
MINORITY REPORT:
The Committee, after public notice to all parties in interest,
commenced its hearings upon the subject-matter of these petitions on
the twenty-ninth day of January, and finally closed them on the
twenty-first day of March. Under the authority granted by the
legislature, a reporter was employed by the Committee, by whom It
verbatim report was made of all the testimony and arguments submitted
to the Committee. This has been printed for the use of the Committee
and of the legislature, and is now accessible to members.
Many parties were represented by counsel, and various plans were
presented.
The first proposal was that of the Troy and Boston, and Vermont and
Massachusetts Railroad Companies, for a consolidation under one
corporation of the direct line between Boston and Troy.
The second, for a consolidation of the Boston and Lowell and Fitchburg
Railroad Companies, with authority to lease or purchase the lines to
the tunnel and to Ogdensburg, placing under the control of one
corporation about fifteen hundred miles of railroad.
Third, the proposition was urged upon the Committee to provide for the
acquisition by the State of the Tunnel Line.
The attendance before the Committee was not limited to the
representatives of corporations directly or indirectly interested in
the result. Committees of the Board of Trade and other commercial
associations, and many private citizens to some extent represented the
public interests; while the larger audiences in attendance upon the
sessions of the Committee attested the deep interest of the business
community in the subject-matter under discussion.
The problem before the Committee was to determine how the people of
this Commonwealth could derive the greatest benefit from the
construction of the tunnel which has involved so large a public
expenditure.
The relations of the State to this enterprise have greatly changed
since its commencement. The tunnel was projected as a private
enterprise, which was first aided by the State by a loan of its
credit.
It was doubtless then intended that the tunnel when completed should
form a part of the through line over the Fitchburg, Vermont and
Massachusetts, Troy and Greenfield, and Troy anti Boston Railroads, to
be owned and controlled by these corporations like the rest of the
line. This project failed. The Troy and Greenfield Railroad Company
was unable with the state loan to complete the tunnel, and after great
delays and difficulties, surrendered its railroad and the incomplete
tunnel to the Commonwealth, which has since carried on the work at the
public charge. Its completion within the current year may be expected,
and the total expenditure from the treasury of the State will amount,
including interest, to about $12,000,000. This expenditure is a charge
upon the people and the property of the whole State.
It seems improbable that any disposition can be made of the tunnel
which can return to the treasury the whole sum expended, and it is for
the legislature to determine how far a return can be made to the
people of the State from this great public expenditure, in increased
means of transportation and a reduction of rates which are now a
burden upon the whole community. Since the tunnel was projected, new
lines of railroad have been built which give to nearly every portion
of the State direct access to the tunnel and through it to the great
West.
In the progress of the hearing certain points were made tolerably
clear.
_First_, That the tunnel itself should be so far held and controlled
by the State as to insure its use on equal terms by all parties.
_Second_, That some consolidation of the line or lines working through
the tunnel was essential to secure efficiency of action, and to
provide for the great business awaiting the completion of the tunnel.
_Third_, That to provide equipment and terminal facilities for such a
business, the weak and disjointed separate corporations were
inadequate, and that it was particularly desirable that some action
should be taken at the present session of the legislature.
The policy of direct state ownership was strongly pressed upon the
Committee by the railroad commissioners and other parties. The address
of Mr. Adams, in behalf of the commissioners, upon this subject, is
contained in the printed report, and is a clear and able statement in
behalf of this policy. While the experiment has been tried in other
States, and under other circumstances has failed, we do not think it
is to be condemned for this reason. These experiments were tried
before the development of the railroad system, and generally in
thinly-peopled States, where state construction of railroads was a
political necessity to supplement private capital that could see no
inducement for investment.
In the days when state management failed, corporation management
failed to quite as great an extent.
The statement of Mr. Adams, in regard to the results of the system in
Belgium, are very striking, and in England the current seems to be
settling in favor of the assumption of the railroads by the
government.
To any careful observer of the railroad development of the past
twenty-five years, there can be little doubt of a like progressive
increase in this business in the future.
If the benefit of this increase in business can be secured to the
people who furnish the traffic, instead of to the corporations who
provide the capital, an immense public benefit will follow. The most
valuable experiment to be tried at the present day is to ascertain how
cheaply railroad transportation can be afforded. Corporations formed
to make money for their stockholders, can hardly be expected to fairly
try this experiment. The greatest need of this Commonwealth is cheap
transportation. To secure this the Hoosac Tunnel has been constructed
at a cost of $12,000,000 of public money.
We are fully convinced that to secure to the people the full
advantages to be derived from the construction of this new avenue to
the West, and to secure equal lights to all parties desiring to use
it, the State must not part with the control of the tunnel. We are
equally convinced that to secure efficiency in the lines working
through the tunnel, consolidation is necessary, and that the tunnel
itself must be worked and managed for all parties using it, by one
head.
It would follow that the State, retaining the tunnel, should operate
it, and should also own or control one line of road between Boston and
the West, at the same time giving to all parties, without
discrimination, equal advantages to the tunnel. The state management
cannot afford to be unjust or to discriminate.
No private corporation can be trusted when its own interests may
conflict with the interests of other and perhaps rival corporations,
to establish or to enforce rules for the transaction of such business.
We therefore report and recommend the passage of the accompanying
Bill: "To incorporate the State Board of Trustees of the Hoosac Tunnel
Railroad."
Its purpose is to form a corporation for the management of the Troy
and Greenfield Railroad and Hoosac Tunnel, with all the powers of a
railroad corporation. It is to be composed of five trustees, to be
appointed by the governor and council, each to hold office for five
years, and one of whom shall be appointed annually. To these five
state trustees are to be added not exceeding three, one by each of the
railroad corporations whose property may be acquired or managed under
the terms of the Act.
Instead of directly purchasing the railroads constituting the direct
line, provision is made for leasing these railroads by the new
corporation upon terms which are fair and equitable for all parties.
The returns to the railroad commissioners show that the average
expense of operating the railroads of this State is seventy-five per
cent. of the gross income. We therefore propose to set apart for the
benefit of each of these corporations twenty-five per cent. of the
gross income of its railroad, out of which shall be paid a yearly
rental; and that they may not in any event be losers by the
experiment, it is proposed to guarantee to them an amount sufficient
to pay to their stockholders the dividends they are now paying, with
liberty to increase to the maximum which law or custom permits our
railroad corporations to pay.
That such a lease would receive the assent of the companies
interested, we have strong reasons to believe.
It secures to the stockholders the dividends they are now receiving.
It secures also to them the benefit of any increase of business likely
to accrue from the completion of the tunnel, to as full an extent as
they can hope to benefit by it. No railroad corporation ought ever to
pay more than ten per cent. dividends, and the legislature would
undoubtedly, under its power to regulate tolls, interfere to prevent
greater dividends.
While these corporations are thus interested in the earnings of the
roads, the bill provides that they should be represented in their
management. We shall thus secure the services of persons familiar with
the local business and history of the separate roads, and although
forming only a minority of the board of management, they must have an
important influence in the direction of its affairs.
The benefits to be gained by the State by this arrangement are obvious
and manifold.
It retains state ownership and management of the tunnel.
It secures to all corporations desiring to use the tunnel equal
rights.
It secures to the Commonwealth the full value of its investment,
whatever future developments of business shall prove that value to be.
It assumes the establishment of a strong corporation, able to provide
all equipment and terminal facilities which any future increase of
business may render necessary or advisable.
It meets all the presumed advantages of state acquisition of the
railroads, without that disturbance and removal of capital which must
follow the purchase of the railroads by the State.
It can furnish capital for 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.
It enables the State to try fairly and fully the experiment of cheap
transportation.
It creates a corporation which cannot combine with other corporations,
nor can its stock be purchased or in any way controlled by outside
parties, and is strong enough to compete successfully with the
powerful corporations of neighboring States.
Such a management we believe would be efficient and reliable beyond
that of ordinary railroad corporations. It would combine to a great
degree the advantages of state and corporate management. The governor
and council could be depended upon to appoint suitable persons as
trustees. The railroad corporations would naturally appoint their most
efficient agents as trustees. Such a board could find no difficulty in
securing the services of the ablest railroad officers to direct and
aid in the management.
It remains to refer briefly to the other propositions before the
Committee.
First, to that of the Boston and Lowell Railroad Company to unite with
the Fitchburg. This is a proposal to unite two lines in some degree
rival and competing. They are rival lines to some extent for local
business. They form parts of rival lines for distant business with the
North and West. It is a new proposition in this Commonwealth to unite
rival and competing lines. This competition will be increased with the
opening of the tunnel line. The Lowell is the natural terminus of the
Northern line, and the Fitchburg is the natural terminus of the tunnel
line. Whatever advantages may accrue to the corporations themselves
from such a consolidation, the public results will be unmitigated
evil. Not one witness unconnected with the interested corporations
appeared before the Committee to testify in favor of such a
consolidation. The evidence against it was strong and conclusive. The
Northern line by way of the Lowell and Vermont Central was shown to be
of great value to Boston and to Massachusetts. It is now in a measure
consolidated under contracts having twenty years to run, and it is
surely bad policy for the Commonwealth, having expended $12,000,000 to
create a new line, to commence its operations with the destruction of
one in full and vigorous existence. Moreover, such a consolidation
threatens more than anything else state control of the tunnel itself.
A powerful corporation, owning the whole line except the tunnel, would
soon compel the transfer of that, and until such transfer, would throw
upon the State as the owner of the tunnel the responsibility for all
the sins and omissions of the line.
The important question of an interchange of depots and tracks by the
railroads entering Boston on the north has been somewhat involved in
this hearing.
The avoidance of railroad crossings is undoubtedly of great
importance, but it has no proper connection with the disposal of the
tunnel. The Eastern Railroad Company and Boston and Maine Railroad are
agreed what changes can and should be made to avoid these crossings.
All that is essential to secure this end is to remove the passenger
station of the Fitchburg Railroad west of the Lowell, where it
properly belongs. The legislature has full power in the premises. It
can, independently of any consolidation, require the Fitchburg
Railroad Company to provide passenger accommodations west of the
Lowell station, and thus leave its present station on Causeway Street
free for the use of the Eastern Railroad Company.
If the State acquires the Fitchburg Railroad under this Act, it can
easily provide for the change. The whole question of interchange of
depots is independent of the far more important question of the
disposition of the tunnel, and should not control it. If the Lowell
Railroad can provide for the wants of the Fitchburg Railroad Company
in its passenger station after consolidation, it can do so without
consolidation.
Respectfully submitted by
E. P. CARPENTER,
J. K. BAKER,
T. W. WELLINGTON,
WILLIAM BAKER,
_Members of the Committee on Railways._
Commonwealth of Massachusetts.
-------------
In the Year One Thousand Eight Hundred and Seventy-Three.
-------------
AN ACT
To incorporate the State Board of Trustees of the Hoosac Tunnel
Railroad.
_Be it enacted by the Senate and House of Representatives, in General
Court assembled, and by the authority of the same, as follows:_
SECT. 1. The governor, with the advice and consent of the council,
shall, as soon after the passage of this act as may be convenient,
appoint five persons, citizens of this Commonwealth, who shall, on or
before the first day of July next, take the interest of the
Commonwealth in the Troy and Greenfield Railroad, and the Hoosac
Tunnel when it shall be completed by the contractors, and all the
property and interest of the Commonwealth in the Southern Vermont
Railroad Company, and hold the same in trust for the purposes
hereinafter named, one of whom shall hold his office for five years,
one for four years, one for three years, one for two years and one for
one year, from the ___________ day of ___________. Before the first
day of July in each year, one such trustee shall be appointed for the
term of five years; upon the occurrence of a vacancy before the
expiration of a term, an appointment shall be made for the remainder
of such term.
SECT. 2. Said trustees are hereby created a railroad corporation under
the name of the State Board of Trustees of the Hoosac Tunnel Railroad,
and shall have all the powers and privileges, and be subject to the
duties, restrictions and liabilities set forth in the general laws
relating to railroads, so far as the same may be applicable and not
inconsistent with the provisions of this act.
SECT. 3. Before entering upon their duties, said trustees shall be
sworn to the faithful performance of the same. They shall organize by
the election of a president, who shall be one of said trustees, a
clerk and such other officers as shall be necessary, and they shall
prepare by-laws in accordance with which their meetings shall be held.
SECT. 4. Said board of trustees shall have sole charge, direction and
control, subject to the provisions of this act, of the Troy and
Greenfield Railroad and of the Hoosac Tunnel, when said tunnel shall
be completed by the contractors of the Southern Vermont Railroad, and
of such other railroads as may be leased or acquired under the
provisions of this act. They shall appoint a treasurer, a general
manager, whenever they deem such an officer necessary, one or more
superintendents and such other agents as may be required for the
operation of said railroads and tunnel, and they shall define the
duties and fix the compensation of such officers and agents. They
shall establish rates for the transportation of passengers and
merchandise, and make contracts and arrangements with connecting roads
in relation to joint rates and joint business, and they may do all
other things, not inconsistent with the provisions of this act and the
general laws in relation to rail roads, which may be necessary for the
efficient and economical operation of said railroads and tunnel.
SECT. 5. Said board of trustees shall hold in trust all moneys
received from the operating of said railroads and tunnel, and all
moneys which may be appropriated by the Commonwealth for the
completion, extension and improvement of said railroads and tunnel and
for the equipment thereof, and shall faithfully apply the same. They
shall annually pay into the treasury of the Common wealth the net
income received from said roads and tunnel after the payment of the
expenses; and the same shall be set apart, under the direction of the
governor and council, and applied in such manner and at such times as
they shall direct to either or all of the following purposes: the
extinction of any indebtedness, or payment of interest thereon, which
the Commonwealth may at any time incur to carry out the purposes of
this act, or any act in addition to or amendment thereof; the
extinction of the indebtedness, or payment of interest thereon, which
has been or may be incurred in the construction of the Hoosac Tunnel;
and the purchase of stock in any company which shall lease its
franchises, railroad and property in perpetuity to the corporation
herein before created.
SECT. 6. Said board of trustees shall make a semi-annual report to the
governor and council of their doings during the six months next
preceding, and of their receipts and expenditures, and shall make an
annual report to the board of railroad commissioners in the manner and
form and at the time prescribed for railroad corporations.
SECT. 7. Said trustees shall receive, in full compensation for their
services as such, the sum of five thousand dollars each per annum,
except the president of the board, who shall receive eight thousand
dollars, which sums shall be charged to operating expenses. No trustee
shall be appointed to any office in the employ of said board of
trustees, except the president, but the general manager, when such
officer shall be appointed, shall be _ex officio_ a member of the said
board.
SECT. 8. Said board of trustees is hereby authorized to re-locate,
where necessary, the tracks of said Troy and Greenfield Railroad,
taking land therefor in the method prescribed by law in case of land
taken for depot or station purposes, and to complete, extend and
improve the construction and equipment of said railroad and tunnel,
and to prepare the same in all respects for the reception of the
traffic of a through line.
SECT. 9. The sum of five million dollars is hereby appropriated, to be
expended under the direction of said board of trustees in carrying out
the provisions of this act, to be paid to them from time to time as
the same may be required and called for, by a two-thirds vote of said
board of trustees, on the warrant of the governor. And for the
purpose of providing for said appropriation the treasurer of the
Commonwealth is hereby authorized to issue scrip or certificates of
debt in the name and on behalf of the Commonwealth to an amount not
exceeding five million dollars, to be sold or disposed of in such
manner, and at such times, and in such amounts, as the governor and
council shall direct. Such scrip shall be redeemable in not less than
twenty nor more than, forty years from the date thereof, shall bear
interest not exceeding six per cent. per annum, payable semi-annually,
and shall be known as the "Hoosac Tunnel Railroad Loan"; and the
property of the Commonwealth in the Troy and Greenfield Railroad is
hereby set apart and pledged to the redemption of said scrip.
SECT. 10. Said board of trustees is hereby authorized and directed to
lease in perpetuity, or for such term of years as the governor and
council may approve, the franchises and property, and thereafter to
maintain, improve and, operate the railroad, with its branches, of the
Vermont and Massachusetts Railroad Company, on the terms following:
twenty-five per cent. of the gross earnings of said leased railroad
and property shall be reserved annually by said board of trustees as a
specific fund out of which they shall pay to said company, first, a
sum sufficient to pay the interest on the indebtedness of said
company, at the date of said lease, as said interest becomes due, and,
second, a yearly rental equal to ten per cent. on the present capital
stock of said company, free of all taxes upon the stockholders or
said company (and on any additional stock, when the same shall be
issued for existing convertible bonds), or such a proportion of said
rental, not exceeding said ten per cent. and said taxes as said
reserved fund shall be sufficient to pay: _provided_, _however_, that
in no year shall there be paid to said company a rental of less than
four per cent. on said capital stock, and said taxes together with the
amount of said interest; and to the payment of such minimum rental and
interest said board of trustees is authorized to pledge the faith of
the Commonwealth. Said board of trustees is also authorized to assume
and make provision in said lease for the payment of the principal of
said indebtedness. The surplus of said reserved fund shall be annually
passed by said board of trustees to the account of earnings. When said
lease shall have been executed, and while the same continues in force,
said Vermont and Massachusetts Railroad Company may elect, from time
to time, for a term not exceeding five years, one trustee, who shall
be added to said board of trustees, and, upon being sworn to the
faithful performance of his duties, shall become an incorporated
member of the State Board of Trustees of the Hoosac Tunnel Railroad;
and said company may fill vacancies for the remainder of the term.
SECT. 11. Said board of trustees is hereby authorized and directed to
lease in perpetuity, or for such term of years as the governor and
council may approve, the franchises and property, and thereafter to
maintain, improve and operate the railroad, with its branches, of the
Fitchburg Railroad Company, on the terms following: twenty-five per
cent. of the gross earnings of said leased railroad and property shall
be reserved annually by said board of trustees as a specific fund, out
of which they shall pay to said company a yearly rental equal to ten
per cent. on the present capital stock of said company, free of all
taxes upon the stockholders or said company, and also on an additional
capital stock of one hundred thousand dollars, which said company is
hereby authorized to issue and hold for its own benefit, or such a
proportion of said rental, not exceeding said ten per cent. and said
taxes, as said reserved fund shall be sufficient to pay: _provided_,
_however_, that in no year shall there be paid to said company a
rental of less than eight per cent. on said capital stock and said
taxes; and to the payment of such minimum rental, said board of
trustees is authorized to pledge the faith of the Commonwealth. The
surplus of said reserved fund shall be annually passed to the account
of earnings. When said lease shall have been executed, and while the
same continues in force, said Fitchburg Railroad Company may elect,
from time to time, for a term not exceeding five years, one trustee,
who shall be added to said board of trustees, and, upon being sworn to
the faithful performance of his duties, shall become an incorporated
member of the State Board of Trustees of the Hoosac Tunnel Railroad;
and said company may fill vacancies for the remainder of the term.
SECT. 12. Said board of trustees is hereby authorized and directed to
lease the franchises and property, and thereafter to maintain,
improve and operate the railroad, with its branches, of the Troy and
Boston Railroad Company, and shall pay therefor an annual rental equal
to twenty-five per cent. of the gross earnings of said leased railroad
and property. When said lease shall have been executed, and while the
same continues in force, said Troy and Boston Railroad Company may
elect, from time to time, for a term not exceeding five years, one
trustee, who shall be added to said board of trustees, and upon being
sworn to the faithful performance of his duties, shall become an
incorporated member of the State Board of Trustees of the Hoosac
Tunnel Railroad; and said company may fill vacancies for the remainder
of the term.
SECT. 13. In estimating what shall constitute the said twenty-five per
cent. of the gross earnings of said several leased railroads, out of
which their rentals are to be paid, there shall be first deducted from
twenty-five per cent. of their respective gross earnings, six per
cent. per annum on all amounts expended by said board of trustees for
the permanent improvement of said railroads respectively.
SECT. 14. Said Vermont and Massachusetts, Fitchburg, and Troy and
Boston Railroad Companies are severally authorized to lease their
franchises and property to said board of trustees.
SECT. 15. Said board of trustees is further authorized, with the
approval of the governor and council, to lease or purchase necessary
terminal facilities, and also to lease any railroad now built, or
that hereafter may be built, lying in the tunnel route between Boston
and Lake Ontario.
SECT. 16. In the carriage of through passengers and merchandise, the
rates of transportation shall be estimated pro rata per mile, and the
Hoosac Tunnel shall be estimated at such length in miles, not
exceeding fifty, as shall seem equitable to the trustees.
SECT. 17. In the management of such railroads as shall come under the
operation of said board of trustees, there shall be no unequal
discriminations in freights, fares or facilities in favor of or
against different persons, places or connecting railroads.
SECT. 18. In case of the lease of the Fitchburg Railroad under the
terms of this act, the said board of trustees is authorized and
directed to purchase terminal facilities in Boston, westerly of the
freight station of the Boston and Maine Railroad and to arrange with
the Eastern Railroad Company for an interchange of stations in Boston
in such manner as to obviate the necessity of passenger trains on the
Eastern Railroad, Boston and Maine Railroad and Fitchburg Railroad
crossing the tracks of the other, and the Eastern Railroad Company is
hereby authorized, with the assent of said trustees, to take or
purchase all the land, depot property and buildings of the Fitchburg
Railroad Company, situated in Boston south of the channel or
passage-way for vessels through the Fitchburg Railroad bridge over
Charles River, said property to include all the draws and drawbridges
over the passage-way for vessels.
Also all the property, land and buildings situated on the
south-westerly side of the following line, to wit: beginning at a
point on the northerly side of the above-mentioned passage-way for
vessels twenty-two feet nine inches east of the easterly line of the
roadway draw over said passage-way, and running northerly at right
angles to said passage-way, one hundred and three feet five inches, to
a point where said line intersects with the north-easterly line of
said Fitchburg Railroad bridge over Charles River; thence northerly,
following and coinciding with said north-easterly line of bridge,
eight hundred and forty-eight feet; thence turning and running
westerly to a point in the north rail of the north passenger track of
the Fitchburg Railroad, distant four hundred and sixteen feet seven
inches from the south-easterly line of Austin Street, measured on said
north rail of the north track. Said point is also distant twenty-nine
feet four inches at right angles from the southerly side of the wooden
freight house (measured from a point sixty feet distant from the
westerly end) belonging to the Fitchburg Railroad Company, on Front
Street; thence southerly, crossing the Fitchburg passenger tracks at
right angles to a point four feet distant south of the south rail of
south passenger track; thence westerly on a curved line parallel with
the south rail of the south passenger track, and four feet distant
therefrom to the south-easterly line of Austin Street in Charlestown.
And if the Eastern Railroad Company shall so fake the said property of
the Fitchburg Railroad Company, then the Fitchburg Railroad Company
shall take or purchase all the like property of the Eastern Railroad
Company lying between the crossing of the Eastern and Fitchburg
Railroads and Causeway Street in Boston, except the parcel of land to
be taken by the Boston and Maine Railroad, as hereinafter provided;
and in case of the taking or exchange of the tracks and property
herein before described, or any part thereof, the said Fitchburg
Railroad Company shall locate and construct such tracks and bridge
structures on the westerly side of the present line of the Eastern
Railroad as may be necessary to connect its railroad and tracks with
the tracks and property so purchased or taken by it; and shall not
thereafter cross either said Eastern Railroad or said Boston and Maine
Railroad except for freight purposes.
And the Eastern Railroad Company shall locate and construct such
tracks and bridge structures as shall be required to connect its
present tracks northerly of its crossing with the Boston and Maine
Railroad with the tracks and property so purchased or taken by it,
keeping at all times east of a line drawn from a point on the easterly
side of its present location, distant southerly three hundred and
fifty feet, measured on said line from its intersection with the
southerly side of Cambridge Street to the point of intersection of the
northerly line of the state prison wharf with the easterly line of the
location of the Boston and Maine Railroad, and thence keeping east of
said easterly line of said location; and shall not thereafter cross
the tracks of the Boston and Maine Railroad.
And the Eastern Railroad Company shall take any lands now belonging to
the Boston and Maine Railroad in Charlestown or Somerville lying
easterly of such new location; and the Boston and Maine Railroad shall
take all the road-bed, land and property of the Eastern Railroad
Company lying between the line above described for the westerly
limitation of said new location of the Eastern Railroad and the
westerly line of the old location of the Eastern Railroad, and the
present northerly line of the Fitchburg Railroad: _provided_,
_however_, that in case of the aforesaid taking and exchange of
property by and between the Eastern and Fitchburg Railroads, the
Boston and Maine Railroad shall release the Eastern Railroad Company
from all damages for its taking and occupation thereof and take from
the said Eastern Railroad Company so much of the premises described in
the first section of the three hundred and fifty-sixth chapter of the
acts of the year eighteen hundred and seventy-two, as was taken from
the said Boston and Maine Railroad by said Eastern Railroad Company
under the provisions of that act; and said Eastern Railroad Company
shall, without other compensation therefor, release to said Boston and
Maine Railroad all their rights in said premises acquired by them,
taking the same under said act; and _provided_, _further_, that any
exchange of land made under the provisions of this section shall take
effect simultaneously.
All general laws relating to the taking of land for railroad purposes
and to the location and construction of railroads, shall be applicable
to and govern the proceedings in the taking and exchange of lands and
property, and in the making of any new locations under the provisions
of the foregoing sections, except that instead of the county
commissioners three disinterested persons shall be appointed by the
supreme judicial court for the county of Suffolk as a board of
commissioners to determine the values of the lands and property so
taken and exchanged or over which any such location may be made, and
to adjudicate the damages to be paid by any of the others upon the
taking, exchange or locations aforesaid, from whose decision an appeal
shall be to a jury in behalf of either party, as provided by law in
the case of lands taken for railroad purposes.
Any sum of money received by the Fitchburg Railroad in said
interchange of stations and tracks above the expense of necessary
alterations shall be applied to procuring new terminal facilities and
making improvements on said road or may be applied to the reduction of
the capital stock of the Fitchburg Railroad Company in such manner as
may be agreed between the Fitchburg Railroad Company and said board of
trustees.
SECT. 19. This act shall take effect upon its passage.
SPEECH.
MR. PRESIDENT:
I am deeply impressed with the great importance of the question now
before us for consideration. It is not local, not sectional, nor
political, but a question that affects more or less directly the
industrial, the mercantile, the manufacturing, and the commercial
interests of the whole Commonwealth. The proper solution of this great
problem rests with us, as the representatives of the people; and it is
a responsibility of no ordinary importance, and one that should
control our serious and earnest attention and our candid and best
judgment, unbiased by any local or personal interest, with a solemn
regard to our oaths to support and maintain the constitutional rights
of the people of the Commonwealth.
Stern convictions of duty alone induce me to address this honorable
body on this occasion--duty that I feel incumbent upon me, Mr.
President, from the honored position that I received at your hands. It
is well known that I neither have or make any claims as a public
speaker, and I must ask your indulgence for being somewhat dependent
upon my notes in presenting to you an honest statement of my own
convictions of this great question, having no other interest to serve
but the State and her people.
This important subject involves directly the whole question of the
railroad policy of this Commonwealth; and here in Massachusetts the
proper direction of the railroad policy is even more important than at
the West, where it now engages the public attention almost to the
exclusion of other interests.
Within the last fifty years this Commonwealth has almost entirely
changed its industrial position. Half a century ago, agriculture, the
fisheries, and commerce were the leading interests. Now, manufactures
engross the attention of our people, and have made all other interests
subordinate. They have not excluded other interests, but in a measure
supplemented them. Our agriculture has changed and now finds its chief
support in providing supplies for the manufacturing towns which have
grown up in every part of the Commonwealth. Our commerce, both
internal and external, is largely engaged in bringing to our doors the
raw material for our laborers, and in spreading throughout the world
the products of our manufacturing industry.
We can raise but a small proportion of the food necessary to feed the
people of the State; under such circumstances the transportation must
weigh heavily upon our industry. We feel it in the increased cost of
living, which increases the cost of every article we produce. We feel
it in the increased cost of the raw materials of our manufactures,
which makes us less able to compete successfully with more favored
locations. We feel it finally in the increased cost of marketing our
goods. This position has been so well stated by the Railroad
Commissioners in their report of 1870, page 39, that I may repeat it
here:
"It may safely be asserted that there is no branch of Massachusetts
industry which is not carried on against competition more
advantageously located. The State has very few natural advantages;
but everything with her depends on the intelligence of her people,
and the cost of transportation. The West, in producing cereals, has
at least a soil of unsurpassed fertility: Pennsylvania in
manufacturing iron has the ore and the coal in close proximity to
the furnace. The English mill-owner has his power and his labor in
cheap profusion. Almost every article, however, which enters into
the industries of Massachusetts has to be brought within her limits
from a distance. Her very water powers are subject to inclement
winters and dry summers, while she has to make her ingenuity supply
a deficiency in labor. Her food is brought from the North-West: her
wool and her leather from South America, Texas, California and the
Central States: her cotton from the South: her ores from the
Adirondacks: her coal from Pennsylvania; her copper from
Superior,--and the list would admit of infinite extension.
Massachusetts is thus merely an artificial point of meeting for all
kinds and descriptions of raw material which is here worked up, and
then sent abroad again to find a customer At every point, coming
and going, and in process of manufacture, it has to be transported,
and it has to bear all costs of transportation in competition with
articles of the same description produced elsewhere and by others.
Every reduction of the transportation tax acts then as a direct
encouragement to the industry of Massachusetts, just as much so as
if it were a bounty or bonus: it is just so much weight taken off
in the race of competition."
No words of mine can add any force to this plain statement of facts;
but yet we are told that transportation is only _one_ element in the
cost and price of goods, and frequently not that of the greatest
consequence, but the importance of this _one_ element is fourfold, and
often more, to the Massachusetts manufacturer, making the
transportation of more importance in many cases than the cost of
materials transported. This transportation tax is the _very_ element
that is to build up a competition in these favored localities that
will either extinguish or transfer many classes of our industrial
interests that we can ill afford to lose.
It is only necessary for one to travel West and South and observe the
great development and success of the manufacturing interest in these
sections to be convinced that New England cannot long hold the
prestige as the "workshop" of the country with so heavy a
transportation tax imposed upon her industrial productions.
The importance of this ONE element will be more fully realized by the
Eastern manufacturer when he finds that his Southern and Western
rivals save it altogether by having the raw material at hand, and a
home market with all the other elements (save skilled labor which can
be transported) that make manufacturing industry profitable at a much
less cost.
A combination of our manufacturers to establish cheap transportation,
and the sale of their goods upon a home market, would be far more to
their interest and profit than the exaction of an extra hour's labor
and would confer a great blessing upon their overtasked employees.
EFFORTS TO REDUCE THE TRANSPORTATION TAX.
Since the railroad system was inaugurated in 1831, the statutes of
this Commonwealth bear yearly evidence of the persistent and liberal
policy pursued by the legislature toward the railroads.
It would be tedious to enumerate the many acts which have been passed
loaning the credit of the State to aid the struggling corporations in
establishing and completing their lines.
Almost all the leading lines in the State sought and obtained this
aid, without which there must have been a great delay, if not failure
in accomplishing these enterprises; and here let me say, that with
the exception of the Hartford and Erie loan, and the losses arising
from the repayment by the Eastern, and Norwich and Worcester railroads
in legal tender instead of gold, there has never been a dollar lost by
the railroad loans of the State. The result has been to build up a
system of railroads, centering in the city of Boston, having no
superior, if equal, for completeness on this continent. Massachusetts
has more miles of railroad in proportion to population and territory
than any similar extent of territory in America.
And there can be no question that the prosperity of the State has
grown more from its railroad facilities, than from all other causes
combined.
There is another class of legislation to which we cannot look with
equal satisfaction. Every railroad charter contains provisions for the
regulation of fares and freights; and yet since the railroads were
established, no single act has been passed directly for this
regulation.
The question has involved so great difficulties that no legislature
has yet ventured to grapple with it. The tendency of legislation in
that direction is obvious. Commissioners have been appointed to
consider the subject and no result has followed. A Board of Railroad
Commissioners has been formed, which has been productive of great
good both to the railroad corporations, and to the people.
This board has been directed to fully consider and report some plan of
regulating fares and freights; and has reported that it cannot
recommend any means of reducing this transportation tax, by direct
legislation, but strongly advises the trial of State ownership, as the
only means of attaining the desired end.
THE EFFECT IN OUR EXISTING SYSTEM.
While it may be said that under the present system of railroads, the
Commonwealth has been prosperous, there are drawbacks and defects
which need careful examination, and if possible a remedy. To those who
are familiar with the condition of our manufactures, the most striking
want is the failure of our home market for our productions.
We are tributary to New York in many ways. The great sale of our
manufactured goods is made in New York, and goes to build up a rival
city. Our great commission houses have been compelled to establish
branches in New York, which in a short time have surpassed in business
and in importance the home establishments.
If we could have kept at home the sale of our manufactured goods--have
retained here in Boston the great houses through which the exchanges
are made--could have brought to New England the purchasers from the
West and South, it would have vastly increased the prosperity of
Boston and of New England.
Business can be done cheaper in Boston than in New York; and yet New
York has drawn away from us a large proportion of our legitimate
business,--the sale of our manufactured goods; and this loss can be
directly attributed to a defect in our railroad system, which can and
should be remedied. I say defect, but, more properly, the want of a
strong and independent line of railroad through to the West,
controlled in the interest of Massachusetts. Why, Mr. President, if we
could withdraw from New York the firms and business that represent the
sale of Massachusetts goods, it would more than cover the burnt
district of this city, and double the business of Boston; and New York
would feel that her loss was much greater than the Boston fire. And
why is it that our goods are sent to New York to be sold? Simply
because New York has _three_ great trunk routes to the West, which
control the transportation of the Southern and Western productions,
and the owners, who are the merchants, follow their goods, and are the
customers who purchase our manufactured goods of New York houses, and
ship them in return over these same trunk lines, giving them a large
and profitable business; which should be and can be controlled, by
proper management, in the interest and for the benefit of a through
line or lines from Boston to the West.
To-day Boston is without a through and independent line to the West,
and while we are shipping our goods to New York to be sold, to be
transported over the great lines leading South and West, our _own_
Western road, so called, in 1872, according to the annual report of
the directors, carried through from Boston to Albany 112,071 tons of
freight, and from Albany to Boston 556,202 tons--more than four times
as much _from_ the West than is carried _to_ the West; which state of
things would be reversed if the sale of our goods was made here
instead of New York; but this can only be accomplished by a through
line West, controlled in the interests of Massachusetts, and not in
the interest of New York.
A line to the Lakes in competition,--not with the Boston and Albany
Railroad, as that is dependent upon the New York Central Railroad in a
great measure for its Western freights,--but an independent line, so
organized as to guard against any combination, that will force by
competition the New York lines to give to the Boston and Albany and
the Boston, Hartford and Erie Railroads less rates, making Boston a
competing point, thus securing the advantages of four competing
Western lines, including the great Northern line, which must bring to
our seaboard the products of the great West, and thus secure an
exchange of trade that will increase the growth, and prosperity of
Massachusetts, that will equal the prophecies of those who are called
_visionary theorists_. It was by competition of the three great trunk
lines running to New York--discriminating against Boston--that forced
the removal of the sale of Massachusetts productions to that city; and
it is estimated these sales amount to more than two hundred and fifty
millions of dollars per annum at the present time; and the golden
opportunity is now at hand to restore in a great measure the
advantages lost by not having a strong and efficient line of railroad
leading to the great West, in the interest of the State.
THE RELATIVE ADVANTAGES OF BOSTON AND NEW YORK.
The great advantages of New York arise from the fact that it is a
great emporium of exportation and importation. A very large proportion
of the exports of the country have been made from New York. She has
gained control of the export trade--and the export trade governs the
import trade. Ships go where they can find a return cargo, and
merchants follow their goods. The possession of the great bulk of the
export trade, has given to New York the great bulk of importations,
and equally the control of the domestic trade. How can we, in Boston
and Massachusetts, get our fair share of the importing and domestic
trade of the country? There is but one way--by reducing the
transportation tax. In many respects Boston has great advantages for
the export trade. The chief exports of the country are to Europe. We
are two hundred miles nearer Europe than any of the other of the great
seaboard cities. We have a harbor unrivaled on the American coast for
easy entrance--for depth of water--for protection from storms.
Its great water-front, at which vessels of burden may lie to an extent
(as is stated by the Harbor Commissioners) of fifty miles--every foot
of which is, or may be directly connected with our railroads. There is
not a wharf along the whole circuit which may not, without great
expense, be made available for the export of the productions of the
country, brought by the railroad car to the side of the ship, which
shall convey it to the freight market. If we can secure to Boston a
fair share of the export trade of the country, the import and domestic
trade will follow, and we ensure the building of a city within the
limits of my friend's annexation project, that will equal the greatest
city of the continent.
THE EFFECT ON THE STATE OF MAKING BOSTON AN EXPORTING CITY.
It is hardly necessary to allude to the close connection which Boston
holds to Massachusetts. One-third of the population of the State and
one-half its valuation are combined within a circle of five miles from
this building. The prosperity of Boston is inseparable from the
prosperity of Massachusetts. The recent calamity of Boston was felt
throughout the limits of the State. But the great benefit to the State
from making Boston an exporting city is not the prosperity of the city
itself. It grows out of the condition which alone can make Boston a
city of export for the productions of the country.
This can only result from a reduction in the transportation tax which
will make such productions relatively cheaper in Boston than in New
York. In the profits of such a result the remotest corner of the State
will directly share. Transportation cannot be reduced to Boston
without a corresponding reduction upon every line of railroad leading
to or from this city. It was with a hope of such a result that the
State entered upon the project of building the Hoosac Tunnel, and it
rests with us to say, now that this great enterprise is so near
completion, whether this hope can be realized.
THE HOOSAC TUNNEL.
It is needless to explain at any length what the Hoosac Tunnel is.
There can be no member of this board who does not know that we in
Massachusetts are separated from the West by a mountain barrier
extending from near Long Island Sound to near the Canada line. This
barrier must be passed to bring us into connection with the West.
It has been turned on the north by the Vermont Central, on the south
by the Hartford and Erie. It has been passed over steep grades by the
Boston and Albany. At North Adams it is compressed into narrow limits
in the Hoosac Mountain, and the bold conception was formed to pierce
directly through it at this point. First, the effort was made to
accomplish the great undertaking by private capital, aided by a state
loan. The difficulties were underrated and the plan failed. Finally,
the State assumed the enterprise and has since, with varying fortunes
but unfaltering energy, prosecuted it to a successful result. Within
the current year there can be little doubt of the completion of the
work. The Tunnel will be opened for traffic and a new line formed
between Boston and the West, shorter by eleven miles than any existing
route; with easy grades, which, making the usual allowance for the
obstruction caused by heavy grades to railroad traffic--will render
it constructively shorter than any route by at least twenty miles, or
ten per cent., between Boston and Albany.
Its cost to the State, including the Troy and Greenfield Railroad,
will be at least twelve millions, raised by loans, on which the
interest is paid by taxation. Since the plan of the Tunnel was formed
new lines of road have been projected and built, connecting it with
every part of the State, and there is scarcely a town from Berkshire
to Provincetown, which does not to-day stand in position to reap its
share of the benefit expected to follow the completion of this great
public enterprise.
Having expended so large a sum on the Tunnel, the question arises, How
shall we use it to derive the greatest good to the whole people? The
State now holds, as owner substantially, the Troy and Greenfield
Railroad and the Tunnel, at a cost of about twelve millions. Its value
depends wholly upon the future development of business, but its
relations are such to other railroad interests, that I have no doubt
that, if the State desires to sell the Tunnel, notwithstanding its
great cost, negotiations could be made to dispose of it at a price
that would return to the State the moneys expended, but it would be at
the risk of sacrificing the prosperity of its own industrial
interests. There are various and conflicting opinions expressed in
regard to the business that may be done. Some parties who appeared
before the committee declared that the completion of the Tunnel could
only be compared to the removal of a dam, to be followed by a flood of
business beyond our power to properly care for; while others were
equally confident that the traffic now flowing through other channels
would be diverted to the new one only through the influence of time
and energetic labor. All, however, agreed in the opinion that, under
proper management it was destined to become, at no very distant day,
perhaps, the great avenue for trade between the East and West. The
eagerness with which various railroad corporations seek its control by
"_ways_ and _means_," if honest, should be convincing proof of the
great importance of the Tunnel to the public, and if not honest, it
should merit the condemnation of every honest man in the community.
POSITION OF THE COMMITTEE.
On certain points the committee were unanimous. _First:_ That the
State should own and control the Tunnel in such manner as to secure to
the whole State the ultimate benefit to be derived from its
construction, and to secure to all persons and corporations seeking to
use it, equal rights. _Second:_ That to attain the highest benefit to
be derived from this new line, a corporation strong enough to provide
sufficient equipment and terminal facilities should be formed, able to
command connections with roads outside of the State and to compete
with a fair share of success with the existing corporations. How best
to attain these ends with a view to cheapness of transportation and
efficiency of action the members of the committee differ. The majority
reported a bill providing for the consolidation of the Boston and
Lowell Railroad Company, the Fitchburg Railroad Company, the Vermont
and Massachusetts Railroad Company, the Commonwealth and the Troy and
Boston Railroad Company into one corporation, with authority to
purchase or lease certain other roads, which will make a capital of
not less than twenty-five to thirty millions and give control to about
five hundred miles of railroad. From this plan the minority have
dissented and reported a plan which will place the direct line from
Boston to Troy substantially under one direction, and subject it not
to state management but to _state control_.
THE BILL OF THE MAJORITY.
To the bill reported by the majority of the committee we have the
strongest objections.
_First._--It sanctions an enormous inflation of capital. It
authorizes a consolidation upon the basis of an appraisal of the value
of the several properties to be made by the parties themselves. The
railroads of this Commonwealth are prohibited by law from making stock
dividends, and yet here stock dividends are allowed to such extent as
the parties think proper. One of the greatest impositions ever
practised upon the public, from which the people of this Commonwealth
now suffer, is the watered stock of the railroads between Albany and
Chicago. The amount of stock in these roads issued without any
equivalent, upon which our traffic is now taxed, is variously
estimated at from forty-four millions to one hundred and five
millions. The annual tax levied is from three millions to six
millions, of which we pay a large share. The majority bill provides
for just such a watering of stock, to the extent of perhaps ten
millions, according to the appraisal by the parties in interest. We
believe this to be all wrong, and should not be sanctioned by the
Commonwealth.
_Second._--We utterly dissent from the opinion of the majority in
allowing the Boston and Lowell Railroad to come into such a
consolidation. The Boston and Lowell forms no part of the Tunnel line.
Every witness before the committee, except the agents of the
corporations themselves, was emphatic against such a consolidation.
See Governor Claflin's testimony, 7th Hearing, page 26.
" J. T. Joy " " " " 37.
" C. F. Adams, Jr., " " " " "
" N. C. Nash " 9th " " 4.
" Q. A. Vinal " 14th " " 10.
" Col. Faulkner " " " " 12.
" J. W. Brooks " 17th " " 13.
The Northern line has been of very great value to the business of
Boston and Massachusetts; more than any other it has effected that
reduction of rates which has returned to Boston within the past few
years a portion of the export trade. It forms the shortest line at
present existing between Boston and the Lakes, and while lake
navigation is open substantially controls the rates over the other
lines. Mr. Nathaniel C. Nash says (9th hearing, page 6), "We have
derived more advantage from that line than from any other source."
(See Railroad Commissioners' Report of 1870, page 36.) While the
Lowell railroad provided the terminus and the representation in this
Commonwealth, the other railroads in the line have cooperated in
producing this result. It has cheapened food to the people of this
Commonwealth, and of all New England. The Lowell Railroad is bound by
contracts to continue in this Northern line for twenty years to come.
Although some of the corporations are under financial difficulties,
this does not affect the operations of the line. The railroads still
exist and must continue to do business, and so far as the advantage of
the traffic extends, it matters little who owns or operates the
railroads. So impressed are the majority of the committee with the
importance of maintaining the northern line that they impose upon the
Lowell Railroad Company, as they say, the conditions of withdrawing
from the Northern line, and make provision for transfer of the
business to another line--the Boston and Maine. They propose to do
this in a manner which seems to us weak and futile. The majority bill
provides for repeal of the charter of the Great Northern Railroad
Company, passed in 1869, which authorized the Boston and Lowell
Railroad Company to consolidate with certain companies in New
Hampshire, with authority to lease or purchase other railroads leading
to Ogdensburg and other points in the North and West, and lines of
boats on the lakes. As all the other companies in this consolidated
line are in New Hampshire this charter was ineffective without the
cooperation of New Hampshire, and to this bill New Hampshire has never
assented--not from any hostility to through lines, but because it
contained objectionable features, such as the consolidation of
competing lines, the creation of a monstrous corporation with power to
combine in one gigantic monopoly all the railroads within her borders.
This charter is mere waste paper, and its repeal would have no more
effect than the burning of waste paper. The Lowell Railroad remains
bound by contracts to the Northern line, and the majority bill
effectually places the Northern and Tunnel lines under one control.
The proposal to transfer the Northern line and northern business to
the Boston and Maine Railroad seems to us an absurdity. The Boston and
Maine is practically an Eastern line; of its whole length, one hundred
and twelve miles, only twenty-six could be used in connection with the
Northern line. It never could or would give that exclusive attention
to the business necessary to make such a line successful. Its only
means of connection is over the Manchester and Lawrence Railroad, the
grades of which are too heavy for a successful freight business with
the West.
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
Cheshire, 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 competition 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 Massachusetts, Troy and Greenfield, and Troy
and Boston, and the Massachusetts 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 passage 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 circumstances 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 pass 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 ownership, or state
management.
State ownership 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 competition 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 assurances that the Fitchburg
Railroad Company will assent 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
competition, 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
competition. 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 Massachusetts,
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 Cheshire and other Vermont and Massachusetts 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
Massachusetts 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 circumstances 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 Massachusetts. 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 endorsement of the Commonwealth of Massachusetts,
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 assume a
proposition and verify this proposition by figures.
Judging from the present local business now done on the several
roads--forming what is anticipated 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 assume 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 assured 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 pass 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 extinguishing 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.
If they choose, the managers of any private corporation could exert a
greater and more injurious political influence than these State
trustees.
If the power is dangerous in State trustees, who must be selected by
your Governor, it is far more dangerous in the hands of persons
elected by stockholders of a private, money-making corporation, whose
interests are in direct antagonism to the interests of the public.
This argument applies to corporate management only with a much greater
force. Let corporate management be unmasked and it would make State
management hide its face with shame. (See extract New York State
Committee on Erie.)
"If the principle is to be established that a few interested parties
of stock-jobbers, having no permanent interest, can, by the corrupt
use of money or by violence, take and hold possession of a great
railroad corporation, and reimburse themselves out of its treasury, it
is time the matter was understood by the public. As to the payment of
money to influence legislation connected with said company, or other
irregularities, the testimony was enough to show that the railroad
companies have been in the habit of expending large sums from year to
year, either to secure or defeat the passage of bills. It appears
conclusive that a large amount, reported by one witness at $100,000,
was appropriated for legislative purposes by the railroad interest in
1872, and that $30,000 was the Erie's portion. In this connection the
committee denounce the lobby roundly. It is further in evidence that
it has been the custom of the managers of the Erie Railroad from year
to year in the past to expend large sums to control elections and to
influence legislation. In 1868 more than one million dollars was
disbursed from the treasury for 'extra and legal services.' What the
Erie has done, other great corporations are doubtless doing from year
to year. We have here simply an acknowledgment, of the fact. Combined
as they are, the power of the great moneyed corporations of this
country are a standing menace to the liberties of the people. The
railroad lobby flaunts its ill-gotten gains in the faces of our
legislators, and in all our politics the debasing effect of its
influence is felt."
This cry of political corruption against State management is but the
resurrection of the old party ghost which has always been retained in
the service of all political parties to frighten people that are
naturally timid and conservative; and this terrible spectre has often
been the means of delaying and defeating enterprises that were for the
best interests of the people.
I remember, Mr. President, when this ghost was exhibited by the
Democratic party in every town in this State; and the people were made
to believe that the loan made by the State to the Boston and Albany
(Western) Railroad would ruin the State; that every man's farm was
mortgaged at nine dollars per acre; and men believed it, for that was
in times when the people followed party leaders through faith; when it
was said that the true test of the political faith of a New Hampshire
Democrat was to wake him up with the inquiry, "Who made you?" and if
he answered promptly, "Isaac Hill, sir," he was to be trusted as one
of the faithful.
The effect of this great outcry was to destroy confidence in the
enterprise and the stock at one time could not be _given_ away for
fear of assessments. And if the people at that time could have been
guaranteed that the loss of the State should not exceed the four
million loaned, they would have gladly given another million as a
guarantee. But they could not rid themselves of the supposed burden,
and the result has been the development of a great enterprise in the
interests of the State in spite of their fears. This was in a measure
to the credit of State management.
As to the efficiency of the plan, it remains to be tried; but in the
language of the minority report we believe such a management would be
efficient and reliable beyond that of ordinary railroad corporations.
It combines State control with corporate management.
The Governor and Council could be depended upon to appoint suitable
persons as trustees. The railroad corporations would naturally appoint
their most efficient agents as trustees. Such a board could find no
difficulty in securing the services of the ablest railroad officers to
direct and aid in the management.
As the plan has no precedent it cannot be judged from the record, and
the prejudice existing against State management cannot fairly apply to
this plan; but if it could have a fair trial we have no doubt of its
efficiency and success; and we are not alone in this opinion, for this
plan has received the full endorsement of eminent railroad managers,
successful and prominent manufacturers and merchants, and the Chairman
of the Railroad Commissioners, together with many of our most
enterprising and conservative citizens.
STATE PENSIONERS.
It is urged that the plan proposed creates a large class of state
pensioners to whom the revenues of the treasury are pledged. They are
State pensioners in the same sense as any individual who leases
property to the State for a fixed rent, is a State pensioner. Every
railroad charter contains a provision for the acquisition of the
corporate property by the State, by payment of its presumed value. As
well say that all these charters are pension bills.
The minority bill simply provides that stockholders yielding their
property to the State, shall have a remuneration for the property
surrendered. It makes little difference to the individual whether his
compensation comes in the form of the payment of a fixed sum or of an
annual annuity. It does make some difference to the State, whether it
increases a debt to payoff these stockholders at once, or pays such
interest as the property acquired may be fairly presumed to earn. The
guarantee does not exceed the dividends which the property may be
expected to earn, and the advantage which a lease gives over a
purchase by avoiding the transfer and changing of capital should not
be overlooked.
In a word, these stockholders are pensioners only in the sense that
they become entitled to secure annuities from the State for which
they pay beforehand a full equivalent into the treasury.
THE BENEFITS OF THE PROPOSED PLAN.
It makes absolutely certain the perpetual control of the Tunnel for
the benefit of the people of the whole State.
It secures to the people by whose money it has been built, the
ultimate value of the enterprise, whatever that value may prove to be.
It secures to the people an independent Western line, to be managed
for the benefit of the people, free from any danger of combinations by
which rates are fixed.
It secures to all corporations desiring to use the Tunnel, equal
rights.
It secures a line stronger than any other, amply able to provide
equipment and facilities, and to compete with powerful corporations in
neighboring States.
It fixes the capital of the corporation without danger of inflation,
and without risk of speculative control.
It enables the people to try fairly the experiment of cheap
transportation.
It provides equally with the plan of the majority for the interchange
of depots, by which the crossings at the north side of the city may be
avoided.
If only one-half of these advantages can be gained the experiment is
worth trying. If it succeeds and our expectations are fully realized,
it will confer upon the people the greatest boon since the
introduction of railroads.
Senators will bear me witness that I have never solicited their vote
on any personal consideration, and in the decision of this great
question, I can only appeal to you as legislators to record your votes
in accordance with your convictions of duty to the people of this
Commonwealth, and for the protection of her six hundred millions of
industrial interests; unbiased by any local or personal interest,
keeping in mind that there is no power but that of the State that is
safe to trust in the great exigency that now exists.
* * * * *
Transcriber's Notes:
All obvious typos were corrected. Hyphenation was standardized. The
placement of quotation marks were not standardized; but left as in
the original printed version.
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