IF neither competition nor legislation have proved themselves effective agents for the regulation of the railroad system what other and more effective one is there within the reach of the American people ? This is the final issue to which the railroad problem must apparently reduce itself. The material and moral difficulties which surround the question are further complicated by grave political considerations, which need now to be stated with all possible emphasis, for they will continually present themselves throughout what remains of this discussion, and must ever be borne in mind. The difficulty in great degree arises from the development of a material and moral power, or rather, perhaps, combination of powers, in our social organism which our political system was not calculated to deal with. At the time the framework of our government was put together, a system of necessary monopolies was the very last thing which was expected to present itself on this continent. Our governments, state and national, grew up among, and were calculated for, a community in the less complex stages of civilization. Our whole machinery looked to dealing with individuals, and that only in the least degree which deserved the name of government at all. The idea of one man or set of men combining to own in absolute monopoly the great channels of internal communication as they then existed, — the Hudson, or the Ohio, or the great lakes, — would have been regarded as a wholly inadmissible supposition, a contingency impossible to occur. Consequently no machinery was devised calculated to meet such an improbable emergency. Yet that very emergency would now seem to be imminent. Here then are two systems growing and expanding side by side, — the representative, republican system of government, adapted to a simple and some what undeveloped phase of society ; and the corporate industrial system, the result and concomitant of a complex and artificial civilization. How long can they develop together ? The peculiarities and combinations now noticed in our legislatures and market-places, the growing torpidity of public opinion, the constant strain under which our machinery of government visibly works, the crude, undigested propositions for reform which emanate from every quarter, the startling rapidity with which change develops itself, and the rapidly shifting phases which all interests assume, clearly indicate some deep-seated social and political revolution in progress. What this will result in, time only can disclose. It would be a mere waste of space and ingenuity to endeavor to forecast it at present.
Meanwhile so far as the railroad system is concerned it seems almost inevitable that the national government must, soon or late, and in a greater or less degree, assume a jurisdiction. This is an obvious conclusion to be deduced from the irresistible development of the system in a course it has hitherto pursued. The next question is when, and in what way, and to what extent, is this to be done ? What is to be the basis of legislation ? This now admits of almost infinite modification, ranging from public ownership on the one hand, to the most limited regulation on the other. The same may be said as to extent of jurisdiction. It may be assumed over all roads lying in more than one State, or it may be confined to certain trunk lines specially designated as military and post roads. These questions it is now premature to discuss. They constitute the final problem. All other proposed solutions of it, resting upon State regulation or State control, are but temporizing expedients, important simply as illustrating the practical value of certain theories. Such may prove instructive resting-places ; they can hardly be the final objective. To these, however, attention should now be confined, for through them the ultimate results are to be evolved.
Two of these proposed solutions have of late excited an unusual degree of discussion. The one seeks to supply our government with a supplementary power, which will better adapt it to the new exigency which it is called upon to meet ; — the other directly meets the emergency with a proposal of some form of ownership of railroads by the State ; it pronounces the English and American railroad system in many respects a failure, and seeks to make good its defects by the introduction into it of certain features of the Belgian system.
It is impossible, in view of past experience, not to entertain grave doubts as to the result of any experiment of the sort last referred to, made through the political machinery which exists in America. As regards the construction of a railroad system it has repeatedly been tried and uniformly ended in failure. Pennsylvania, Ohio, Michigan, Illinois, and many other States went through the same sad experience. Every section with us had its claims, and those claims could not be disregarded. In Belgium, in France, or in Russia a government engineer can locate a railway, and there an end ; it was found to be otherwise in America, and an impartial disregard of the figures of the census by no means resulted in a commercial success. It is, however, argued that it would be otherwise in the case of a completed system ; that if our State governments could not construct, they could at least manage railroads by deputy. This remains to be seen. That the government should engage in any business, whether as producers, as carriers, as bankers, or as manufacturers, is opposed to the whole theory of strictly limited governmental functions.
This aspect of the question is most important, and in America it cannot well be dwelt upon too frequently or stated too broadly. Our whole political organization, our history as a nation, the prodigious material development of which we are so vain, — all of these rest upon the great principle of limited governmental functions, and the leaving of persons and interests to rely solely on themselves, and to work out their own destiny in their own way, subject to the least possible external interference. To turn over to a government constructed on such a principle the management of so complex an organization as the railroad system is certainly a measure of the last resort. But, unfortunately, this is a case in which choice must be made between two evils. So far from disentangling themselves from connection with the railroad system, there is not to-day a government in the United States, including the national government itself, which is not steadily drifting into the most dangerous form of connection with it of which it is possible to conceive. It is scarcely an exaggeration to say that our legislatures are now universally becoming a species of irregular boards of railroad direction. Questions of the purest detail affecting the operation of railroads are regularly brought before them, and the increasing disposition to manage this elaborate system by statute enactment is notorious. Not only is it more than questionable whether this can be successfully done, but the attempt itself irresistibly forces the owners of the system in self-defence into the lobby. The inevitable consequence does not need to be dwelt upon ; it has already become a fruitful source of scandal and alarm. The question at issue, therefore, is not between interference and non-interference by the State, but between two forms of interference.
For, indeed, it is practically conceded on all sides that the task of supervising in some way the railroads of a modern State does constitute one of the necessary functions of government. A writer as jealous of limiting those functions as J.S. Mill expressly makes this exception : “ There are many cases in which the agency, of whatever nature, by which a service is performed, is certain from the nature of the case, to be virtually single, in which a practical monopoly, with all the power it confers of taxing the community, cannot be prevented from existing... it is the part of government either to subject this service to reasonable conditions for the general advantage, or to retain such power over it, that the profits of the monopoly may at least be obtained for the public. This applies to the case of a road, a canal, or a railway. These are always in a great degree practical monopolies ; and a government which concedes such monopolies unreservedly to a private company, does much the same thing as if it allowed an individual or an association to levy any tax they chose, for their own benefit, on all the malt produced in the country, or on all the coffee imported into it.” Accepting this statement of the case as sound, and it is difficult to see how it can be controverted, it simply remains to consider what form of interference will be most effective, and at the same time in the least degree politically injurious. At this point opinions diverge.
The results of legislative regulation of private railroad corporations have been sufficiently dwelt upon. It can hardly be claimed that in any aspect they have been encouraging. Not only have the material interests of the community suffered, but the effects upon political morality have been injurious, and are felt at the most vital point of our system, — in the legislative department. A vicious civil service or an inefficient executive can be reformed, but there is no power which can purify a corrupted legislature. Many States in this country, and especially New York, New Jersey, Pennsylvania, and Maryland have now for years notoriously been controlled by their railroad corporations. Not one of these States owns a mile of railroad, and yet it is very difficult to conceive of any form of State ownership which would entail greater scandals or political evils than those which now spring from the system in use in them. The empty name of non-interference is thus jealously guarded, while constant interference notoriously constitutes one half of the legislative business of the country.
The expediency of making an experiment at the State ownership of a railway and its management through the agency of public trustees, instead of a board of private directors, has been more or less discussed during each of the last three sessions of the Massachusetts legislature. A fair though carefully limited trial of the Belgian system was proposed by the Board of Railroad Commissioners of the State in their report for 1871. They advocated the purchase by the Commonwealth of the fifty miles of road between Boston and Fitchburg, which will ultimately connect with the West by means of the Hoosac Tunnel. The argument of the Commissioners practically was, that competition, if it could be secured, was, under the present circumstances, the most effective agent which could be brought to bear to introduce many greatly needed reforms into the Massachusetts railway system. To effect these reforms by means of legislation in the case of roads owned and managed by private companies, even if it were practicable, would in fact occasion a far more dangerous and corrupting political association between the private companies and the government, than the absolute ownership of any experimental line. Such a line once in the hands of trustees, and energetically managed, would obviate all necessity of further attempts at the most difficult class of railroad legislation by effecting that through the force of competition, which it was now in vain sought to compel by law. The competition and comparison continually existing between the public and private lines could be relied upon to keep the administration of each pure ; neither, it was argued, would the State in this way be gradually led on to assume the other railroads within its limits. If public management failed to operate the one road assumed so as to compete with private roads, and in addition thereto to pay the interest on its purchase money, — equal to the dividends on private roads, — then other portions of the State would insist upon the sale of the property rather than pay taxes to support a local public road; did public management succeed in its reforms and still meet all demands on account of interest, then private managements would, under the pressure of public opinion, naturally adopt reforms thus proved to be safe; they would follow in the beaten track.
The only cases furnished by American experience at all parallel to the one here proposed, certainly do not militate against this line of argument. Most prominent is that of the Erie Canal in New York. The influence of this canal as an independent and steady competing force upon railroads is well known ; — it, and it only, can be relied upon never to enter either into freight combinations or ruinous competition. It has been public property, and its management certainly has not been above criticism, but it is equally indisputable that it has never exercised upon the politics of New York an influence either so great or so pernicious as at least two of the private railroad corporations with which it competes. So far as administration is concerned, the precedent of the Erie Canal wholly fails. The service in the case of a canal and a railroad being dissimilar, the element of comparison between the public and the private roads which has produced such great results in Belgium is wanting. One thing, however, is very certain, and not less suggestive as bearing on one present phase of the railroad problem, were the canal a public railway, instead of what it is, Mr. Vanderbilt might safely be permitted to water the stock of the Central to any degree which he might desire ; — the community could always control the tariff of his road without being compelled to resort to hostile legislation. Neither would the influence of this competition probably be confined to the Central road. Railroad management in the same community always seeks a certain level ; reforms once introduced are never confined to their original limits. Let a positive advance in any direction be thoroughly established, and the pressure of self interest and popular feeling may safely be relied upon to make it general.
The Post-Office Department of the United States government also throws some light through its workings upon the proposed innovation. The postal service is a close monopoly, employing thousands of agents and entailing heavy expenditures ; it has for a long time been subjected to all the evils which flow from a system of rotation in office, — it is a recognized part of the political spoils of the country. While, in spite of these adverse circumstances, its administration will probably compare favorably with that of any railroad in the country, and while it furnishes facilities and accommodates the public as no private corporation possibly could do, yet no one will maintain that the Post-Office in its connection with the government is politically either as disturbing or as corrupting an agent as any one of numerous railroad corporations which are perpetually soliciting Congress.
Should this experiment be tried and succeed it might well give a new phase to the whole question of internal communication, and bring the railroad problem one step nearer to a solution. Meanwhile, it would be wholly futile to suppose in the face of the growing tendency to nationality, the constantly increasing disposition to ignore State lines and to transfer control to the general government, that this revolution would confine itself to State limits, or that a dozen different State organizations could control a Pacific railway. Such a system, with local jealousies, interests, and pride to contend with, — each great line running the gauntlet of a dozen rival competing points, and artificially turned into twenty interested channels, — would so hamper the commerce of the continent that it would crumble into chaos in less than a twelvemonth. Government ownership of railroads can therefore with us only mean their ultimate, though not necessarily exclusive, ownership by the national government. At present, however, that government is peculiarly unfitted to assume any functions of this sort, and must continue to be so until after a thorough and sweeping reform of the civil service is effected. A purified political atmosphere may be imagined, in which at some future time it would be safe for Congress to assume the management, through supervising boards, of certain designated continental routes ; but any movement in that direction would certainly, and very properly, encounter a strong and determined opposition so long as the present condition of affairs exists.
It is not wholly impossible, however, that a safer, even if less effective, solution of the difficulty may be found in the furnishing our governments with the supplementary power which shall adapt them to the new condition of affairs which has arisen. A practical attempt in this direction is now in process of development in Illinois. That State was the first to recognize the essential fact that the railroad system is an exceptional interest, and therefore requires to be exceptionally dealt with. This great stride in advance was secured by the Constitution of 1870. It was the concession of a starting-point, the recognition of the new social and political force for which no provision had been made. When a deficiency is fairly acknowledged, we can in America feel a tolerable confidence that it will shortly be supplied. The provisions introduced into the Illinois Constitution are, indeed, crude and unsatisfactory, but they are a beginning. A discussion of these provisions will again bring into view at once the very point upon which our State systems have hitherto broken down in their attempts to deal with the railroad development.
The most striking feature of the Illinois Constitution is the strong resolve of its framers to do away with what are known in England as “private bills,” and in this country as special legislation. It is unnecessary to dilate upon the nature of this abuse, which may safely be set down as the greatest danger to which any system of government is liable ; it may almost be said to be the root of all political ills. Legislation should know nothing of individuals. All modern thought tends to the conclusion that the universe is controlled by general laws ; and a belief in special providences is entertained only by the most superstitious. A sound system of government should recognize individuals no more than the laws of nature recognize them. The law should apply to all, without discrimination for or against. The system of special legislation, on the contrary, from top to bottom, is based on a supposed necessity, which is taken for granted as existing, that privileges may be conceded to one or a few which it is not safe or politic to concede to all. Nature never acts in this way, nor will thoroughly enlightened governments do so, when any such exist. The Illinois Constitution deserves to be hailed as a great advance towards the realization of this idea. The framers of this instrument, when they came to dealing with railways, provided for their regulation these articles, among others : —
ARTICLE XI.
CORPORATIONS.§ 1. “ No corporation shall be created by special laws, or its charter extended, changed, or amended ; ... but the General Assembly shall provide, by general laws, for the organization of all corporations hereafter to be created.”
§ 11. “ No railroad corporation shall consolidate its stock, property, or franchises with any other railroad corporation owning a parallel or competing line......”
§ 12. “ Railways heretofore constructed, or that may hereafter be constructed, in this State, are hereby declared public highways, and shall be free to all persons for the transportation of their property thereon, under such regulations as may be prescribed by law. And the General Assembly shall, from time to time, pass laws establishing reasonable maximum rates of charges for the transportation of passengers and freight on the different railroads in this State.”
§ 13. “ No railroad corporation shall issue any stock or bonds, except for money, labor, or property, actually received and applied to the purposes for which such corporation was created ; and all stock dividends and other fictitious increase of the capital stock or indebtedness of any such corporation shall be void......”
§ 15. “ The General Assembly shall pass laws to correct abuses, and prevent unjust discrimination and extortion in the rates of freight and passenger tariffs on the different railroads in this State, and enforce such laws by adequate penalties, to the extent, if necessary for that purpose, of forfeiture of their property and franchises.”
Now while it is conceded that special legislation is the bane of all government, it must also be conceded that special legislation has hitherto been found indispensable to any regulation of the railroad system. The exception once conceded, every railroad came up and demanded it own special immunities and privileges, — its peculiar charter, which was a law unto itself. The extent to which this was carried may be inferred from the three thousand two hundred acts on the statute-book of Great Britain, and the one thousand on that of Massachusetts, — nine-tenths of them, in each case, special legislation to meet the supposed requirements of an organized monopoly. The exception and its dangerous nature — the frauds which were perpetrated under it, and the lax and confused system of legislation it was engendering-long ago attracted the public attention and excited its alarm. The press raised its voice, and the people responded by inserting into more than one constitution provisions absolutely inhibiting the passage of any act of a private nature. In other States the Executive accepted the issue ; and in New York a long succession of vetoes has only recently vindicated the principle of general legislation. There was in each of these efforts at reform an element of fatal weakness. The fact that the railroad system occupied an exceptional position was ignored. Instead of conceding that this system was made up of a number of monopolies, in regard to the necessities of which a discretion must be exercised, journalists and legislators insisted on placing them in a position exactly similar to that of individuals, amenable to every law of trade. The result was, of course, failure. The monopolies evaded or broke down the law, and were omnipresent in legislatures. There was no machinery in the government adapted to meeting the exceptional case. Reformers failed to realize that, though special legislation was corrupting the whole political system, yet general legislation of the ordinary description would not meet the requirements of the case. It is here that the whole question lies in a nutshell, — how can the requirements of the railroad system be met, and yet its individual members driven from the legislature ?
This final result was not attained in the Illinois Constitution ; had it been, the value of that instrument would have been more than doubled. Indeed, the provision made in it brings the innovator just to the fatal point ; as yet he has done nothing, but the next step involves everything. In spite of its Constitution, Illinois must now slip back into the deep mire of special railroad legislation, or it must go on and solve the problem. The case stands thus : the Constitution implies the passage of (1) laws prescribing reasonable rates of charges on the different railroads, and (2) laws to correct abuses and prevent unjust discrimination and extortion in the rates of freight and passenger tariff.
The legislature it seems is to do this work ; if so, the work cannot be done ; the provision is so much waste paper. It may boldly be laid down as a principle, that no general law can be framed which will meet the exigencies of a whole railroad system in all its manifold details. This is true in almost every respect. A law, for instance, authorizes the taking of land for railroad purposes, but one road requires an exceptional amount of land in a particular locality. A general law regulates station facilities ; but while it may apply well to one district, it will be simply ridiculous in its application to another. The difficulties in the way of framing a general law regulating fairs and freights, — the very one provided for in the Illinois Constitution, have already been sufficiently discussed. If, turning from this manifest difficulty, the legislature seeks to establish tariffs adapted to particular roads, then the whole evil of special legislation in its worst possible form is upon it. Where, then, is the escape ?
We have thus got back to the old puzzle, — how to meet special requirements under general laws. The solution, if found at all, — if failure is not predestined, — will be found by the Illinois legislature in fairly recognizing an evident exception to general conditions, and supplying an executory power specially calculated to meet it. It is the want of this which has brought to nought all efforts at general legislation on this subject up to this time. They have uniformly failed from one defect ; they were hard, unyielding, intended to apply to differently conditioned members of one exceptional and most complex system, and yet wholly unprovided with any discretionary, adaptive, or executory power. The law was there, but it did not move. It was as if a criminal law were put upon the statute-book which was to apply to all degrees of crime indiscriminately, without the aid of judge or of officer. And, indeed, this very example illustrates the whole subject. The criminal law was once a subject of special legislation. Individual criminals had acts passed to meet their particular cases. The legislature was at one and the same time judge and jury. The legislative and judicial functions of government were, however, separated so long ago, that the community has forgotten that they were ever united ; yet it was this division, first introduced under Alfred the Great, which alone made possible the success of parliamentary government. Had it been the discovery of one man, he who made it would have deserved to rank among the greatest benefactors of his kind. In early New England history the distinction was again obliterated. The Great and General Court was in Massachusetts Bay both the source of law and the seat of supreme justice. This simplicity very shortly disappeared as society became more complex, but it left behind it the fatal legacy of special legislation. The same confusion of functions is exactly what has hitherto existed in regard to railroads ; the result, both in New and Old England, is seen in a statute-book swollen with special enactments, a legislature overwhelmed with business it cannot do and tainted with jobbery of which it cannot rid itself, all resulting in a railroad system which is a confessed failure in everything but its material aspect, with which the legislature could have nothing to do. Can the desired separation be effected.
The solution of the problem stated in this form seems so obvious, that it is fairly matter of surprise that it has never yet been practically attempted. The legislature should enact its general laws for the requirements of railroads, as it does to meet the innumerable civil and criminal complications which arise ; but, in the one case as in the other, the judicial and discretionary action under the general law should be devolved upon tribunals specially created to take cognizance of them. The legislature declares the rule which is the same to all ; but the degrees of discretion which varying circumstances exact in the application of the rule must constitute a trust necessarily delegated to others. At present all these distinct powers are jealously retained by the legislatures. Their committees sit as courts and take evidence and listen to arguments. So far it is well. At this point, however, instead of framing a general law or dismissing the individual case, they undertake to give a charter to this applicant and to refuse it to that ; to pass a special act in favor of this corporation, and to reject it as regards that ; to authorize an increase of stock here, and to direct the construction of a new depot there. These are functions which no legislative body can successfully perform ; as well undertake to decide every suit at law or to affix the penalty to every crime. Just so long as legislatures insist on themselves doing work of this nature, just so long will corruption increase and the statute-book fall into confusion.
But it will be said, Who will guard the virtue of the tribunal ? Why should the corporations not deal with them as with the legislatures ? They may do so, but somewhere and at some point, put on all the checks and balances that human ingenuity can devise, we must come back and rely on human honesty at last. One rule always holds good, — where the most direct responsibility exists, there will the best conduct be found. Corruption loves a throng and shrinks from isolated places. To divide responsibility is to destroy it. The judges of our courts are rarely otherwise than pure ; the heads of our official departments are conspicuous for honesty ; they are always directly and individually responsible. If we thus can, and indeed, from the necessity of the case, must confide the charge of the public funds and our personal liberties to mortals like ourselves, acting under the law, it is difficult to see why, except that we never have done so, we cannot trust these other interests to similar mortals. All in such cases depends upon the men. We have had in England and in this country a sufficiency of feeble attempts in this direction — boards of trade, railroad commissions, and various other pieces of machinery. They have all failed, for one reason, the principle of special legislation was ever kept open in the background behind them. They have uniformly possessed a mere simulacrum of power ; their decisions were appealed from, their recommendations were ignored, and their principal duty was to sit patiently by and watch the corporations as they dealt directly with the legislature over their heads. Instead of the legislature saying to the sturdy corporation beggars who infested the lobby, as it would say to civil litigants or to criminals, “Leave us ! there is the general law and there is a tribunal specially charged with the interests of you monopolists ; go to it !” — instead of this, the boards, commissions, and what not, have ever been placed in the ignominious position of a court, whether civil or criminal, from which in every case an appeal would lie to the legislature itself. A tribunal so constituted can hardly fail, soon or late, to sink into contempt ; least of all is it calculated to deal with powerful corporations. As a direct consequence of this conspicuous distrust, these tribunals have almost invariably been made up of very inferior and, not seldom, corrupt men, for no such responsibility and prominence was thrown upon them as forced out capacity and integrity as the only alternative to failure. Had the same class of appointees, as a rule, been placed upon the bench, the judiciary would long since have sunk into contempt. The duties, the responsibilities, and the characters of those composing these boards should, on the contrary, be brought up to the highest standard, — to an equality, in short, with those of the judges of our courts. Their tribunals should be clothed with all necessary powers and be put forward as if the members were fully competent to represent the interests of the State with an experience and ability, a knowledge of details, and a zeal in their occupation equal to that ever so conspicuously displayed by the agents of the corporations. Such men could certainly be found ; the corporations always have them. Meanwhile the whole subject may be summed up in few words : under a system which permits special legislation, boards for the regulation of railroads are useless ; they are, however, indispensable under one which confines itself to general laws.
It is not impossible that the defective machinery in our government, to use once more the simile originally employed at the beginning of this chapter, may be strengthened in the way indicated. A new strain has been brought to bear. At present our government occupies the impossible position of a wooden liner exposed to the fire of modern artillery. It was built for no such trial. The railroad corporations, necessarily monopolists, constitute a privileged class living under a form of government intended to inhibit all class legislation. We must, then, see our government fail in this unexpected crisis, or we must strengthen it in such a manner as to enable it to vindicate its authority. This can only be done through human agency ; ingenious statute machinery, without a man inside of it, will only result in certain failure. The other course, also, may fail, as the iron plates of our monitors may be crushed by the weight of novel projectiles ; but here, at least, the power of resistance can in some degree be proportioned to the intensity of the strain.
The only advance which has for years been made in railroad legislation was effected in the direction indicated by the legislature of Illinois in the first session after the adoption of the new constitution. Amid some legislation of very questionable character and propriety, and which can hardly fail injuriously to react upon the reform desired, two laws were enacted of great importance ; — by one a board of commissioners was constituted, and by the other a general attempt was made to classify roads and to affix limits to the charges for travel. It is extremely improbable that the last act will be found perfect in its provisions, but it contains in itself the two great germs from which an efficient regulation of roads by law must grow if the thing is in any way possible ; — these two germs are the recognition of the natural differences between different railroad enterprises, and the consequent delegation of a discretion in details and administration to a permanent and competent tribunal.
T H E E N D.
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