Under the system of congressional legislation that now obtains, the laboring and producing cla.s.ses are being rapidly reduced to a state of servitude that would grace the most despotic government.

CHAPTER XII.

THE RIGHT OF EMINENT DOMAIN.--UNCONSt.i.tUTIONALITY OF MUNIc.i.p.aL AID TO RAILROADS.

The question of taxation for the benefit of private corporations has agitated the public mind since the construction of railroads became one of the admitted necessities of the country. For the purpose of justifying and legalizing governmental aid to railroad corporations, in the various forms in which such aid has been afforded, the doctrine has obtained among the advocates of the measure that railroads are public highways, as well as a public necessity; and such being the fact, that aid in the shape of grants, taxes, and subsidies, are legal, legitimate, and proper. They draw an argument in favor of this doctrine, from the fact that legislatures, state and national, have provided by law for the condemnation of private property, for the use of the companies, respectively, upon paying the a.s.sessed value thereof; and that thus the right of eminent domain is vested in these corporations; that the right of _eminent domain_ is an attribute of sovereignty, and that the granting of this attribute to corporations imparts to them the character of public highways. They reason that because they are public highways, and the companies owning them are common carriers, taxes may be legally levied and collected for the exclusive use of these companies. They claim that because the United States, states, counties, cities, towns, and townships, have authority to construct, or to aid in constructing, common highways, they have the same right to construct, or aid in constructing, railroads.

If it were not that precedent has tended to sustain this "false doctrine," we would not think it profitable to combat it. The only point in the argument in favor of this doctrine that has any real foundation, is, that railroad companies are allowed to locate their roads where they please, upon payment of the damages a.s.sessed in the manner prescribed by statute. The answer to this is, that railroads could not be built, unless the companies had permission to pa.s.s over the lands of private citizens. If the t.i.tle from each land owner could be procured only by negotiation and purchase, no railroad could be constructed, for the reason that a direct or continuous line for a road could rarely be secured. Railroads are constructed to aid in the transportation of freight and pa.s.sengers from one part of the country to another; to promote commerce throughout the whole country; to supply the wants of a people, just as a mill or factory supplies the wants of a particular locality. The miller constructs his dam across a stream, and, under the statutes of most of the states, he can procure the condemnation of the land of his neighbor overflowed by his dam, to his own use, upon payment of the damages a.s.sessed. It is not a condemnation for the use of the public, but for the use and benefit of the owner of the mill. The mill itself, while it is owned by a private individual, and can be sold and transferred by him at any time, is also a public benefit. Can it be said that the right of eminent domain attaches to the mill or its owner? So with railroads: They are owned by private companies--are built and controlled by them; they are of public benefit, but not owned or controlled by the public or by the state, or local authority, as in the case of public highways. Their private owners can sell them, with all their franchises, rights, and privileges. The rules for their operation, rates of charges, and all other matters affecting their government, are exclusively under the control of the parties owning them. Only that the companies may become the owners of the necessary grounds over which to build their roads, have legislatures provided that they may enter upon lands owned by private persons, and upon the payment of the appraised value thereof, appropriate a narrow strip (the width being fixed by statute) for the purpose of locating their road upon it. It is not condemned for public use, as in the case of a public highway, or where land is needed for public buildings, or any other public purpose. The a.s.sessed value is not paid by the government, or from the public fund, nor by individuals for the public; but by the private corporation out of its own purse, and for its own gain.

This is what is called, by the advocates of the measure, "the right of eminent domain," a right that only belongs to the supreme government.

This power cannot be exercised by local or subordinate governments, unless it is delegated to them by the supreme or superior government.

While the courts in some of the states, Iowa included, have, by decisions, made this right of eminent domain attach to railroad companies, it cannot be supported on principle. To allow it to obtain is to clothe private corporations with the attributes of sovereignty. But conceding that this right attaches to these corporations, upon no principle of const.i.tutional law or justice can the right to levy taxes upon private citizens to aid in the construction of railroads, either by acts of congress, by state statutes, or by local munic.i.p.al government, be supported. And it matters not in what form these taxes are imposed upon the people, whether in the shape of munic.i.p.al subscriptions of stock, to be paid by a.s.sessments upon the people; by donations of land or money, to be repaid by imposing a larger price upon lands sold to the citizen; by indirect taxation, or by special local elections held in cities, towns, or counties,--the compulsory taxation of the property of individuals, under our system of government, can only be imposed for governmental or public purposes. Taxes are levied for the support of the government in all its departments; for the construction and repairing of highways; for the building of school houses and all other edifices of a public character; for the support of schools; for the necessities of local munic.i.p.al governments, and for other objects having the public weal for their sole consideration. These taxes are legitimate and proper, because the ends sought to be reached by such taxation are for the use and benefit of the whole people, and for the protection of their rights. For all of these purposes the legislature can provide an uniform system of taxation. But when the government attempts to compel A to pay a tax to a.s.sist B and C in building a railroad, it enters upon the exercise of a despotic and oppressive power, that is in conflict with the letter and spirit of our const.i.tutions, both state and national.

The legislature, by the pa.s.sage of such a statute, says, in substance, to the taxpayer: "A company is formed for the purpose of building a railroad which pa.s.ses through the county in which you reside. This company has not sufficient means for constructing and stocking its road.

That the necessary means may be furnished to it for that purpose, you must pay a tax upon your property, amounting to one-tenth or one-twentieth of its value; this amount you must donate to the company.

True, you will have no interest in this road when it is completed; you will not be a stockholder; you cannot ride in its cars, or ship your freights over the road, without paying the same price as other persons.

It may cause you to sacrifice a part of your property to pay this tax, but the road will be of great advantage to the public, and you must make this donation to help the enterprise." The consequences flowing from this unjust and oppressive system of taxation are appalling. It has no foundation in right or justice. The legislature has no inherent right to impose taxes for any purpose. The authority to levy taxes is dependent upon the power delegated by the people as contained in the fundamental law. In a republic even a majority of the people do not possess the inherent right to tax the minority for private purposes. Such taxation can be imposed by no other government than a despotic one, where the will of the despot is the supreme law, and where might rather than right is the controlling power. So conscious are the advocates of this species of taxation of the fact that taxes can be levied for public purposes alone, that they deem it all-important to connect and blend in one--the right of eminent domain and taxation.

But this position is not tenable. Bouvier defines the term, "Eminent Domain," as follows: "The right which the people or government retains over the estate of individuals, to resume the same for public use."

Taxes are defined to be burdens or charges imposed by the legislative power of a state, upon persons or property, to raise money for public purposes. It will be seen that there is a wide distinction between the taxing power and the right of eminent domain: that while they both appropriate private property for public uses, they differ in degree.

While the right of eminent domain takes from the private citizen the absolute t.i.tle to property upon just and fair compensation, taxation exacts from each property owner a contribution for the support of the government, or for the benefit of the public, without any other compensation than the protection the government affords him in life, liberty, and property. Contribution for this purpose is a duty imposed upon all who are under the protection of government. A complete power to procure a regular and adequate supply of revenue forms an indispensable article in our const.i.tution; and provisions for levying and collecting this revenue is a charge laid upon the legislative department. The levy and collection of all taxes deemed necessary for the administration of the government and for the public good, is an incident of sovereignty; but this does not extend to the levy and collection of taxes to aid private interests or enterprises. The taxing power is limited; the needs of the public fix this limit. When this is pa.s.sed, the citizen is subject to continual plunder. The value of his property is destroyed; he is but a trustee holding his property subject to the will of an arbitrary power, that can at any moment call for a part or all of it. He had entered into a governmental contract for the purpose of appealing to the strong arm of const.i.tutional law when his rights are a.s.sailed, but finds, instead of the protection he had reason to expect, an irresponsible, arbitrary, power, compelling him to divide his property with railroad corporations, or other private parties, without any consideration; not only without consideration, but the taxes illegally and forcibly taken from him are used to build up and protect a monopoly that is blasting the fruit of his labor, while it is as surely destroying const.i.tutional and republican government. His property is taken from him by what can only be termed a superior, despotic, power, and appropriated without his consent for the benefit of a private corporation.

It is not difficult to distinguish what are proper objects of public support and for which taxes can be levied and collected from those that are not, if we keep in sight the fundamental or organic law. In the formation of a republic no new rights are created. The adoption of a const.i.tution is but declaratory of pre-existing rights and laws; its object is to define and limit the powers of the government, and to guard and protect the rights of the citizens. An eminent jurist, in speaking of the const.i.tution, uses the following clear and forcible language: "It is not the beginning of a community, nor the origin of private rights; it is not the fountain of law, nor the incipient state of government; it is not the cause, but the consequence, of personal and political freedom; it grants no rights to the people, but is the creation of their power, the instrument of their convenience, designed for their protection in the enjoyment of the rights and powers which they possessed before the const.i.tution was made; it is but the frame-work of the political government, and necessarily based upon the pre-existing condition of laws, rights, habits, and modes of thought. There is nothing primitive in it; it is all derived from a known source. It pre-supposes an organized society, law, order, property, personal freedom, a love of political liberty, and enough of cultivated intelligence to know how to guard it against the encroachments of tyranny. A written const.i.tution is, in every instance, a _limitation_ upon the powers of the government in the hands of agents, for there never was a written republican const.i.tution which delegated to functionaries all the _latent powers_ which lie _dormant_ in every nation, and are boundless in extent, and incapable of definitions."

Keeping in mind the distinction existing between measures of a governmental or public nature, and those that are private, and applying the above quoted definition of const.i.tutional power, we cannot find it difficult to determine what are, and what are not, const.i.tutional levies and collection of taxes.

Another thought having weight in connection with the const.i.tutional right to tax the people in aid of railroads, is, that minorities have the right to live, and to own and enjoy property; and the majority has no right to compel the minority to contribute aid to railroad corporations. It has always been conceded that in a republican government the majority should rule, and that their will expressed in a const.i.tutional and legal manner should be the law of the land; yet no one claiming to respect const.i.tutional law will contend that this will of the majority can act outside, or independent of, const.i.tutional restrictions. If this doctrine should obtain, const.i.tutional government is at an end; private rights are destroyed, and the unrestricted will of a bare majority becomes supreme; all the guarantees of the const.i.tution are annulled; life, liberty, and property, are all dependent upon the popular will; const.i.tutional safeguards are destroyed, and the stability of the government is lost. The first step in this direction is fraught with the greatest danger. When the restrictions embodied in the const.i.tution are overridden and disregarded in one instance it affords a precedent for a second step in the same direction. Acquiescence in encroachments upon const.i.tutional restriction by the people, undermine and absolutely destroy republican inst.i.tutions and the government itself. If, for the accomplishment of some private purpose, a community, a state, or the general government disregard the provisions of the const.i.tution, and a.s.sume powers not granted them by that instrument, they arbitrarily act the part of the absolute tyrant. And it makes no difference whether the course pursued, or the measure adopted, proves beneficial to the public, or oppressive. In the fact that it is the usurpation of an unauthorized power, lies the danger. The disregard of the limits fixed by the const.i.tution, in the administration of the government, destroys the only guarantee the people have for the protection of their private rights. Among all the unconst.i.tutional measures which now obtain throughout the country, the affording of aid to railroads, by the government, state and national, has proved the most burdensome to the people. Of this cla.s.s of subsidies, that afforded by local, munic.i.p.al subscription, with or without a vote of the people, has caused the greatest injury. A local or munic.i.p.al government can lawfully impose taxes for the support of its administration, and for contribution to the general comfort and happiness of the people. It can tax for the purpose of laying out and constructing streets and public highways, because these objects are intended to be, and in fact are, open to the use of the whole people; all can use them on equal terms; they are made for the benefit of the public; each citizen has undertaken to contribute his just proportion of the expense of providing for the common, public benefit. But when a county, a city, town, or township, organized for the convenience of the people, and to more effectually protect their rights, attempts to become a stockholder in a railroad corporation, it attempts the exercise of a power it does not and cannot possess under the const.i.tution. Munic.i.p.al corporations were not created for the purposes of private speculation or private gain, but for purely and strictly government purposes. No power is granted (nor can it be implied) to county judges, commissioners, or supervisors, nor to township trustees, or city boards, to take stock in railroad corporations, or to issue bonds of the munic.i.p.ality in payment for such stock, for the reason that such power is not necessary for the administration of these several governments, and does not come within the limit of the powers granted by the people. We know there are many decisions of courts sustaining the position that munic.i.p.al corporations can become stockholders in railroads, and may issue bonds in payment therefor, and that it is within the scope of the powers vested in such corporations to levy taxes for the payment of the bonds so issued; but we have yet to see a decision that is sustained by any provision of the const.i.tution. Many of these decisions admit that the right to subscribe stock is not contained in the const.i.tution, and cannot be justified on const.i.tutional grounds. Of these decisions we shall speak hereafter, and we leave them for the present. We insist that there is no authority in the const.i.tutions, state or national, under which any department of any of the governments can become stockholders in a railroad corporation; nor is the right to take such stock in accordance with the genius or spirit of republican government. The distinction that exists between cities and towns acting under charters, and counties, townships, school and road districts, is marked, and should be kept in mind in considering the nature of the powers possessed by each. County, township, school, and road district organizations are necessary in the administration of the laws of the state. They are at most but _quasi_ corporations; all their powers are derived from, and executed under, the general statutes of the state. They have no special grants or privileges, but are the chosen means for executing state laws. In the distribution of the powers and duties vested in and imposed upon the state governments, the duties of administering the local affairs of the counties, townships, and districts, are delegated to, and imposed upon, these _quasi_ corporations respectively. They can only exercise such powers as are necessary for the accomplishment of the objects of their creation. Their acts are the acts of the state government as applied to their respective localities. They are not clothed with any extraordinary power; nor can the state government delegate to them a power it does not itself possess. When the const.i.tution of a state (as in the case of Iowa and other states) prohibits the state from subscribing stock, loaning its credit, or issuing its bonds to private corporations, we would at once conclude that it could not delegate authority to one of its subordinate departments to do an act forbidden to itself by the const.i.tution. But this is what it has done, if these _quasi_ corporations possess the power to afford aid to railroad or other private enterprises. Munic.i.p.al corporations, such as cities, towns, &c., act under special charters, and in some respects are sovereign. But they are governed and controlled as absolutely by the provisions of their charters, as is the state by its const.i.tution. They can only act within the scope of their delegated powers, and in all doubtful questions the presumption is against their right and in favor of the public, for the reason that only special privileges are conferred upon them. Nor can the legislature confer upon them privileges or powers not possessed by itself under the const.i.tution. It is then absolutely certain that neither counties, cities, nor towns can aid private corporations, or become stockholders in such corporations, unless the power has been delegated to them by the state legislature. It is equally certain that unless the state, in its sovereign capacity, possesses this power, it cannot delegate it to either counties or cities, and that when the const.i.tution of a state forbids the exercise of a power, it includes the legislature, all the departments of the state government, all counties, cities, and towns, and all the people. All these corporations are agencies in the administration of the affairs of the public. Being political in their nature, they are entirely distinct from private corporations organized for the purpose of pecuniary profit. They are established for public purposes exclusively. Judge Dillon, in his valuable work on munic.i.p.al corporations, says that "They can exercise the following powers, and no others: First, those granted in express words. Second, those necessarily or fairly implied, or incident to the powers expressly granted. Third, those essential to the declared objects and purposes of the corporation--not simply convenient, but indispensable." The same author, in treating upon aid to railroads, while admitting that the current of judicial decision is in favor of the principle that in the absence of special const.i.tutional restrictive provisions, it is competent for the legislature to grant this power to munic.i.p.al corporations, says that "Notwithstanding the opinions of so many learned and eminent judges, there remains serious thought as to the soundness of the principle, viewed simply as one of const.i.tutional law. Regarded in the light of its effects, however, there is little hesitation in affirming that this invention to aid private enterprises has proved itself baneful in the last degree," and he adds: "Taxes, it is everywhere agreed, can only be imposed for public objects, and taxation to aid in building the roads of private railway companies is hardly consistent with a proper respect for the inviolability of private property and individual rights. Fraud usually accompanies its exercise, and extravagant indebtedness is the result, and sooner or later the power will be denied either by const.i.tutional provision (as in Pennsylvania, Ohio, and Illinois, it already is) or by legislative enactment."

As we are now dealing with const.i.tutional rights, and not with judicial decisions, we think we have fully shown that public or munic.i.p.al corporations have no authority under the const.i.tution to aid railroads by subscription of stock, or the issue of bonds, and that no authority exists for taxing the people to pay for such stock or bonds; and if it be true that counties and cities are not, and cannot be, clothed with the power to aid in the prosecution of private enterprises, it is equally true that the legislature cannot delegate to the majority of the voters of a county, city, township, or district, the authority to tax the minority for the same purpose. Legislatures cannot create new powers; they can only exercise such as they possess under the const.i.tution. The powers not delegated by the people in the fundamental law, are retained by them. If the people are sovereign, they are the source of power, and all that is not vested in some department of the government remains vested exclusively in the sovereign. If the legislative, executive, or judicial department of the government can act independently of the restrictions and prohibitions contained in the const.i.tution, then the will of the servants of the people is the supreme law, and the sovereign power supposed to reside in the people is destroyed, and const.i.tutional government is at an end. Oppressive taxation imposed without authority, for private and selfish ends, if persisted in, will eventually subvert our republican inst.i.tutions. This, and other unconst.i.tutional legislation, to some of which we have already referred, has caused such a departure from the old landmarks that it is questionable if we now have, in fact, a republican government. Under the rules adopted in legislation, and the pliant decisions of courts, const.i.tutions are made to yield to the demands of combinations, stock-jobbers, and private corporations, until we cease, as a people, to revere and respect these safeguards of our liberty.

CHAPTER XIII.

THE FATAL POLICY OF MORTGAGING CITIES AND COUNTIES FOR THE CONSTRUCTION OF RAILROADS.

The justification for the munificent grants and lavish taxation of the people in aid of railroads has been, that these roads afford the necessary facilities for transportation of freight, promote speedy communication throughout the country, provide ready markets for the products of husbandry, increase the value of property in their vicinity, and a.s.sist in improving and developing the new portions of our country.

While some, or all, of these objects may have been in a degree promoted, the little good thus accomplished has been more than counterbalanced by the evils uniformly attending this species of aid to railroads. What are the evils incident to the general incorporation acts, and local taxation in favor of railroads?

_First._ They take from the individual the natural and const.i.tutional right of owning and controlling his own property, and license the agents of a county, city, or town, to inc.u.mber his property with a debt, without his consent and against his protest.

_Second._ The policy engenders a rivalry between different localities, causing reckless extravagance and the creation of an immense indebtedness by public corporations. This indebtedness not unfrequently r.e.t.a.r.ds the settlement of the locality expected to be benefited, and depreciates instead of enhancing the value of property, for the constant and compulsory drain of the resources of the place in payment of the debt thus created can leave nothing but barrenness behind, the rule being, with but few exceptions, that non-residents hold the evidences of the indebtedness, and as a consequence, payment must be made to distant creditors. If one thinks that this is overdrawing the picture, let him examine the condition of those counties and cities that years ago loaned their credit to railroad companies, or subscribed to their capital stock. Localities less favorably situated, with fewer natural advantages, fewer miles of railroad, and with less productive countries tributary to their growth, have far outstripped their bonded neighbors in wealth, improvements, and the increased value of their property.

Persons who are seeking locations dread and shun these bond-_cursed_ localities, and seek homes elsewhere. New counties far outstrip these old ones in improvement and wealth; new towns and cities spring up and destroy the business of these old bond-ridden ones, and the latter, instead of receiving the antic.i.p.ated and promised increase of wealth, show a paralyzed industry and depreciated property. Localities that fifteen or twenty years ago gave promise of a prosperous future, are less wealthy, less prosperous, and in some instances less populous than when they subscribed stock, and issued bonds to railroads. For years to come, the wealth and industry of these places must suffer from the incubus of enormous taxes levied for the payment of bonds issued under the mistaken idea that great benefit was to result from the indebtedness.

_Third._ It places the pecuniary interests of all of the people of the counties and cities creating this kind of indebtedness in the hands of unscrupulous and relentless non-resident creditors, mainly Wall Street stock-jobbers, who obtained it at large discounts, often at one-fourth its par value, and who own not only the county and city bonds, but control the railroads in aid of which they were issued, and so by constantly collecting from the people the oppressive taxes required to pay the interest and princ.i.p.al of these bonds, withdrawing the amounts so collected from circulation and sending it to the east without leaving, or ever having paid any equivalent, they are constantly impoverishing the people with the very means which were to have been sources of prosperity.

_Fourth._ The aid granted to railroad companies has enabled them to get control of the commerce of the country. As a general rule, all of the railroads receiving subsidies in land, government, state, county, and city bonds, and large gifts in local taxes, have been owned or controlled by the same cla.s.s of men, and not a few of the roads by the same ring or combination. Then speculators have visited all parts of the country, claiming to be men of "large hearts" who desire to benefit mankind. They talk of their large experience in railroad matters; of the great benefit the particular locality will derive from the construction of a certain line of road; of the great profit to be returned in the shape of dividends if local aid is voted, and after having by fraud, falsehood, and willful deception induced the people to move in the matter, they then turn their attention to state legislatures and to congress for more aid, and so perfect is their combination, that in almost all their attempts they are successful. Among these rings and combinations are found men to fill every department in the scheme for plundering the people. Some of them become directors in the corporations to which the aid is voted and granted, and they thus get control of the donations, grants, and bonds. Some members of the ring become agents to sell the bonds of the corporation, as well as any others received from the general or local government, and to mortgage the lands granted to the companies. Still another division of the ring become the purchasers of the bonds at their _market_ value. They all unite in this way and mortgage their roads, rights, and franchises, and construct the road, taking care that when the road is completed, the liabilities resting upon it shall be sufficient to represent its entire value. By this means they become the creditors of the counties and towns through which the road runs; they own and control the road; and the combination being the same substantially throughout the country, owning and controlling all the roads, holding and using the subsidy bonds, fixing the rates of freight and pa.s.senger transportation, they control the whole country and hold the best interests of the people subject to their will. In the prosecution of their ends they bribe local officers, state legislatures, and members of congress. To secure the election of their friends to congress, large gifts are made. In one instance one of these raiders upon the rights of the people bestowed upon a prospective United States senator, $10,000, for the purpose, as he stated, of securing friendly legislation for a certain railroad company. The pirates and robbers who prey upon mankind are not more dishonest or unscrupulous than are these rings who make the people their prey. They differ only in the degree of punishment received; the former being executed or sent to prison, while, of the latter, many are elected to congress or to other high and responsible offices, or they are appointed to high places of trust and profit in the government. If the reader will look through the _Railroad Manual_, he will find a long list of names of men, prominent now from the recent raids upon the people and public treasury, who have been engaged in the same business for at least twenty years; men whose names are now as familiar to the western people as "household words," who, like birds of prey, have flitted from one part of the country to another until their blighting influence is felt in the whole land. We are referring of course to the men who have followed the business of "organizing" railroad companies for the purpose of procuring aid in lands, bonds, and taxes, and who have devoted their energies to this cla.s.s of railroads, and not to those capitalists who, with their own money and credit, have constructed their roads and pursued a legitimate business. Prominent among the men who have devoted their time and talents to railroad enterprises, will be found the names of Thomas C.

Durant, John A. Dix, Henry Farnham and others, whose memory will remain fresh with western men, because of their diligence in procuring local aid to railroad companies from counties and cities fifteen or twenty years ago, and who, after obtaining such aid, by some means became the owners of city and county bonds, to a large amount, and then to prompt the people to greater diligence in the payment of taxes, levied to liquidate these bonds, applied to the president of the United States for troops to aid in their collection. Slightly varied, the same organization of men which inaugurated the system of constructing railroads through land grants, donations, and subsidies, is still in the same business. With their headquarters in New York and Boston; with Wall Street as the princ.i.p.al depot for all railroad stocks and bonds, as well as the bonds of the United States, and of such states, counties, and cities as have been duped by them, these _raiders_ upon the treasury and resources of a people have taken the absolute control of the railroad interest of the country, and "run it" for their own exclusive benefit, to the injury of the country and the absolute destruction of the agricultural interests of the great west. By having placed in their hands the large grants of land and subsidies voted to railroad corporations, they acquired the means of controlling the princ.i.p.al roads throughout the country. Roads in Texas, Louisiana, Alabama, Arkansas, Kansas, Nebraska, Iowa, and in other states and territories, are owned and managed in the exclusive interest of capitalists in the eastern cities who have no interest in the communities where these roads are located, save to realize large dividends by extortions and oppressions.

All of the roads receiving large grants and subsidies, whether from the general or state government, or as local aid, are in the hands of this cla.s.s of men, with their fiscal and transfer agencies in the cities above named.

This statement has its ill.u.s.tration in the Kansas City, St. Joseph, & Council Bluffs company, which has five directors in Boston, two in New York, one in Michigan, and one in Missouri--Fiscal agency and transfer office, Boston. Peoria & Bureau Valley company has its princ.i.p.al office in New York; Chicago & Northwestern--Financial and transfer office, Wall street, New York; Dubuque & Southwestern--all of the directors, save one, and its financial agency, in New York; Atchinson, Topeka, & Santa Fe company--fiscal agency and transfer office, Boston; Galveston, Harrisburg, & San Antonio company--Fiscal and transfer agency, Boston; Leavenworth, Lawrence, & Galveston company--Fiscal agency and transfer office, Boston; Kansas City & Sante Fe company--Fiscal and transfer agency, Boston; Cedar Falls & Minnesota company--All of the directors reside in New York; Iowa Falls & Sioux City company--Of the directors, John B. Alley, Oliver Ames, P. S. Crowell, and W. T. Gilden, reside in Ma.s.sachusetts, J. I. Blair in New Jersey, and W. B. Allison and Horace Williams in Iowa--Fiscal and transfer agency, Boston; Colorado Central company--Of the directors, Oliver Ames, Frederick L. Ames, and four others, reside in Ma.s.sachusetts, and the fiscal agency is in Boston, and the princ.i.p.al office in California; Cedar Rapids and Missouri River company--John B. Alley, Oliver Ames, and nine other of the directors are in the eastern states, and James F. Wilson, and three others, are of Iowa; Northern Pacific company--Princ.i.p.al office, New York; Hannibal & St. Joseph company--Fiscal and transfer office, New York; Burlington & Missouri River company--Fiscal and transfer office, New York; Union Pacific (central branch)--All but two of the directors in Washington City and the east, and princ.i.p.al office in New York; Union Pacific--Among the directors are Oliver Ames, Oakes Ames, and eleven others in New York and Ma.s.sachusetts, one in Illinois, and G. M. Dodge in Iowa--Fiscal agency, Boston; transfer offices, Boston and New York; Fremont, Elkhorn, & Missouri Valley company--John B. Alley, of Boston, John I. and D. C. Blair, of New Jersey, C. G. Mitch.e.l.l, of New York, and three Cedar Rapids men, directors (this is a part of the Sioux City & Pacific road); Winona & St. Peters company--Fiscal and transfer office, Wall street, New York; Burlington & Missouri River (in Nebraska)--Princ.i.p.al office, Boston; Sioux City & Pacific company--Directors: Oakes Ames, and six others, in the east, and G. M.

Dodge, of Iowa--Fiscal and transfer office, Boston; Missouri River, Fort Scott, & Gulf company--Fiscal and Transfer office, Boston; Central Pacific company--Fiscal offices, San Francisco and New York; [A]New Orleans, Mobile, & Texas company--Oakes Ames and twelve other directors, resident in New York and the east, and two in New Orleans; princ.i.p.al office, New York; Houston & Texas company--Fiscal agency and transfer office, New York; Chicago & Northern Pacific Air Line company--Princ.i.p.al office, New York; Elizabeth, Lexington, & Big Sandy company--Princ.i.p.al office, New York; Dubuque & Sioux City company--General offices, Dubuque, Iowa, and New York. [B]Texas and Pacific company--Princ.i.p.al office, New York.

[A] NOTE.--This company has a donation from the state of Louisiana of $3,000,000; a subscription of stock by the same state to the amount of $2,500,000; and the same state has indorsed the company's bonds to the amount of $12,500 per mile. This company has also received other large sums in munic.i.p.al aid and other donations.

[B] NOTE.--This company has a grant of 13,440,000 acres of land, and other aid.

We might continue the above list indefinitely, but think we have extended it sufficiently to sustain our charges. If the reader is desirous of learning who compose these various companies, the Railroad Manual will disclose the same set of leading men, divided into three or four princ.i.p.al squads or companies, who raid from one end of the country to the other; control all the roads that have received aid, and at once place them under the direction of the central railroad combinations in Boston and New York; diverting the grants and donations supposed to have been made for the benefit and in the interest of the people, to their own selfish purposes; making the aid thus granted a means of oppression to the people, rather than an agency for their relief.

CHAPTER XIV.

THE IMPOVERISHING TRANSPORTATION SYSTEM.--THE WAREHOUSE CONSPIRACY.

One of the great evils resulting from this bonded subsidy system of building railroads, is that it gives to those who manage them the control of the whole carrying trade of the country, and enables them to impoverish the great agricultural population of the west and south. The wealth of the United States lies in its agricultural products. The greater portion of the people are engaged in agricultural pursuits. Good markets and cheap freights are of the utmost importance to agriculture.

However abundant may be the crops, unless a market can be reached without a sacrifice of one-half the product in the shape of freights and commissions the husbandman will be impoverished. If the farmers, the tillers of the soil, do not receive a fair remuneration for their work, all other industrial interests will suffer with them; anything that tends to deprive the producer of the value of his product, tends to the impoverishment of the whole country. Any system of laws, regulations, by government, or combinations of men, or corporations, that are oppressive to the producer, oppress the whole people. It matters not whether these oppressions are in taxes, tariffs, or charges for transportation of the farm product; no matter in what shape it comes, the result is the same.

The great oppression now being practiced upon the people is in the enormous charges made by railroad companies for carrying freight. The charters, grants, subsidies, and privileges given to these companies have enabled them to organize a powerful monopoly, through which they demand and receive for transporting meats, grains, and other farm products from the west to the eastern markets, at least one-half the value thereof. The charges of these monopolies are arbitrary, and often fixed by the value of the different kinds of grain carried by them. For instance, they charge one-third more per ton for carrying wheat from the west to the east than for corn and oats; it being worth more in market, they ask a larger dividend from it. It can be carried as cheaply as oats or corn, but, because of its value, will bear a greater charge, and still leave one-half of its value for the producer. There is no good reason why a railroad company should charge thirty cents per hundred for carrying wheat from Muscatine (Iowa) to Chicago, when it charges but twenty cents for carrying oats and corn over the same road, the same distance. Yet such is the fact. Those who are in the interest of these monopolists talk about cheap freights; they argue that railroads can transport freights much cheaper than it can be done over ordinary highways. Let us turn again to the Railroad Manual, and see how the matter is treated. Says the author: "The cost of transporting Indian corn and wheat over ordinary highways will equal twenty cents per ton per mile. At such a rate, the former will bear transportation only 125 miles to a market where its value is equal to seventy-five cents per bushel; the latter only 250 miles when its value is $1.50 per bushel.

With such highways only, our most valuable cereals will have no commercial value outside of a circle having a _radii_ of 125 miles and 250 miles, respectively. Upon a railroad the cost of transportation equals one and one-fourth cents per ton per mile. With such a work, consequently, the circle within which corn and wheat, at the price named, will have a marketable value, will be drawn upon a _radii_ of 1,600 and 3,200 miles respectively. The arc of a circle with a _radius_ of 125 miles is 49,087 square miles; that of a circle drawn upon a _radius_ of 1,600 miles is about 160 times greater, or 8,042,406 square miles. Such a difference, enormous as it is, only measures the value of the new agencies employed in transportation, and the results achieved compared with the old."

Here the fact is acknowledged that freights can be transported over railroads for one and one-fourth cents per ton per mile. At this rate, a ton of freight transported from Muscatine, Iowa, to Chicago, would cost less than $2.50. This is what the advocates of aid to railroad companies publish to the world as a fact, and from it deduce the argument in favor of increased facilities for their construction, with greater privileges to be granted to the companies constructing them. The same rate of charges for transportation from the state of Iowa to the city of New York would not amount to more than from twelve to fifteen dollars per ton, and would allow the producer a fair price for his product. But while it is admitted that the above stated amount will compensate the railroads for transporting freights, the amounts actually charged range from twenty-five to fifty dollars per ton from Iowa to Chicago, with a proportionate increase to New York and other eastern cities. Where commerce is open to compet.i.tion, a fair remunerative price for carrying freights is all that is demanded or paid. If the railroads of the country were not owned and controlled by the same combinations; if they in any degree answered the ends antic.i.p.ated by the public when their charters were granted and privileges were bestowed upon the companies constructing them, these excessive charges would not be made or paid.

We have attempted to show that all the railroads in the country are owned, controlled, and operated in the interest of eastern capitalists, with their headquarters in New York or Boston; and that the only interest these capitalists have in the producer is to extort from him all they can get, even at the risk of ruining the whole country. These monopolists, taking advantage of the great privileges granted them, and of the necessities of the agricultural and producing cla.s.ses, have combined, and defying all compet.i.tion, as well as the legal restrictions sought to be placed upon them, are now, and for some time past have been, charging such unjust rates for transportation as to render the farm products of the west of little or no value. Corn, worth from sixty to seventy cents in New York, is worth only from fifteen to twenty-five in Iowa--two-thirds of its eastern value being absorbed in charges for transportation, storage, &c. Wheat, worth from $1.50 to $2.00 in New York, is worth but from ninety cents to $1.25 in Iowa, the difference being absorbed in charges for transportation, storage, commissions, and in pa.s.sing it through elevators. It will be seen that these monopolists who have combined for that purpose are systematically robbing the farmer of about one-half of his crop. After he has labored diligently during the season, and harvested his crops and prepared them for market, because of the privileges granted to these monopolists he must divide with them, giving them one-half, or let it go to waste, and suffer his family to want for the necessaries of life. The combination against him is so perfect he is without remedy. All other means of transportation have been superseded by railroads, and he is powerless to resist. The banditti who raid upon the country, and levy tribute upon the inhabitants by force, are no greater robbers or oppressors than these monopolists. Indeed the wrongs practiced by the former are less to be dreaded than those practiced by the latter. The people, supported by natural and common law, as well as by statutes, can rid the country of the bandit; but the monopolist has become so powerful that he defies the people, moulds the statutes and decisions of courts to suit himself, and compels the whole country to submit to his extortions. No one would wish those engaged in transporting freights from the west to the east to lose money in the business. On the contrary, the people desire that railroad carriers should receive a fair and liberal compensation in their business, and upon the capital invested. But when it costs but $30,000 per mile to construct and stock the railroads, and when for the purpose of illegitimate gain the persons owning and controlling them water the stock, and add to the actual cost fict.i.tious and imaginary items, that it may appear that these roads have cost fifty or sixty thousand dollars per mile, then issue to themselves or their agents bonds to meet these fict.i.tious amounts, and annually pay to themselves the interest on these bonds, and to increase the value of these bonds declare dividends upon the whole stock, it will readily be seen why the producer does complain of the high rates now charged for transporting his products to market.

These companies make it impossible to do an honest business and show dividends, or ever pay the interest upon the bonds they have issued. If it be true that the charges for freights cannot be reduced on railroads, two things are demonstrated: First, that the published statements of the costs of carrying upon railroads are untrue; and second, that railroads have entirely failed to supply the necessities of the country. If we are to depend upon railroads to carry the agricultural products of the country to the seaboard, all hope of competing with other countries in European markets is at an end. If the cost of carrying a bushel of wheat from Iowa to New York is to remain as at present, one of two alternatives is presented. Either the producer must sell at ruinous rates, or a home market must be found for his crop; for the large amount charged for carrying it to the coast, added to the ocean freight, destroys all hope of a foreign market, save in times of failure of crops elsewhere. We now complain of our lack of shipping upon the ocean, and of the fact that the balance of trade is against us. With our large annual product of cereals, meats, cotton, and yield of precious metals, the balance of trade is in favor of England; and American shipping, once the equal of England's, is now cla.s.sed with only third and fourth rate nations. One of the chief causes of this deplorable state of affairs is the absolute control obtained by these petted monopolists over our inland commerce, and their tyrannical extortions in rates for transportation.

We have spoken of the rates of charges from the west to the east. We need not go into details in this matter, for every farmer knows from experience what proportion of his crop railroads demand as their share.

If he does not, let him look at his crib of corn, worth in New York from seventy-five cents to one dollar per bushel, and in Iowa from fifteen to twenty cents. Three-fourths of his crop is what these corporations, _these great blessings to the country_, as they claim to be, demand of him for carrying his one-fourth to market, provided he will, at his own proper cost, load his whole crop at the place of shipment, and unload it when it reaches its destination; or, what is worse for him, permit it to go into the company's storehouse. While this state of things lasts, it is not a question as to how much the producer is increasing in wealth, but how long will he be able to pay his taxes and keep his family from starving? If he is in debt, he is without hope of paying. No king, emperor, or despotic sultan, would dare to extort from his subjects three-fourths of the productions of their toil; yet this oligarchy, composed of men who, from long practice, have come to look upon the people as their va.s.sals, and the fruits of their labor as lawful spoils, demand and receive as their toll from one-half to three-fourths of the entire farm products of the country. The consolidation is now so perfect, that these railroad kings can dictate to the people how much they shall receive for their products, and how much they must pay for transporting it to market. Any one of the railroad kings of New York, by a telegraphic dispatch to the west, can depress the price of grain one, five, or ten, cents per bushel. The order is made at headquarters, and in one hour from the time it is made the farmer in the west who is about to sell his one thousand dollars' worth of wheat must take nine hundred dollars for it, because this railroad king has sent word west that he must have another one hundred dollars added to the already enormous charges for transportation. Unless this combination can be broken up and destroyed, and they who own, manage, and control the carrying trade of the country forced to act honestly, there is no prosperous future for the laboring and producing portion of the people; they must remain bond-servants and va.s.sals of this railroad oligarchy now controlling the country.

Another evil resulting from this railroad system, directly affecting the producer, is the elevator and warehouse system, put in operation, supported by, and prosecuted in the interest of, this monopoly. As a necessity in shipping and handling grain and other farm products, there must be at shipping points, as well as at the great grain depots, warehouses, storehouses, and elevators. If these were owned and controlled by individuals, unrestricted by railroad companies, they would be of great benefit to the producer; but such is not the fact. Go to any way-station on the roads, or to any of the more prominent points, as well as to the great grain depots, and you will find an arbitrary and oppressive rule adopted, which demands of the producer a further dividend from his products. At unimportant points and way-stations, the warehouses and elevators are built upon the company's depot grounds, and, if not owned by the company, are built under an agreement that there shall be a division of the receipts; and in order to make it mutual, the elevator company, or warehouseman is to charge certain rates on all grain pa.s.sing through their hands; and the railroad company is to receive on board their cars no grain that has not paid its duty to the elevator or storehouse. Whether it is stored or not, whether it pa.s.ses through the elevator or not, this arbitrary toll or levy must be paid before it can be shipped. If the farmer deliver it directly on board the cars of the company, he must pay these charges the same as though he had delivered it to the warehouseman. He cannot avoid this extortion, for the only possible way he has to get his grain to market is to ship it over the road, and this he cannot do unless he pays this charge. But by far the greatest imposition is practiced at the great grain depots at Chicago, New York, and other cities. The immense daily receipts at these great depots demand immense warehouse and elevator facilities. Large numbers of elevators and warehouses were provided and used--formerly by individuals; and while warehous.e.m.e.n dealt individually with the public, there was but little abuse; compet.i.tion was sufficient to insure reasonable charges. The owner of grain, upon its arrival at its destination, could avail himself of any compet.i.tion among warehous.e.m.e.n, and select such as his judgment approved or his interest prompted.

But a different rule now obtains. These railroads do not stop half way.

Their combination for carrying the product of the country is perfect; but another combination will afford them an opportunity for extorting from the producer an additional portion of his crop in the shape of storage. To effect this object, the different warehouse companies in the princ.i.p.al grain marts have consolidated or "pooled" all their interests, and in combination with the railroad companies have pursued, and are pursuing, a course of extortion which is oppressive upon the producer.

When his grain reaches its destination, it must go into a warehouse; he is in a worse situation now than when he shipped it; then he had the option to keep it, or submit to the first levy in favor of the warehouseman; but he is now entirely helpless in the hands of the _ring_ formed to rob him. Without asking his consent his grain is taken to such warehouse as the railroad agent directs; it is seized by the warehous.e.m.e.n and stored at such ruinous rates as to compel him to sell at once, or have the small portion of the crop which he sowed and harvested, and which thus far the railroad combination has graciously allowed him to retain, absorbed by elevator and warehouse charges. He is obliged to use all these agencies or let the crop go to waste on his hands; and these agencies are all owned and controlled by this vast, this gigantic corporate power, created, enriched, and protected by state and national legislation, and constantly guarded by the decisions of the courts, state and national. Indeed, the old despotic maxim, "The king can do no wrong," that his acts cannot be questioned, seems to have descended to these monopolies. They are protected by government, and, as the case now stands, _their servants, the people_, must be content, because all hope of relief from efficient action on the part of either the legislative or judicial departments of the government is denied them.

CHAPTER XV.

A NEW AND FALSE PRINCIPLE IN HYDRAULICS--WATERED STOCK--ITS UNLAWFUL PROFITS THE SOURCE OF EXTORTIONATE TARIFFS--THE "FAST DISPATCH" SWINDLE.

We have attempted to show some of the oppressions of the present railroad system upon the agricultural interests of the country, and, at the close of our last chapter, were treating of freights, warehouse charges, &c. Closely connected with these latter charges is another abusive and fraudulent practice, which threatens not only to still further oppress the people, but also to more closely combine the power now so rapidly and surely destroying our republic. I refer to what is known as "Dispatch Companies." To fully understand the object and effect of these companies it will be necessary to look a little further into the management of railroads, and the methods adopted in their balance sheets for showing the cost of their construction, the amounts of paid-up capital, and their total indebtedness. These balance sheets do not present the truth in any instance, and have not that purpose, being only an exhibit that will apparently justify the many extortions and deceptions practiced by these corporations. The actual cost of constructing and stocking the roads is not given; instead, we have the cost as represented by the stock and bonds issued and _watered_. For a clear understanding of this book-keeping, let us examine the cost of some of the roads as the same is given to the public, and compare it with the actual cost as shown by other evidence. The "Central Pacific"