in a very large ratio and still leave more profit for the persons who control transportation facilities than you can in any other branch of business.

The CHAIRMAN. The original grant to the New York Central Railroad Company was made under a certain state of society which did not then possess the present great improvements in machinery. Mr. Vanderbilt was not the constructor of that road. He simply came in and bought it, just as you and I might have bought a piece of real estate. These improvements in machinery came along, and Mr. Vanderbilt took advantage of them. The result was a very large profit to him; because it is notorious that the road has been more profitable in his hands than it was in the hands of the original owners. He has used that profit and has cheapened the cost of transportation to the community. I can transport goods now on Mr. Vanderbilt's road for less than onehalf of what I had to pay five years ago, and at less than one-fourth of the rate which I had to pay fifteen years ago. Mr. Vanderbilt has made money by these improvements just as anybody might have made money, by buying a piece of land near to which some public improvement has been unexpectedly made. In that case the man bought his piece of property under one set of circumstances, and he sells it under another set of circumstances, and thus makes a large profit. Mr. Vanderbilt in that sense has done no more than any private individual would do. While he does hold a fiduciary capacity to the community and is exercising a public franchise, the question is, whether he is using that franchise contrary to the organic law or contrary to the interests of the community. If he is using it contrary to the law, then it is the fault of every citizen who tolerates it. If he is using it contrary to the interests of the community, then it is necessary to show that the profits produced by the progress of things have not been fairly divided with the community and that he has not been performing the labor as cheaply as he ought to be performing it. As a matter of fact there has been competition, a steady competition, between railroads. That competition has been so great as practically to have made all the other lines unprofitable except Mr. Vanderbilt's, his profit being in the peculiar local position of his railroad, which he had the sense to see, just as you had the sense to see the value of your location when yon put up your great establishment. Is Mr. Vanderbilt to be blamed or punished for that foresight?

Mr. THURBER. Did you allude more especially to the through rates or to the local rates of railroad transportation?

The CHAIRMAN. I alluded to all classes of rates. His local rates were largely reduced by reason of other roads being established which competed with him; for instance, that unhappy Midland railroad, which has been unable to more than live itself, unable to earn a dollar for anybody. That road still is a check upon Mr. Vanderbilt. And so with his through rates. His through rates have been kept down by the opposition of the Pennsylvania line, the Baltimore and Ohio line, and the Erie line.

Mr. THURBER. These remarks apply more fairly to the through rates than to the local rates. Local rates have not been so largely reduced as one-half or one-fourth. The CHAIRMAN. I think they have; but the point is this: You think this corporation has got rights which it is abusing?

Mr. THURBER. Yes; I think it is the abuse, and not the exercise, of rights which the community has to complain of. You speak of Mr. Vanderbilt having acquired this property below its value. One of the excuses given for the watering of the stock has been that the property was worth more than it was capitalized for.

The CHAIRMAN. Suppose you should buy a cargo of tea to-day, and that, suddenly, owing to some unexpected event in China, it went up 100 per cent., you would water it-so to speak-that is, you would double the price of it in your shop?

Mr. THURBER. Are you not asking that question on the same principle as that in which you compared an ordinary transaction in merchandise with a railroad transaction Now I claim that a railroad is entitled to a liberal return on the capital invested. I think that the maximum rate established in Massachusetts, and theoretically, I believe, in New York, of 10 per cent. is a fair one. I did not think it fair for Mr. Vanderbilt, in 1867 or 1868, to add to the capital stock of his road $47,000,000 to be distributed among the stockholders; and the dividends on which additional stock paid within the last ten years amount, with compound interest, to $52,000,000.

The CHAIRMAN. The amount stated yesterday as the amount of the watered stock was twenty-two millions.

Mr. THURBER. I think I can send you the history of the stock-watering of that road, which shows that in two years, 1867 and 1868, about forty-seven millions of watered stock was put into the New York Central and Hudson River Railroad.

The CHAIRMAN. If you saw fit to mark up your goods would it be anybody's concern but your own?

Mr. THURBER. In the first place, the reason that Mr. Vanderbilt gave for increasing the capital stock of his road was that the value of the road was increased; that its mileage had been increased; that its depots and rolling-stock had been increased. How had they been increased? They had been increased by the use of the surplus

earnings. And I claim that when a road is improved and made safe and convenient for the public by the use of its surplus earnings (earnings taken from the people), the rates should be reduced to a point which would only yield a reasonable return on the capital actually invested, instead of the capital being increased to a point to absorb all the profits.

The CHAIRMAN. Yesterday I was taking the other side of the question with Mr. Adams; I mean I was taking the side that you are now taking. To-day I am taking Mr. Adams's side. Mr. Adams's side was that Mr. Vanderbilt would have had no inducement to enlarge the facilities of his railroad for business under that state of things; that he would not have laid down four tracks; that there was plenty of local business to pay the 8 per cent. to which his profits were limited; that the community had gained more by this enlargement and development of the road in the reduction of the rates of transportation than it would have gained if the stock had not been watered; that the community had the benefit of it; that the State of New York had the benefit of it in one sense; and that we all had gained by it. Whereas, if your view were taken, that Mr. Vanderbilt had to limit himself to the dividend allowed by law, he would not have done anything to develop the road, but would have sat down and said, "This is my property; I am satisfied with it as it is."

Mr. THURBER. I think that if Mr. Adams should say that the transportation facilities were unsatisfactory, and that it was very desirable for the city of New York and for the State of New York that they should be increased, there might be a certain amount of truth in what he says. But the general opinion among railroad men is that the addition of this watered stock to the capital of the New York Central Railroad Company has not conferred any additional benefits on the community; that the doubling of the tracks has been entirely in excess of the wants of traffic; that the new tracks have not been employed to any great extent; and that, instead of its being a beneficial move of Mr. Vanderbilt's in the way of increasing cheap facilities to the public, it arose from his desire to increase his capital stock so that he could pocket this fifty-six million dollars which the dividends on the watered stock have amounted to, with compound interest, in the short time of ten years.

The CHAIRMAN. Grant that that was his motive. The question is: Has the community suffered by it? Has not the community gotten more facilities than it had before, and at lower rates than before?

Mr. THURBER. Suppose that Mr. Vanderbilt, instead of watering his stock, had reduced transportation rates to a point that would pay him 10 per cent. on his then existing capital, would not that have been a benefit to the community to a much greater extent?

The CHAIRMAN. No doubt, and the benefits to the community would be enormous if Mr. Vanderbilt was content to take 24 per cent. instead of 10 per cent. But Mr. Vanderbilt was the owner of this property, and he said: "I propose to put that property in my pocket. All that the public has a right to ask is that I do its business and do it as cheap as anybody else will."

Mr. THURBER. That may be true. But in the first place I claim that railroad managers do exercise, to a certain extent, a public trust; that they have no right to fix rates at points which will yield them a large surplus revenue, which surplus they invest in improvements of their road, and then issue stock to represent those improvements. It is just the same as if I had the power to take from the public a certain amount of capital and then afterwards to charge the public with interest on that capital. I claim that it is only a question of degree. A merchant may be as selfish as a railroad manager, and under the same circumstances might act in the same way; but I claim that the public is entitled to certain protection from the workings of human nature, which, in the one case, can be made to operate to their detriment, and in the other case cannot be made to work to their detriment, owing to the fact that the law of supply and demand prevents their doing so.

The CHAIRMAN. We are sitting here representing the nation. Assuming that the advantages of Mr. Vanderbilt's road are so great that he can carry goods cheaper than any other railroad in the country between the West and New York, and suppose that you require him to do that sort of thing, and that it is done, must not the inevitable effect of it be to ruin the value of all the other property that is engaged in transportation between the East and the West? If he can do the work cheaper than they can, and is compelled to do it cheaper, and to give the public the benefit of it instead of putting it in the pockets of the stockholders, would not the other roads be deprived of their business and ruined?

Mr. THURBER. Not necessarily. The State of New York, of course, yields a very large local profit to Mr. Vanderbilt. He makes most of his profits from local traffic. The rates for local traffic are entirely out of proportion to those for through traffic That is generally admitted by railroad men. Now I claim that there should be a fair proportion existing between them; and I do not think that a fair proportion exists at the present time. I think that the people of the State of New York ought to have the benefit of those local rates to a just degree, from the fact that they furnish an enor.

mous traffic to this railroad, which no other road in any other part of the United States bas. I think that a road in a sparsely settled country would be entitled to charge rates of transportation that would yield it 10 per cent., but I think that the people of the State of New York should have the benefit of their furnishing a largo traffic to the New York Central, and not have the benefit of it to go into the pockets of Mr. Vanderbilt and his stockholders.

The CHAIRMAN. When I undertook the investigation of this question, I was met in this way: "You ask us why we do not put down local rates to through rates? Our answer is that we would lose money by it; that it would simply ruin us." (And the evidence is conclusive that they cannot do local and through business at the same rates.) I said, "Well, why not give up the through business and devote yourself to the local business and do that as cheaply as you can?" The answer was, "If we throw up the through business we cannot do the local business at as low rates as we now do it, because the low rates are in a measure due to the volume of trade, and we now get such a volume as enables us to keep our four tracks engaged at a profit, and enables us to do the local business at lower rates than if we had not the through business." And investigation led me to the conclusion that that was correct.

Mr. THURBER. I think that there is great truth in that argument, but I think that whenever strong points can be made in favor of the railroads, they have the ablest men in the United States to make those strong points and to bring them out, whereas the public are at a disadvantage, there being but few people who have the time or the opportunity or the interest to take up the question in the popular interest.

The CHAIRMAN. I took it up five or six years ago as a member of the chamber of commerce, and I confess that I never found an answer to this suggestion of the railroad company, and I do not find an answer to it now. In other words, if the through business were taken from the Central and Erie roads, they would have to charge higher rates for the local business in order to keep their roads running; and, seeing that state of things, I cannot see that we are justified in demanding that the local rates and the other rates shall be uniform. And when we abandon the principle of uniform rates, we must leave it to the judgment of somebody as to what the rates shall be, and it has been left to the managers of the railroads and to the restraining influence of general competition.

Mr. THURBER. The fault I find is this: that there has been no investigation of the facts. The cost of transportation is a thing unknown to the public; it is unknown perhaps to a great many railroad managers. Mr. Adams frankly states that it is an unknown quantity. Now I venture to assert here that Mr. Adams knows more to-day about the cost of transportation in the State of Massachusetts than he did before the Massachusetts railroad commission was established. What I claim is that this is a subject for investigation; that there is somewhere a golden mean-a basis that will come near to being substantially just to both the public and the railroads. I have no inclination to treat a railroad company any differently than I would be treated myself, provided our duties were the same; but I think that they are slightly different. I claim that we need light on this subject. We have been trying to get it for four years and have not been able to get it. Every attempt to get it has been smothered in the legislature. The merchants of New York, through their various associations, asked last winter an investigation of certain matters by the legislature. The question was taken up by the chamber of commerce and by other commercial organizations and by the municipal authorities and the mayor; but the legislature refused (through railroad influence) to give us the common right of investigation of grievances. And I say: If there is nothing wrong, why does railroad influence stifle investigation? If they are all right, why do they not give us investigation? It is to their advantage to let the light shine. If there is not something wrong, they ought not to shut out the light. I claim that the interest of the people is so great in this question that there ought to be a supervision of it in the interest of the public. The banking interest has had a certain supervision placed over it (not a close enough one), and here is an interest which, in its magnitude, overshadows the whole of them, and which has absolutely no supervision. The tendency seems in that direction; but the railroads fight it off. In the Railroad Gazette of last February was published a circular communication headed "Anti-supervision." It was sent to Mr. W. P. Shinn, one of the best railroad experts in this country, and he took up the question and sent a communication to the Railroad Gazette, giving his views as to why it was in the interest of the railroads and of the public that the light should be admitted. But, in every instance where it has been asked, it has been evaded by the railroad companies. I claim that we ought to have a competent national board of railroad commissioners with an auxiliary board in each State. I claim that there is no phase of taxation to-day so important, and bearing so hardly upon the industries of the people, as that of the railroads. Look at the exhibit of what the railroads in the State of New of York receive annually; and take it, if you choose, that they are only charging one-fourth more than they ought to charge, still that is double what the entire expenses of the State government are. the investigation of this question of transportation, the further we have got into it

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the more and more convinced we are of the great necessity of letting the light shine upon it. The great revenue of the railroad managers comes from outside auxiliary organizations, organized (as the chamber of commerce expressed it) and designed to deplete the revenues of the railroad companies before they reach their stockholders. I have no enmity to Mr. Vanderbilt, but it has been asserted over and over again that the Albany bridges are not a component part of the New York Central road; that every ton of freight that passes over those bridges pays fifty cents to the bridge company and every passenger ten cents; and that the revenue from those two bridges amounts annually to more than their entire cost. A resolution was introduced in the legislature last session asking a statement of its receipts from the bridge company for a past term of years; and that resolution was smothered. It is now resting in the hands of the attorney-general. A member of the legislature from the city of New York had the greatest difficulty in getting it to a vote. Take another instance. Take the Merchants' Despatch fast freight line, the only non-co-operative fast freight line existing at the present time. I mean by non-co-operative what is not made up of cars owned by the different roads, according to their mileage. These cars are not owned by the New York Central Railroad Company, or, if they are owned by it, they are rented to the little ring that runs them. That I suppose to be one of the institutions that bring down the revenues of the New York Central so that it only pays 8 per cent. to the stockholders. So, again, take the Wagner Drawing-Room Car Company, the stock-yard companies, the lighterage companies, and the elevator companies, and all of them have this bearing. There are a dozen of branch lines (like this Spuyten Duyvil road) that have been put in at three times their cost and leased to the New York Central organization at a permanent rate of 8 per cent. on a perpetual lease. I claim that all these are abuses, and that they go to make up a case to show that the public have a legitimate cause for complaint. I say that these things should be investigated, that light should be thrown upon them; and if the railroad company has nothing to conceal, public opinion will see that it shall not be unfairly treated. I do not believe in any granger movements against railroads. I think that some of the granger movements in the West have been unwise and unfair. At the same time there was a substantial basis of complaint for these men, and public opinion has, to a great extent, remedied much of the evil.

The CHAIRMAN. Then you have come to the same conclusion that Mr. Adams came to yesterday: that it would be very wise to have a national supervision of the railroads?

Mr. THURBER. Yes. Mr. Adams believes that there should be a consolidation of railroad interests in order to regulate and make more uniform the transportation of the country, and he believes that that is one solution of it. Uniformity and stability of charges of transportation are very desirable things, but, in my opinion, they can be obtained at too high a cost; and I think that too high a cost would be the legalizing of the present inflated basis of our transportation system. I think that if you were to legalize combinations between the railroad companies on their present basis, it would require the establishment of rates of transportation at higher points than they ought to be, and higher than what is fair and right. I am in favor of waiting a while before we do that, so as to let railroad business down to the same hard-pan basis on which all other kinds of business are at present. I believe that we should establish a uniform basis which should be binding on the community; but I think that rates ought not to be established upon a basis that will yield 8 per cent. on the present capitalization of the New York Central Railroad Company, taken in connection with all of the other organizations which I have mentioned, and which are designed to deplete its revennes. I think it would be a public misfortune to do that. I have no doubt that the general tendency of our transportation system is toward consolidation. We can see it typified in the recent developments of Mr. Vanderbilt's road in acquiring Western connections and constantly extending them. I think it very probable that the future will see this country as it were portioned out between a few great organizations that will be almost supreme within their respective territories, the same as now exists in France and to a considerable extent in England. I should not like to see the apportionment made too quickly. I think the transportation should get down to the hard pan basis before we can fix rates that would be just to the public.

The CHAIRMAN. Do you think that those railroads can resist an enlightened public opinion? Do you not think that the chief corrective will be to get knowledge of the facts?

Mr. THURBER. I do. I think there will be very little legislation required. Throw the matter open so that public opinion can have a free scope, and there will be little need of legislation.

The CHAIRMAN. In England that has been the final conclusion. There they have ceased to legislate about railroads; but they require the utmost publicity.

Mr. THURBER. I am aware of it. Mr. Adams forgot to mention that the English board of railroad commissioners have very wide and full powers; and they are exercising them in the interest of the public. Every time that a complaint is brought before them they investigate it.

The CHAIRMAN. But they have no power to regulate rates?

Mr. THURBER. Yes, they have, in many instances.

The CHAIRMAN. Where differential rates are made can they require the company to give the same rates to one man as to any other man, or can they fix the rates at which business is to be done?

Mr. THURBER. The law gave them that power, but I do not think that they have ever attempted to exercise it.

Mr. RICE. If one road should say, "We will do this business at such a rate," and another road should say, "We will do it at such a rate" (higher or lower), the railroad commissioners in England can say which rate shall be adopted by both companies. That is your idea, is it not?

Mr. THURBER. Yes; there ought to be no differential rates or discriminations. The CHAIRMAN. They are forbidden by the law in England, and you think they ought to be forbidden here?

Mr. THURBER. I think so.

Mr. RICE. The power given to the English railroad commissioners is greater, perhaps, than would be tolerated in this country, because there the government assumes that it owns the railroads; that it has absolute power over them, not even restricted by the constitutional limits as to the right of confiscation. That right is almost overridden in England in regard to the railroads; and the commissioners there have extreme powers; powers more extreme, I think, than would be tolerated, or would be necessary, or would be advisable in this country.

Mr. THURBER. They have been working gradually up to it there-a process of evolution to a point which we may arrive at.

Mr. RICE. The railroad board there is really a judicial tribunal; it is a court; it hears cases; it has volumes of reports of decisions, just as we have reports of the decisions of courts in this country; and the powers exercised by that board are very extreme. They really extend practically to the fixing of rates, although I do not think that they do it in form.

Mr. THURBER. I have trespassed too long on the time of the committee, and unless you have some additional questions to put, I will retire.

The CHAIRMAN. I had other questions, which were, after all, only speculative, in regard to some positions laid down by you. But similar points have been made in the testimony of other witnesses. I do not know whether I understood you as saying that you would have a limit put to the accumulation of property in individual hands, especially in the hands of corporations.

Mr. THURBER. I would not like to express myself squarely on that proposition. I think that the tendency of the times is in that direction, and that, if that tendency continues for the next quarter of a century as it has for the last quarter, unless the statesmen of to-day can gradually ameliorate the condition of things, we may reach that point.

The CHAIRMAN. Suppose that Mr. Astor's property should increase in time so that he became owner of the entire city of New York, do you think that his position would be an enviable one?

Mr. THURBER. I do not think it would.

The CHAIRMAN. Then I think the evil will correct itself. When wealth comes to a point where it is troublesome to the owner, he will take some means of distributing it.

Mr. THURBER. I think that there are two extremes-the extreme of riches and possessions and the opposite extreme of poverty; and I have no doubt that the wisdom of the committee will reach some conclusion on that point.

The CHAIRMAN. But when you lay down the proposition that there is to be a limit to the accession of wealth, it raises up this whole question of communism at once. If it be true as to one amount, it is true as to any amount.

Mr. THURBER. I saw in a newspaper article the other day a calculation as to what Mr. Vanderbilt's estate would amount to in twenty-five years at the present estimated rate of increase (which I think is about five millions from the regular interest on the capital and about five millions more from the subordinate corporations which Mr. Vanderbilt controls), and that calculation made it foot up to nine hundred and twenty four millions in twenty-five years. Now, suppose this thing goes on indefinitely, perhaps the people will say, "Here, we will tax certain things in a certain way so as to prohibit this enormous increase of wealth." It may be reached in that way. I do not say that legislation should say that a man shall not have over a certain amount of property, but I think the people will be very apt to find some legislation that will keep down such accumulations.

The CHAIRMAN. Suppose we pass a law to-morrow enacting that Rutherford B. Hayes is hereby declared to be the owner of all the property in the United States. There he is, invested with the whole thousands and thousands of millions of dollars of the country. How would the relations of any body to Mr. Hayes or of Mr. Hayes to anybody else be altered by that fact? Would we not be living just as we are living in