9

EXAMPLES OF PLUNDER AND SPOLIATION.

As illustrating the imperative necessity for the passage of this bill and its two sister bills to prevent the issuing of stocks and bonds by railways, excepting by permission of the Interstate Commerce Commission, I desire to recall to your memories certain concrete historical plunders and spoliations. A lack of proper legislation relating to the issuing of railroad stocks and bonds has been the cause of stock watering by the railroads and other industrial corporations of this country in the amount of billions of dollars. In the absence of regulations relating to and guarding the issuing of stocks and bonds some of the most stupendous financial crimes known to history have been com mitted.

In the days of Jay Gould and others the stock of the Erie Rail, road was increased from $17,000,000 to $78,000,000 for no other purpose than to play the stock market.

For Specific examples of plunder and spoliation let me call your attention to the history of the Chicago & Alton Railway Co. About 1900, while this road was under a businesslike management, paying dividends of about 8 per cent annually, it had total liabilities amounting to $34,000,000. A year or two afterwards a combination, consisting of the late Mr. Harriman, Schiff Gould, and others, bought the stock of that company at a very therein. large premium and obtained a controlling interest In seven years the capital indebtedness of the company had been increased from $34,000,000 to $114,000,000, an increa se of $80,000,000, with only about $20,000,000 paid out for actual improvements and additions, leaving an increase of its stock and liabilities for which there was not any consideration whatsoever of about $67,000,000.

mile. creased

In 1905 the bonds and stocks outstanding of the Southern Pacific Railway Co. amounted to $251,473,400, or $76,880 per In 1906 the capitalization of that company had been into $284,153,500, or $86,342 per mile. This appears to have been done within a year. With no additions, improvements, or road building, its debt had increased $31,600,000. This was making a fortune for some fortunate individuals of ingenuity by magic and printer's ink.

During the early fall of 1913 the Interstate Commerce Com

mission

undertook an investigation of the Frisco, the Rock

Island, Pere Marquette, Boston & Maine, and New Haven Rail

roads.

These events must be fresh in the minds of all, and we

remember the high financial plundering indulged in by the directors and managers of those several railways. According to the showing made before the House Committee on Interstate Commerce the capital stock of the Rock Island Railway Co. was in recent years expanded from $60,000,000 to $75,000,000, and the bonded indebtedness from $71,000,000 to $258,000,000. thousand miles of railway, much of it nonproductive, were added to the system, and little of the great increase in the indebtedness was put into improvements of the way or the

service.

Three

manner in which the public are interested and are also imposed Here we have a striking and forcible example of the The interest on the increased bonded indebtedness was to the public in passenger and freight rates, and has

upon.

charged

been raised from $18,238 to over $38,000 per mile. The Pere Marquette Railway furnishes another example. The funded indebtedness of this road increased from $25,000,000 in

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1900 to over $78,000,000. While there has been an increase of over $4,000,000 in the annual earnings during the last 10 years, yet it is testified to that there has been no material increase in equipment. The road is said to be in worse financial and physical condition than in the year 1900.

One of the most notable features disclosed in the investigation of the purchase of the Chicago & Eastern Illinois Railway by the St. Louis & San Francisco Railway Co. last year was the discounts on bonds and notes and other short-term paper issued by the Frisco and its lines, amounting to over $30,000,000 in 12 years. Another important fact disclosed by this investigation of the Frisco line which is worthy of consideration in this discussion is a comparison of its interest-bearing liabilities with its stock liabilities. In May, 1913, its total capital amounted to $295,000,000, of which only $51,000,000 was capital stock and $244,000,000 was funded debt, including equipment. The capital stock thus seemed to have been only a little over 17 per cent of the total liabilities, while the funded indebtedness seemed to have amounted to a little over 82 per cent.

THE NEW YORK, NEW HAVEN & HARTFORD RAILWAY.

For years the New York, New Haven & Hartford Railway appeared to be one of the most flourishing railway systems of the country. Soon, however, numerous and unaccountable railway accidents, resulting in destruction of large numbers of life and property, occurred. Last fall it was thrown into bankruptcy, and recently its affairs were investigated by the Interstate Commerce Commission, and the facts relating thereto are still fresh in our minds, and new facts are being developed each day. From the testimony of Mr. Mellen, the late president of that railway, given about a week ago, it appears that over $30,000,000 of the assets of that company had been wasted and squandered in its management and in purchasing steamship and trolley lines competing with its main system, so that its president said the other day, under oath, that over $30,000,000 of its property had been wasted and squandered. Here, again, interlocking directories and uncontrolled use of its financial powers and the practice of discrimination resulted in the ruin of a once magnificent and prosperous railway.

On the heels of the great sensational revelations concerning the wrecking of the New York, New Haven and Boston Railway, comes the sensational charges in relation to the Morganizing of the Baltimore & Ohio Railway. Mr. Brandeis, special counsel for the Interstate Commerce Commission, which is investigating the relation between the Baltimore & Ohio and the Cincinnati, Hamilton & Dayton Railways, exposed another game of high finance. By a manipulation of the bankrupt Cincinnati, Hamilton & Dayton Railway, the treasury of the Baltimore & Ohio Railway has been swindled and euchered out of $50,000,000.

For years the New York, New Haven & Boston Railway was loudest in its protestations against regulation by the Interstate Commerce Commission. Its protests were the most vigorous against railway regulation of all the stubborn railways. Its managers pointed with pride that over 50 per cent of its stock and bonds were held by widows and orphans. Whenever they were threatened with punishment for their sins, they shed crocodile tears and hid behind the skirts of widows, and appealed to the sympathies of the Nation against regulation and control. Their

hypocrisy has, however, been disclosed. Its officers and directors, on account of insufficient regulation and control by public law, have turned cannibal, and have by wicked exploitations devoured not only the widows and orphans, but the weaker of their fellow plunderers. Yet, we find managers and officers of the New York, New Haven & Boston at this time, when we are trying to pass laws for the relief and protection of the people, joining with their fellow plunderers throughout the country in the hypocritical hue and cry, "Do not disturb our business."

These are but a few of the shining examples of the power, strength, and devouring ways of trusts, combinations, and monopolies. Thousands of a smaller brood of these corporations and monopolies might be mentioned, but time and space forbid, but these are sufficient to show the necessity of new, and proper antitrust legislation. These stupendous facts must demonstrate conclusively to every intelligent and impartial American the necessity of strengthening the Sherman antitrust law by the passage of this and its two sister bills.

DEMAND FOR ANTITRUST LEGISLATION AND BOND AND STOCK CONTROL.

The above are a few concrete examples of the conditions confronting the country. They show a condition of affairs that demands the immediate consideration of Congress. They also show a condition which calls for courage and earnestness on the part of Congress. The evil effects, of which the above cited are but a few, are matters of almost daily observation. Every Representative in this House can point to victims of this system of trusts, combinations, and monopolies in his own district. In every city, in every county and State, there are evidences of their evil practices and wrongdoings. Abandoned mills, purchased and closed by the trusts to prevent competition; commercial failure of the little merchant, who has been for years struggling against these gigantic enemies for fair play; the great natural resources of the country concentrated in the hands of a few, such as its timber, coal, iron, and water powers, conclusively show necessity for passage of these proposed laws. Such are the weighty and startling conditions that challenge the attention and consideration of Congress. For years these trusts, combinations and monopolies have been increasing by bounds. Their activities, operation, and depressions have attracted the attention of the people of the country. Parties have denounced their existence and have promised relief from their operation and influences. The public has had great patience with them, while executives, legislatures, courts, and parties have attacked the same.

In response to the widespread demands of the public, the Democratic Party has in different national conventions repeatedly denounced the evils arising from their operation and has promised relief.

PLATFORM DECLARATION.

In response to the widespread demands of the public for relief, the Democratic Party in its national platform of 1912 adopted the following plank in relation to trusts:

We therefore

A private monopoly is indefensible and intolerable. favor the vigorous enforcement of the criminal as well as the civil law against trusts and trust officials, and demand the enactment of such additional legislation as may be necessary to make it impossible for a private monopoly to exist in the United States.

We favor the declaration by law of the conditions upon which corporations shall be permitted to engage in interstate trade, including, among others, the prevention of holding companies, of interlocking directors, of stock watering, of discrimination in prices, and the control by any corporation of so large a proportion of any industry as to make it a menace to competitive conditions.

We regret that the Sherman antitrust law has received a judicial construction depriving it of much of its efficacy, and we favor the enactment of legislation which will restore to the statute the strength of which it has been deprived by such interpretation.

Equally vigorous declarations were made by the Democratic Party in its platforms of 1908 and 1904.

For 16 years the people of the country have been demanding relief from these intolerable and unjust practices; for 16 years they have knocked at the doors of Congress demanding relief from these conditions, and for 16 years the Republican Party has failed to listen to, these demands. The Democratic Party takes advantage of its first opportunity to grant the relief and protection demanded by the people.

Notwithstanding this widespread demand for relief during all these years, Members of Congress occasionally receive at this time protests against the passage of this and its sister bills. A hue and cry has been set up throughout the Nation by the guilty trusts and monopolies protesting against its passage at this time, and pretending that the business of the country demands a rest from congressional action. Investigation, however, has disclosed that nearly all of the protests which have been received here against the passage of this legislation have been manufactured and are artificial protests, excepting those coming from big business. Exposure has been made on the floor of this House by several Representatives of the character of the great majority of these protests. They are produced by the manager of some trust, combination, or monopoly, writing some small business man a letter or circular, suggesting that business is dull, and that it may be improved by preventing Congress from passing this relief legislation.

The small business man is urged to sign some inclosed protest and forward it to his Congressman. The manner in which such protests are created has become so well known to Members of Congress that they are now considered merely as chestnuts, and not as reflecting the genuine sentiments of the sender.

Since the report of the interstate trade commission bill from the committee to the House, the different chambers of commerce throughout the country have taken the opinions of their members upon that bill. Nearly four out of five of the members of the different chambers of commerce have recorded themselves as in favor of its passage. It is safe to consider that these great business bodies of the country fairly reflect the opinions of the genuine and lawful business interests of the country.

RESTORATION OF LABOR RIGHTS.

At the time of the passage of the Sherman antitrust law, it was almost unanimously understood that this law did not apply to workingmen or farm organizations. So certain were the Members of the Senate that labor and farm organizations were not included in the provisions of the Sherman antitrust law that amendments offered specifically providing for the exemption of such organizations from the law were defeated, upon the ground that such expressed exemption was unnecessary be

cause the law in itself did not cover or include such organizations.

During the past 24 years very much discussion has been going on with regard to the class of people that the Sherman antitrust law was directed against. All through those years there has been a division of opinion upon this question among impartial and intelligent thinking men. The men who framed the so-called Sherman antitrust law and placed it upon the statute books had no doubt as to whom such legislation was directed against. This is shown in the debate upon that bill in the Senate. It shows that it was only against the great combinations that this legislation was directed.

Senator Sherman, who introduced the so-called Sherman antitrust law, had no doubt upon this question, for in the debate in the Senate on March 24, 1890, Senator Sherman said:

Now, let us look at it. The bill as reported contains three or four simple propositions which relate only to contracts, combinations, agreements made with a view and designed to carry out a certain purpose which the laws of all the States and of every civilized community declare to be unlawful. It does not interfere in the slightest degree with voluntary associations made to affect public opinion to advance the interests of a particular trade or occupation. It does not interfere with the Farmers' Alliance at all, because that is an association of farmers to advance their interests and to improve the growth and manner of production of their crops and to secure intelligent growth and to introduce new methods. No organization in this country can be more beneficial in their character than farmers' alliances and farmers' associations. They are not business combinations. They do not deal with contracts, agreements, and so forth. They have no connection with them. And so the combinations of workingmen to promote their interests, promote their welfare, and increase their pay, if you please, to get their fair share in the division of production, are not affected in the slightest degree, nor can they be included in the words or intent of the bill as now reported.

At the time of the consideration and passage of the Sherman antitrust law in the Senate, there were many able, experienced, and learned Senators, and among whom there were none more learned, and experienced, nor more capable of sound judicial interpretation than Senator Hoar, of Massachusetts. While such antitrust bill was under debate in the Senate, on March 27, 1890, Senator Hoar said:

When you are speaking of providing to regulate the transactions of men who are making corners in wheat, or in iron, or in woolen or in cotton goods, speculating in them or lawfully dealing in them without speculation, you are aiming at a mere commercial transaction, the be ginning and end of which is the making of money for the parties, and nothing else. That is the only relation that transaction has to the State. It is the creation or diffusion or change of ownership of the wealth of the community. But when a laborer is trying to raise his wages or is endeavoring to shorten the hours of his labor, he is dealing with something that touches closely, more closely than anything else, the Government and the character of the State itself.

The maintenance of a certain standard of profit in dealing in large transactions in wheat or cotton or wool is a question whether a particular merchant or a particular class of merchants shall make money or not; but the question whether the standard of the laborer's wages shall be maintained or advanced, or whether the leisure for instruction, for improvement shall be shortened or lengthened is a question which touches the very existence and character of government of the State itself. The laborer who is engaged lawfully and usefully and accomplishing his purpose in whole or in part in endeavoring to raise the standard of wages is engaged in an occupation the success of which makes republican government itself possible, and without which the Republic can not, in substance, however it may nominally do in form, continue to exist.

I hold, therefore, that as legislators we may constitutionally, properly, and wisely allow laborers to make associations, combinations, contracts, agreements for the sake of maintaining and advancing their