Part 13 (1/2)

The change was certainly not made in the interest of the Stetson bill.

The incident stirred up Campbell and other anti-machine Senators to the fighting pitch. An arrangement was made, however, by which the measures were to be sent back to the Judiciary Committee after the Committee on Corporations got through with them that the Judiciary Committee might pa.s.s upon their const.i.tutionality. The arrangement had two effects - it silenced the unquieting protest of the anti-machine Senators, and it delayed consideration of the bills. But, as the sequel showed, the arrangement did not help the Stetson bill in the least.

[62] The testimony was that of George J. Bradley, traffic manager of the Merchants' and Manufacturers' Traffic a.s.sociation of Sacramento. It was as follows:

It is estimated on conservative figures that the increase in eastbound California products, or Pacific Coast products, I should correctly say, which is composed of canned fruits, canned vegetables and canned salmon, of which there are several million cases, go from the North Pacific coast through either San Francisco or through the North Pacific coast, the minimum being forty thousand pounds to the car, and the increase being ten cents per hundred pounds, means forty dollars a car increase.

Now, taking the number of cars of all those products that are s.h.i.+pped, it amounted to about - and leather and other products - it amounted to about four million dollars eastbound. Now, when the question of westbound comes out, of course, it is practically impossible for any man to say just exactly what that increase will mean in dollars and cents, and the only way, therefore, to arrive at it is to take the percentage of proportion now in their westbound tariff, which is composed of about between eight hundred and a thousand items. They have raised the rates from 10 to 25 cents on over two hundred articles, all of which move in quant.i.ties; in other words, the process by which the tariff has been amended has been that in every instance where there was a commodity moving in quant.i.ties the rate has been advanced; wherever there was no movement and they wished to encourage a movement, they reduced the rate.

Now, you take the five transcontinental lines that operate on the Pacific Coast, namely, the Northern Pacific and the Great Northern on the north and the Canadian Pacific; the Southern Pacific and the Santa Fe and the San Pedro and Los Angeles on the south, give you six trunk lines operating on the Pacific Coast. If you will take their gross earnings, which amount to over four hundred millions, segregate that by allowing fifty per cent of that to pa.s.senger service, which is a very conservative estimate, because the pa.s.senger service does not amount to that, leaves two hundred million dollars of gross freight earnings. Take five per cent of that for terminal business, and business is based on terminal rates from the coast, plus the local back, because the rate, of course, is felt everywhere, the rates to the interior points are made on the terminal rate, plus the local back. Take five per cent of that and their increase in every instance has been 10 per cent, and in some cases 16 2/3 and 20 per cent; but take a very liberal conservative estimate and put it at five per cent and you have ten million dollars; now, split that in two and take two and a half per cent of it and you have got five millions of dollars. Now, that and your four million dollars on eastbound freight and you have nine millions of dollars increase in freight rates, and I believe that that is a conservative estimate. I don't see how you could get at it any closer, because every man, it doesn't make any difference where he is, every man that buys pays that ten to twenty per cent increase.

[63] Senator Caminetti on February 12 introduced a concurrent resolution calling for the removal of the present Board of Railroad Commissioners from office. The Committee on Corporations reported adversely, and on March 15th the resolution was finally rejected.

Chapter XIII.

Machine Defeats the Stetson Bill.

Southern Pacific Attorney Succeeds in Clouding the Issue - Railroad Claquers Active in Advocating the Maximum Rate, Which Was Designated as Little Better Than No Rate At All - No Fight Over the Bill in the a.s.sembly.

Having succeeded in transferring the railroad regulation measures from the Senate Judiciary Committee, the majority of whose members were anti-machine, to the Committee on Corporations, the majority of whose members were machine, the machine proceeded to discredit the Stetson bill, by making it appear that the State Const.i.tution by implication prohibits the fixing of absolute railroad rates, and provides that the Railroad Commissioners may fix maximum rates only. Peter F. Dunne was brought to Sacramento to make this argument before the Senate Committee on Corporations.

Dunne, in his address, showed greater ability than integrity. When he had finished, even the anti-machine members of the Committee were completely befuddled. Walker, one of the members of the Committee who is not a lawyer, groped in utter darkness thereafter, until he finally stumbled into the arms of Eddie Wolfe and Frank Leavitt and Jere Burke, when the final vote on the railroad bills was taken. It was Walker's only stumble of the session. But for his unfortunate vote against the Stetson bill and for the Wright bill, Walker would have made an exceptionally clean record.

Not only did Dunne befog the lay Senators of the Committee, he shook the faith of men like Miller and Roseberry - both lawyers - on the const.i.tutionality of the absolute rate. Miller recognizes that the absolute rate is the only practical rate; but until the end of the session he was not prepared to say that it could be const.i.tutionally established. Dunne certainly did a good job. To be sure, his address was a ma.s.s of misrepresentations, but of misrepresentations cunningly put.

He shattered the implicit faith of the anti-machine Senators in the absolute rate. And that was what he had been sent to Sacramento to do.

The evil that Dunne did lived long after he had left the capital.

Curiously enough, neither the term ”absolute rate” nor ”maximum rate”

appears in the State Const.i.tution.

Article XII, Section 22, of the Const.i.tution, provides that the Railroad Commissioners ”shall have the power and it shall be their duty to establish rates of charges for the transportation of pa.s.sengers and freight by railroad or other transportation companies.”

Further on in the same section, it is provided that ”any railroad corporation or transportation company which shall fail or refuse to conform to such rates as shall be established by such Commissioners, or shall charge rates in excess thereof, * * * shall be fined not exceeding $20,000 for each offense.”

The dispute between those who stood for maximum rates - that is to say, the members of the machine lobby, the machine Senators, the Southern Pacific attorneys and those who wanted absolute rates - namely, the anti-machine Senators and the attorneys representing large s.h.i.+pping interests - waxed hot over the words in the above quotation which are printed in Italics.

The advocates of the absolute rate held, with at least apparent reason, that the words ”fail to conform to such rates” mean just what the dictionaries say they do: That the railroad charging a rate in excess of that fixed by the Railroad Commissioners, or a rate less than that fixed by the Commissioners, is not conforming to the rates. Such, at least, seems reasonable construction of a very simple phrase.

But not so, insisted the railroad lobby. That aggregation of patriots skimmed over the words ”fail to conform to such rates,” and saw only, ”or shall charge in excess thereof.” Inasmuch, the pro-railroad element held, as the Const.i.tution says that the railroads shall not charge in excess of the rates fixed by the Railroad Commissioners, the railroads are at liberty to reduce the rates as fixed by the Commissioners at will. In other words, according to the pro-railroad element, the Const.i.tution authorizes the fixing of maximum rates only.

The pro-railroad claquers even went so far as to claim that the Supreme Court has decided that the maximum rate is the only rate that can be fixed under the State Const.i.tution. They referred the doubtful to the notorious decision in the Fresno pa.s.senger rate case known as the Edson decision.

But no question of maximum rates was involved in the Edson case. To be sure, Chief Justice Beatty took occasion to say in his opinion in that case that his understanding had been that the State Const.i.tution provides for the maximum rate. But this had no place in the decision, was purely dictum, and is so regarded.

Attorney-General Webb has an ingenious but very plausible explanation of Judge Beatty's much-discussed observation. General Webb points out that previous to the adoption of the present State Const.i.tution - 1879 - Justice Beatty had been engaged in the active practice of the law in this State. Up to the time of the adoption of the Const.i.tution of 1879 the maximum rate had prevailed in California. About that time, Judge Beatty went to Nevada and was absent from the State for several years.

Returning to California, after the State Const.i.tution had been adopted, Judge Beatty found no case in which the duties of the Railroad Commissioners had been involved, until the Edson case came up.