The relations between the corporations and the public that they serve have been clearly defined by the Courts, as the foregoing quotations show.
That the mutual relations existing between the management of the corporations and the public are far from what they should be, there can be no doubt. On the one hand, the great mass of the voting public is uninformed as to actual revenues, disbursements, and operations of the corporations, as to whether their income is unreasonably large, or whether they are struggling to exist. The sums of money involved in the dealings of the corporations are so stupendous in comparison with the amounts used in an ordinary private business—even in one of considerable magnitude—that the majority of the public cannot comprehend them. The published statistics are in such form that only the careful student of affairs can understand or analyze them, and but few of the public officials who receive them are able to read the reports of the properties and comprehend them. As a consequence, the corporation, as a political issue, has been the subject of jest, gibe, and cartoon; there has not been an intelligent public discussion of available reports and statistics, and it may be said that, generally, the mass of the public has come to class all corporations as grasping, overbearing, and unjust, and to consider them all as exceedingly prosperous. This has been taken advantage of by politicians for their own selfish ends, and has led to sundry legislation, some of which has been unreasonable and unjust to the corporations, and much of which is aimed at real abuses that never ought to have existed.
The reasonableness of a rate depends, not alone on the amount of capital invested, but on the volume of traffic, the density of population, the actual cost of service, and many other elements. Rate legislation has been attempted without full investigation. Acts have been passed compelling the establishment of stations and terminals, the improvement of roadway and structures, the purchase of new equipment, the installation of safety appliances and block signals, and many other requirements have been made, some (but by no means all) of which are unreasonable and burdensome. Nearly one-half the States of the Union have by law required a 2-cent, or 2½-cent, passenger fare, regardless of density of population, amount of traffic, or other considerations which might render such rates unreasonable. The regulation of the carriers, by legislature, by railroad commissions, by State officials, and by Courts, the addition of burdens of expense, and the cutting off of revenue, all give considerable ground for the opposition of the carriers to anything that looks like hostile legislation, and compels the student of affairs to admit that there is justice in the claim of the managements, that there is grave danger, not only of seriously crippling many roads, but of so impairing the credit of the railroads as a class that it will be increasingly difficult to secure capital to provide for the necessary extensions and development of the transportation facilities of the country.
On the other hand, perfect frankness compels the admission that the state of public opinion which compelled the passage of these laws has been caused largely by the corporation officials themselves. There is probably no more loyal body of men in America to-day than the officials and employees of railroads. Their loyalty, however, is all to "our company." They enter its service as boys or young men; they grow up to the full strength of manhood working for its good; they take little or no part in public affairs; they have no time for the study of public questions. Their friends are almost exclusively among their own associates in the service of the road, and their development is along the lines of their own special work in the service. As a body of honest, honorable, and worthy men, absolutely loyal to their employers, they have few equals; but it is doubtful if any equal number of men, of equal intelligence, have as limited a knowledge of the fundamental truths of government, or knowledge so colored by bias. It is also doubtful whether any equal number of men have in their ranks so few who bear an active part in the duties and activities of citizenship, or who exercise large influence on their neighbors.
While the foregoing statement is believed to be absolutely true, it will not do to pass over the notable exceptions. Such men as James J. Hill, F. Am. Soc. C. E., M. E. Ingalls, and others of the higher officials, who have taken an active part in public affairs, have had commanding influence. Theirs has been the sound policy, as the property in their hands has not suffered. The short-sighted policy which, in December, 1909, induced the management of one road to compel all its employees holding municipal offices to resign, is bound to react and create hostile feeling on the part of the public.
The entire trend of a training in railway service is to fill a man with prejudice against all things that undertake to regulate or control the corporations, and often goes so far as to enable him to do, willingly and as a matter of right, things which with a broader view of the interest of the whole community he would not agree with at all. The result of this intensive training is that the railway service has in it thousands of men who become impatient with any effort to regulate or control; who permit their irritation to show; and who, by their own attitude, create unnecessary hostility. F. A. Delano, M. Am. Soc. C. E., President of the Wabash, in an address[[2]] at Hannibal, Mo., on March 25th, 1909, said:
"In ordinary manufacturing or commercial undertakings, every man has his own notions about the conduct of his business, and does not want to be interfered with, or dictated to by people who know less about his business than he does himself. Now, while it may be argued in the case of public service corporations that the people who have put their money into these enterprises, have done it with their eyes open and with full knowledge that they were subject to governmental regulation and control, there is nothing in that argument which makes public interference any more palatable to the man or group of men who are interfered with."
This address well expresses the spirit of the railway managers and employees toward all forms of investigation, and the complete lack of understanding, on the part of these managers, of the legal and moral relations which they bear to the communities which they serve. It is extremely unfortunate that railway and corporation people have not taken the public fully into their confidence, and fully and freely given out correct information as to the operation and depreciation of their properties; also, it is unfortunate that, when a corporation official does feel a grievance, he permits himself to make a partisan speech, or write an unwise article for publication. Much hostility is traceable to foolish, undiplomatic sayings or writings of corporation managers (which are often but half quoted), or to equally foolish speeches or newspaper editorials in opposition to the corporations, which are taken seriously by the managers. Whatever may be the cause, there is a regrettable hostility, and, on the part of the corporation officials, there is an apparent unwillingness to admit right motives to anyone advancing theories regarding corporate regulation and control, due largely to the training and atmosphere surrounding the corporate service.
The public has a large bill of particulars, one of which is the promotion of wildcat companies, such, for instance, as the "New York and Chicago Air Line" project which, only a year or so ago, drew from $2,000,000 to $3,000,000 from the people in a limited territory. These people were "investing" in railway stocks. A Federal control of the issue of stocks and bonds would have prevented this and hundreds of like swindles. Any move to secure such a law has always been opposed by the management of large and legitimately operated corporations, under the impression that they are about to be persecuted, and, naturally, the victim classes these corporations with the alleged one that secured his money.
The issue of stocks and bonds far in excess of any possible cost or value of railroad, street railroad, and other properties, and the making of large personal fortunes by the promoters, are matters of such frequent occurrence that it is difficult, indeed, to dismiss them with a mere denial. There is hardly a community of any size which has not had its example of "consolidation," "combine," or "merger," which has resulted in the issue of excessive securities; and there is hardly a citizen of any intelligence who has not either seen or had experience with some form of corporation promotion carried on strictly within the law, but which, nevertheless, in plain language, was a swindle. These, to say nothing of some gigantic deals involving millions, will sooner or later compel some form of regulation of the issues of stocks and bonds. In the last analysis, it is the money of the people, the hundreds of thousands of small investors, depositors in banks, and owners of life insurance, whose money goes into corporation securities, and, until the officers of the great railroads co-operate in securing such forms of control of stock and bond issues as will make impossible the purely speculative "wildcat" corporations, and thus safeguard minor corporations, as to furnish at least reasonable security to those whose money is invested, all forms of corporation security must be under suspicion with the public, and the agitation for control must continue.