The Railroad Question / A historical and practical treatise on railroads, and remedies for their abuses

by William Larrabee

During the first few years of the existence of the Camden and Amboy Transportation Company its business was managed in the interest of its owners, but soon a few of its leading stockholders managed to turn its enormous profits into their own pockets. The Stevens and Stockton families, together with two other directors of the Camden and Amboy Company, had come into possession of a line of steamers that plied on the Raritan, between New Brunswick and New York. The enterprise, in spite of its largely watered capital, had been made to pay dividends ranging from 30 to 40 per cent. Its owners saw an opportunity for a larger field of usefulness and larger dividends. In 1834 a majority of the board of directors of the Camden and Amboy Company proposed that the company rid itself of the responsibility connected with the transportation business and lease its railroad and canal. Mr. Stevens, as representative of the Camden and Amboy Company, then negotiated with Mr. Stevens, the representative of the Napoleon Steamer Company, and the negotiations soon resulted in an agreement between the two companies by which the latter leased the railroad and canal lines of the former and agreed to pay it a fixed toll of $7.64 per ton upon all freights carried by rail, and one-quarter of all its revenues derived from the canal. Soon afterward the Napoleon Company entered into a similar contract with the Camden Ferry Company and now had a complete monopoly of the transportation business between New York and Philadelphia. It at once commenced to develop a system of organized plunder. Instead of the maximum charter tariff of 8 cents per ton per mile, it charged 10, 12, and even 15 cents. The through rates charged were several times as high as those fixed by the charter. Canal rates were raised to such an extent as to make them prohibitory and to compel the public to ship by rail. It is difficult even to estimate the total annual profits of the directorial syndicate. Their accounts, if any were kept, were not accessible, and surmises can only be based upon such data as occasionally found their way to the public. In 1845 the share of the canal tolls paid to the company's stockholders was $359,000. The directors' share under the terms of their lease is thus found not to have been less than $1,077,000. Another item of $170,000, tolls collected for the transportation of 27,000 tons of freight, was so divided that the Camden Ferry Company, or its other self, the directorial syndicate, received $32,000 for one mile, while the Camden and Amboy Railroad Company received $63,000, or less than twice as much, for ninety-two miles. The directors under their lease were entitled to the remaining $75,000.

The service of the company was as bad as it was expensive; its trains were slow and irregular, and its employes arrogant. The syndicate which controlled the company defied its stockholders, the public and the courts alike. When one of the stockholders, a Trenton merchant by the name of Hagar, applied to the courts for an order to compel the directors to produce their books and render an account, the syndicate bought Mr. Hagar's shares, for which he had paid $125 a share, at the price of $1,456 a share. The suit was then withdrawn and the matter hushed up.

In 1848 a number of articles appeared in a paper published at Burlington, Pa., which were signed by "A Citizen of Burlington" and contained much surprising information concerning the Camden and Amboy Transportation Company. It was charged that the directors had defrauded both the State and the company's stockholders of large sums of money, that they had grossly violated their charter by charging illegal and extortionate rates, oppressive to both commerce and travel. It was shown that while the average rate per ton per mile of thirty-five neighboring roads was 2.85 cents, that of the Camden and Amboy Company was 4.54 cents. It was also shown that neither the stockholders nor the State had received the share of the company's revenues to which they were entitled. These articles were extensively reprinted and caused a great commotion wherever they appeared. After the first storm had subsided the directors issued an address to the people of New Jersey, in which they bitterly complained of the people's loss of confidence in their integrity, and declared that the charges preferred against them were founded on falsehoods.

The "Citizen of Burlington" replied by accusing the directors of defalcation and falsifying their books. He charged that from 1840 to 1847 no account had been rendered of the receipt of no less than $5,266,431, on which $493,066 was due to the State. As soon as the legislature convened, a resolution was introduced that a commission be appointed to investigate the charges preferred against the Camden and Amboy Transportation Company. The resolution was adopted, but it was virtually left to the accused to select the members of the commission. That the directors had a guilty conscience appeared from the fact that the last annual report of the company, which had just been printed, was withdrawn and destroyed. To silence their unknown accuser, they threatened him with criminal prosecution. He now gave his name. It was Henry C. Carey, the noted writer and authority on political economy. Mr. Carey did not give up the contest. He proceeded to show how the policy of the managers of the Camden and Amboy Transportation Company depressed commerce, manufactures and agriculture alike. He showed how the company as a public carrier discriminated in favor of industries which they carried on as private individuals. He claimed that the company had forfeited its charter, and that it was the duty of the State to authorize the construction of another road. In the meantime, early in 1849, the legislative investigation committee submitted its report. It was perhaps as shameless a document as was ever placed before a legislative assembly. It lauded the directors, to whose influence the members of the commission owed their selection, and whitewashed their past management of the company's affairs.

But the people of New Jersey were far from being satisfied with this report and demanded the appointment of another committee. Another investigation was ordered, and this time the company, or rather its directors, found it impossible to control the selection of its members. Soon after their appointment the committee asked Mr. Carey to lend them his assistance in their labors, and he readily consented. During the summer of 1849 the members of the committee had occasion to go to Bordentown, to inspect the company's books. From that time on a wonderful change seemed to have come over the committee. They found they could dispense with Mr. Carey's further services. What had previously appeared to them a ring of rapacious monopolists seemed now an association of worthy philanthropical gentlemen. In their report to the legislature they completely exonerated the company's managers. They admitted that the State had not been paid all that was due to it, but they asserted that this difference in the company's accounts was due solely to clerical errors, for which the management were in no wise responsible. The report was accepted, although not even the annexed testimony supported it, and thus the matter was dropped.

This was a great victory for Mr. Stockton and his friends. It demonstrated the success of their methods of dealing with public servants. Mr. Carey repeated his charges, but the directors failed to prosecute him for libel as they had threatened. He asked that he be permitted to inspect the company's books, but was met with a peremptory refusal. Public opinion was defied, and the old methods were continued.

The extortionate and discriminating tariff of the only through route of New Jersey affected seriously the agricultural as well as the commercial interests of that State. The Camden and Amboy monopoly kept the State of New Jersey for many years far behind the New England States in railroad facilities. In 1860 New Jersey had only one mile of railroad for every 17.6 square miles of territory, while the proportion of miles of railroad to square miles of territory for the same year was 1 to 7.9 in Connecticut, 1 to 7.6 in Rhode Island, and 1 to 6 in Massachusetts. At present New Jersey has one mile of railroad to every 3.79 square miles, and therefore leads all the States in the Union in density of railroad track.

The question may be asked how the Camden and Amboy Transportation Company, or rather the syndicate which controlled it, contrived to maintain its power for so many years, to the great detriment of industry and commerce. The only answer that can be given is that the men for whom the maintenance of the monopoly was a source of great wealth were constantly using a part of this wealth for the corruption of those who were in a position to influence public opinion or to direct the policy of the State. Prominent politicians were favored with passes, attorneys were retained by the company as local solicitors, corrupt and servile legislators were bribed by money or the promise of lucrative positions, and newspapers were given large subsidies. In addition to this public men were constantly made to realize the political power of the company, whose many employes had always been trained to do the bidding of their masters. If the opposition, in spite of this, was ever successful at legislative elections, the company's managers found it less expensive to gain the good will of a few members of the legislature after election than it would have been to gain the good will of their constituents before election. Dissatisfied stockholders who threatened with judicial investigation were quietly bought out or impressed with the danger of inviting public discussion in regard to the validity of the company's charter, as it might lead to its annihilation. The good people of New Jersey made several attempts to rid the State of the despotism of the company by making the question a political issue, but they were each time defeated through the lavish and scandalous expenditure of the company's money.

The original charter of the Camden and Amboy Railroad Company was granted for a period of twenty years, and should have expired in 1853, but its managers succeeded in having it extended to January 1, 1859. In 1854 another extension was asked for, and after a long and bitter debate the company was again triumphant. An act was passed on the 16th of March, 1854, making it illegal to build previous to the first day of January, 1869, without the consent of the Camden and Amboy Transportation Company, a railroad in the State of New Jersey for the transportation of passengers and freight between New York and Philadelphia. At the end of this period even a third extension was granted, and the company, though after January 1, 1867, under a new name, maintained its monopoly until it consolidated, in 1871, with the Pennsylvania Railroad Company.

That the spirit of the past is still at work was shown by the recent act of the legislature of New Jersey legalizing the consolidation of the coal roads. The coal barons found the legislature as servile as the managers of the Camden and Amboy Railroad Company had found them of yore, and their well-planned scheme would probably have been successful had it not been for Governor Abbot's courageous veto of the disgraceful act, and it is more than probable that they will yet succeed. They have, in fact, during the last year advanced the price of coal about one dollar per ton.