The Railroad Situation in New England

Brandeis Would Smash Monopoly

Advocates Government Dissolution of New Haven System

Demands Competing Lines

Speaking at Textile Club Here, Boston Lawyer Outlines Remedies for Railroad Oppression -- Says Indicting of Mellen and Chamberlin Will Teach Obedience to Law.

Dissolution by the Federal Government of the monopoly exercised by the New Haven Company was advocated as a remedy for the oppressive railroad conditions in New England by Louis D. Brandeis in an address at the 28th dinner of the Southern New England Textile Club at the Crown Hotel yesterday afternoon.

Mr. Brandeis branded the Mellen system as an incubus upon New England and asserted that it had forced the Grand Trunk to abandon its work of constructing the Southern New England Railway to this city.

He reasoned that the indictments returned by the Federal grand jury against Presidents Mellen and Chamberlin were valuable in that they would teach obedience to the law and would "break into fragments the combination welded together in violation of the law."

The speaker averred that the New Haven's policy was to stifle competition; that the violations of law and the breaches of good faith were natural outgrowths and that the consequent autocratic power of monopoly was the exact analogy of despotic power politically.

He declared that expense of deterioration in the system, which had resulted from the monopolistic acquisitions, was not suffered by the stockholders of the New Haven Company, but was imposed upon the people in the form of higher rates and poor service.


Inadequate and unreliable freight service, obsolete equipment and discontent among its employees, were asserted to be deteriorations in the New Haven system, consequences of which, he said, were manifested in the frequent wrecks on the road in the past few months.

Included in the remedies which he urged to bring relief from the monopolistic oppression, besides dissolution by the Government, were the Congressional inquiry sought by Congressman O'Shaunessy, and the establishing of competitive service.

In the connection with the latter remedy he commended Governor Pothier and the men who had taken action with him to prepare the way for the building of a railroad line over the course abandoned by the Southern New England Railway Company.

In recommending competition as a means of curbing the Mellen system, Mr. Brandeis advocated an independent trolley system in this State to compete with the Rhode Island Company, or the taking over of the Rhode Island Company in order to provide a proper "feeder" in the development of Providence as a trans-Atlantic and coastwise port.

The securing of Mr. Brandeis as the speaker resulted in the gathering of perhaps the largest numbers of members in the history of the organization. All available space in the dining hall was taken up, and, with the assistance of orchestral selections, the big company, numbering about 300 persons, made merry during the dinner by singing.


Charles D. Robinson of Crompton, President of the club, opened the afternoon exercises by introducing Mr. Brandeis, who was given a flattering reception. He spoke on the topic: "The Railroad Situation in New England."

In beginning he said that he had come to Providence to consult with members of the Textile Club, and not to talk to them on the subject, which, he said, "vitally affects your interests as textile manufacturers in middle and northern New England."

"The freight facilities of the New Haven system are inadequate," he said. "The freight service is unreliable. The equipment is obsolete and the employees are discontented. With all of these defects, it is no surprise that the deteriorations were made manifest in frequent wrecks on the New Haven road during the past few months."

"Doubtless, President Charles S. Mellen of the New York, New Haven and Hartford Railroad Company has many faults, but we are not attacking the individual. His responsibility is for certain acts of his own policy adopted by the directors of the road, either directed or acquiesced in by the stockholders.

"We are suffering from the policy which Mr. Mellen is carrying out -- the policy of monopoly, and the Grand Trunk incident, a part of policy, is defiance of the will of the people.

"With all that we have to charge Mr. Mellen with we owe him this; that his restless, irresistible and resourceful spirit has made it possible for you and for me to know what monopoly does when it takes hold of a great function of human activity.


"The monopoly of the New Haven has gone on so fast that all of us can think back a few years and trace the reason of dissatisfaction.

"It is but 10 years ago since the New Haven stood first not in size but in respect, stability and wealth, in the consideration and estimation of the people. Ten years ago its stock stood at 252. It closed yesterday at 158. Ten years ago the New Haven service was so good that the people of Massachusetts were eager to have the New Haven Company take over the Boston and Maine and extend it.

"The great extension which has been made has been attended by a great and constant deterioration of the service. It has also been attended by the violation of faith -- all as a result of autocratic power.

"It is not a question of individual delinquency, but a question of policy. The violation of law and the breach of faith are what were to be expected and came naturally with the autocratic policy of monopoly. It is the exact analogy of despotic power politically.

"Liberty and not despotism leads to the best development and greatest happiness of our people. That principle is as applicable to transportation as it is to other things

"The moment you create monopoly you have removed the stimulus, the incentive from which all progress that we know has proceeded. Monopoly has a deadening effect, not only because it stops men from striving, but also because it undertakes to substitute one or a few minds for the many. That's another reason why monopoly must stop progress.

"How has the New Haven monopoly been obtained? It has been obtained by purchasing all competing transportation lines -- railroads, trolleys, steamships -- and you as business men know what it means -- the purchasing of competing business.


"It has been said that the purchase of the Rhode Island trolley system could not have been an honest transaction, because of the enormous price paid. I do not know whether it was honest or not.

"Such enormous prices have been paid by the New Haven Company, however, that the price paid for the Rhode Island Company must have been extortionate and must have imposed a burden upon the public -- higher prices, poorer service, or both.

"Take your situation here. The New Haven paid $24,000,000 for this fringe of interests in your trolleys. The Massachusetts validation board, after investigation, has concluded that that which cost $24,000,000, has a value from $22,000,000 to $6,000,000.

"I say the New Haven road paid: who is paying? We are paying for it. You are paying for it by unduly high rates and poor service. It paid 1 1/2 per cent. in the past year. Other properties purchased by the New Haven  Company have paid even less. The Berkshire trolleys, bought by the New Haven system, paid [illegible] of 1 per cent. last year.

 "Looking at the extension in New York State, acquired by the same ambition, you find a property that didn't pay operating expenses, which is a burden upon you and upon me, in the form of rates, poor service, or both.

"The accelerated policy of the New Haven in buying up competition is in the period covered by Mellen's administration. The capital obligations have been increased nearly six-fold. Yet the New Haven road proper, that is, the New York, New Haven and Hartford road, so known, has some 2000 miles of lines that it had 10 years ago. All the additional lines have been acquired and all the capital increase has gone in acquiring property which can be based only on a desire to suppress competition.

"The result of the mistakes made in these acquisitions has been unloaded upon the public. The stockholders receive the same dividends when the stock is at 128 as when it was 252. It used to borrow on a three-six-three basis, but the recent loan was on a 5 1/2 basis.


"All these things have to be paid for, for there is no manna coming from heaven to pay for the New Haven losses. The losses have to be paid for by us.

"You can increase the capital in bonds and stocks and notes six-fold, but you can't increase the capacity of the men on top. The men managing the property today are the same human beings that were there 10 years ago. There is a limit to human capacity. The full limit of capacity of the New Haven chief executive would have been exhausted if the management of the 2000 miles of the original New York, New Haven and Hartford road had been done well.

"There is no body of men in existence, no railroad president in the United States who could have prevented the deterioration which has occurred as the result of the monopolistic policy -- he might have been more gracious and omitted certain glaring errors.

"There has been waste, not only in the paying of interest on the property of the Rhode Island Company, but also as the result of the 'biting off more than you can chew,' as the phrase is.

"What are you going to do about these conditions which confront you?

"First, that which your gallant Congressman O'Shaunessy has attempted to do, the securing of a congressional investigation to develop clearly and to put before the people the actual facts as to how the monopoly was obtained and what the political and financial conditions were that resulted in the establishing of this incubus upon the people of New England.

"The next thing to do, the next act we need, is action by the Department of Justice under the Attorney General of the United States to dissolve this merger -- to do what the United States did for California when it declared invalid the merger of the Southern and Union Pacific, which was nowhere near as bad as our situation.


"What then? What should be done in the way of dissolving this? What is it this monopoly consists of? It isn't only the monopoly of a railroad. You undertook to secure competition by bringing in the Grand Trunk. You and the people of Massachusetts did well in trying to get the Grand Trunk. But two sovereign States found themselves powerless against the great New Haven monopoly with its banking affiliations.

"It isn't the Grand Trunk, but it is the concern that made the Grand Trunk let go -- the New Haven Company -- and that concern we have full control of, if we wish to exercise it, that has deprived you of the relief by competition that you sought.

"You can't make the Grand Trunk build from Palmer to Providence. The people of Massachusetts can't make the Grand Trunk build from Palmer to Boston. But we have the power of a sovereign people to provide ourselves with iron highways if the necessity comes, just as we have the power to provide macadam highways. We have the right to provide ourselves with public service. We owe it ourselves to provide public service, if we are not receiving it.

"Your Governor and the men who acted with him acted eminently in their steps looking to the building of a road to give the service which you expected from the Grand Trunk extension. Whether it results in operating the road under private ownership or whether it is a State-named road, or you determine later the administration of it, you ought not to hesitate to break this monopoly.

"I am definitely opposed to city of State-owned public utilities, but when the time has come, when it is necessary to break a burdensome monopoly we must do so and by State or city-owned roads, if that is the only way.

"You here in the city of Providence which is destined to be a great Atlantic seaport, need excellent transportation not only to and from the West, but in all directions. How are you going to get it?

"Your cities are near one another. The trolley system properly developed would afford you opportunity for the greatest possible development.


"Why shouldn't you have competition of trolley service? Why should you be bound by one system? This trolley service declared to be worth no more than $6,000,000 is a possibility well within the reach of the people.

"Certainly, with the great wealth of numerous of your citizens, a $6,000,000 purchase would not be difficult. It is within your power to take the interests of the Rhode Island Company and then you may protect yourselves.

"It is of infinite importance in developing your coastwise and ocean traffic to which Providence is entitled to have a satisfactory and good serving trolley system. If your transatlantic service is restored, you are bound to have feeders which can be furnished you in large measure by an independent trolley system; not one in the interests of the New Haven road, but one in the interests of the people of Rhode Island. Provide proper dockage, pier and wharfage facilities so that they may come in on even terms with the New Haven.

"The indictments against Mellen and Chamberlin by the Federal Government are valuable, for they not only teach obedience to the law, but they will break off these fragments welded together in violation of the law.

"If you are to have the advance of industry, striven for in other States, you have got to do something yourselves. The law is not a substitute to the efforts of the individual.

"The day of industrial liberty is dawning and remember that you are to take some part in the liberty which means prosperity and happiness to the American people."

(Originally published in the December 29, 1912 edition of The Providence Daily Journal.)

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