Legislation on Railroad Tariffs [pp. 318-323]

LEGISLA TION ON RAILROA D TARIFFS.
to control their own transportation charges; a lower rate than that allowed by
any other State at the time, and therefore thought to be the more secure from
disturbance. This is a valuable franchise, and was unquestionably so regarded by the purchasers of our railroad
bonds. This franchise, among others,
thus guaranteed, constituted the foundation of each company's credit, and gave
to its bonds a certain money value. Upon these franchises and assurances were
the bonds sold and purchased; and with
the money so obtained were the railroads
built. We submit, therefore, that the
purchasers of these bonds thereby acquired a quasi-property in the franchises
which the legislature had assured to the
several railroad companies. Relying upon these franchises as a resource by
which the companies would be enabled
to pay the annually accruing interest
upon their bonds and ultimately redeem
the principal, capitalists lent their money, and the country now, as the result,
enjoys these invaluable improvements.
It is clear, therefore, that in assaulting
these franchises it is not the railroad
companies alone that are assailed; but
the rights and securities of these confiding creditors are also attacked, and, as
a necessary consequence, the value of
their bonds is impaired in the money
market. As another consequence, the
credit of the companies thus attacked is
also ruined; and the character of the
State, as unfaithful to its pledges, can
not fail to suffer in the world's esteem.
Thus we have a glimpse at the serious
and injurious consequences resulting
from a single act of willful wrong-doing.
Disguise it as we may, by specious showings and special pleading, the proposition involves a deliberate act of repudiation. Fortunately, however, so far as
our own State is concerned, the case we
are considering is yet hypothetical; we
have not yet done the wrong; it has
only been proposed; we have so far es
caped the infliction. Let us hope that
the good sense and the magnanimity of
the people of California will reject the
insidious proposition. One thing more
in this connection, however. We have
attempted, in the preceding sentences,
to illustrate a financial law namely,
that the mere nominal ownership of
property can give or insure to such owner no credit, if it be known that the control is severed from the ownership. The
truth is, as we have already suggested,
that control is ownership; to talk of separating the one from the other is absurd.
The law, as heretofore recognized and
administered in our civilization, knows
no such property relation as control
without ownership.
We have at hand an instance which
serves to illustrate the mischievous consequences resulting from the attempt to
break up this relation between ownership and control. When the war upon
our railroads began, those engaged in
this branch of industry had it in contemplation to construct several additional
lines, reaching into different parts of the
State, with a view to a grand system of
roads, needed to develop fully our resources. Experience has proved that a
main line once constructed needs connecting lateral lines as feeders, while
each new road demonstrates the necessity for others, until the entire system is
completed, and the interior in all directions suitably accommodated. Such was
the grand scheme which our public-spirited and energetic railroad builders had
in view. But, unfortunately for the public welfare, the violent partisan warfare
about that time organized and precipitated upon the State, so impaired the
credit of our railroad companies that
their purpose had to be abandoned, and
must remain so, at least for an indefinite
time, and until a better informed and
more stable public opinion shall finally
silence these ill-advised clamors. The
threat made in these assaults, to sepa
[OCT.
320