The Committee, after public notice to all parties in interest,
commenced its hearings upon the subject-matter of these petitions on
the twenty-ninth day of January, and finally closed them on the
twenty-first day of March. Under the authority granted by the
legislature, a reporter was employed by the Committee, by whom It
verbatim report was made of all the testimony and arguments submitted
to the Committee. This has been printed for the use of the Committee
and of the legislature, and is now accessible to members.
Many parties were represented by counsel, and various plans were
presented.
The first proposal was that of the Troy and Boston, and Vermont and
Massachusetts Railroad Companies, for a consolidation under one
corporation of the direct line between Boston and Troy.
The second, for a consolidation of the Boston and Lowell and Fitchburg
Railroad Companies, with authority to lease or purchase the lines to
the tunnel and to Ogdensburg, placing under the control of one
corporation about fifteen hundred miles of railroad.
Third, the proposition was urged upon the Committee to provide for the
acquisition by the State of the Tunnel Line.
The attendance before the Committee was not limited to the
representatives of corporations directly or indirectly interested in
the result. Committees of the Board of Trade and other commercial
associations, and many private citizens to some extent represented the
public interests; while the larger audiences in attendance upon the
sessions of the Committee attested the deep interest of the business
community in the subject-matter under discussion.
The problem before the Committee was to determine how the people of
this Commonwealth could derive the greatest benefit from the
construction of the tunnel which has involved so large a public
expenditure.
The relations of the State to this enterprise have greatly changed
since its commencement. The tunnel was projected as a private
enterprise, which was first aided by the State by a loan of its
credit.
It was doubtless then intended that the tunnel when completed should
form a part of the through line over the Fitchburg, Vermont and
Massachusetts, Troy and Greenfield, and Troy anti Boston Railroads, to
be owned and controlled by these corporations like the rest of the
line. This project failed. The Troy and Greenfield Railroad Company
was unable with the state loan to complete the tunnel, and after great
delays and difficulties, surrendered its railroad and the incomplete
tunnel to the Commonwealth, which has since carried on the work at the
public charge. Its completion within the current year may be expected,
and the total expenditure from the treasury of the State will amount,
including interest, to about $12,000,000. This expenditure is a charge
upon the people and the property of the whole State.
It seems improbable that any disposition can be made of the tunnel
which can return to the treasury the whole sum expended, and it is for
the legislature to determine how far a return can be made to the
people of the State from this great public expenditure, in increased
means of transportation and a reduction of rates which are now a
burden upon the whole community. Since the tunnel was projected, new
lines of railroad have been built which give to nearly every portion
of the State direct access to the tunnel and through it to the great
West.
In the progress of the hearing certain points were made tolerably
clear.
_First_, That the tunnel itself should be so far held and controlled
by the State as to insure its use on equal terms by all parties.
_Second_, That some consolidation of the line or lines working through
the tunnel was essential to secure efficiency of action, and to
provide for the great business awaiting the completion of the tunnel.
_Third_, That to provide equipment and terminal facilities for such a
business, the weak and disjointed separate corporations were
inadequate, and that it was particularly desirable that some action
should be taken at the present session of the legislature.
The policy of direct state ownership was strongly pressed upon the
Committee by the railroad commissioners and other parties. The address
of Mr. Adams, in behalf of the commissioners, upon this subject, is
contained in the printed report, and is a clear and able statement in
behalf of this policy. While the experiment has been tried in other
States, and under other circumstances has failed, we do not think it
is to be condemned for this reason. These experiments were tried
before the development of the railroad system, and generally in
thinly-peopled States, where state construction of railroads was a
political necessity to supplement private capital that could see no
inducement for investment.
In the days when state management failed, corporation management
failed to quite as great an extent.
The statement of Mr. Adams, in regard to the results of the system in
Belgium, are very striking, and in England the current seems to be
settling in favor of the assumption of the railroads by the
government.
To any careful observer of the railroad development of the past
twenty-five years, there can be little doubt of a like progressive
increase in this business in the future.
If the benefit of this increase in business can be secured to the
people who furnish the traffic, instead of to the corporations who
provide the capital, an immense public benefit will follow. The most
valuable experiment to be tried at the present day is to ascertain how
cheaply railroad transportation can be afforded. Corporations formed
to make money for their stockholders, can hardly be expected to fairly
try this experiment. The greatest need of this Commonwealth is cheap
transportation. To secure this the Hoosac Tunnel has been constructed
at a cost of $12,000,000 of public money.
We are fully convinced that to secure to the people the full
advantages to be derived from the construction of this new avenue to
the West, and to secure equal lights to all parties desiring to use
it, the State must not part with the control of the tunnel. We are
equally convinced that to secure efficiency in the lines working
through the tunnel, consolidation is necessary, and that the tunnel
itself must be worked and managed for all parties using it, by one
head.
It would follow that the State, retaining the tunnel, should operate
it, and should also own or control one line of road between Boston and
the West, at the same time giving to all parties, without
discrimination, equal advantages to the tunnel. The state management
cannot afford to be unjust or to discriminate.
No private corporation can be trusted when its own interests may
conflict with the interests of other and perhaps rival corporations,
to establish or to enforce rules for the transaction of such business.
We therefore report and recommend the passage of the accompanying
Bill: "To incorporate the State Board of Trustees of the Hoosac Tunnel
Railroad."
Its purpose is to form a corporation for the management of the Troy
and Greenfield Railroad and Hoosac Tunnel, with all the powers of a
railroad corporation. It is to be composed of five trustees, to be
appointed by the governor and council, each to hold office for five
years, and one of whom shall be appointed annually. To these five
state trustees are to be added not exceeding three, one by each of the
railroad corporations whose property may be acquired or managed under
the terms of the Act.
Instead of directly purchasing the railroads constituting the direct
line, provision is made for leasing these railroads by the new
corporation upon terms which are fair and equitable for all parties.
The returns to the railroad commissioners show that the average
expense of operating the railroads of this State is seventy-five per
cent. of the gross income. We therefore propose to set apart for the
benefit of each of these corporations twenty-five per cent. of the
gross income of its railroad, out of which shall be paid a yearly
rental; and that they may not in any event be losers by the
experiment, it is proposed to guarantee to them an amount sufficient
to pay to their stockholders the dividends they are now paying, with
liberty to increase to the maximum which law or custom permits our
railroad corporations to pay.
That such a lease would receive the assent of the companies
interested, we have strong reasons to believe.
It secures to the stockholders the dividends they are now receiving.
It secures also to them the benefit of any increase of business likely
to accrue from the completion of the tunnel, to as full an extent as
they can hope to benefit by it. No railroad corporation ought ever to
pay more than ten per cent. dividends, and the legislature would
undoubtedly, under its power to regulate tolls, interfere to prevent
greater dividends.
While these corporations are thus interested in the earnings of the
roads, the bill provides that they should be represented in their
management. We shall thus secure the services of persons familiar with
the local business and history of the separate roads, and although
forming only a minority of the board of management, they must have an
important influence in the direction of its affairs.
The benefits to be gained by the State by this arrangement are obvious
and manifold.
It retains state ownership and management of the tunnel.
It secures to all corporations desiring to use the tunnel equal
rights.
It secures to the Commonwealth the full value of its investment,
whatever future developments of business shall prove that value to be.
It assumes the establishment of a strong corporation, able to provide
all equipment and terminal facilities which any future increase of
business may render necessary or advisable.
It meets all the presumed advantages of state acquisition of the
railroads, without that disturbance and removal of capital which must
follow the purchase of the railroads by the State.
It can furnish capital for the improvement of the line at a cheaper
rate than any consolidated company can procure it; and cheap capital
in disinterested hands secures cheap transportation.
It enables the State to try fairly and fully the experiment of cheap
transportation.
It creates a corporation which cannot combine with other corporations,
nor can its stock be purchased or in any way controlled by outside
parties, and is strong enough to compete successfully with the
powerful corporations of neighboring States.
Such a management we believe would be efficient and reliable beyond
that of ordinary railroad corporations. It would combine to a great
degree the advantages of state and corporate management. The governor
and council could be depended upon to appoint suitable persons as
trustees. The railroad corporations would naturally appoint their most
efficient agents as trustees. Such a board could find no difficulty in
securing the services of the ablest railroad officers to direct and
aid in the management.
It remains to refer briefly to the other propositions before the
Committee.
First, to that of the Boston and Lowell Railroad Company to unite with
the Fitchburg. This is a proposal to unite two lines in some degree
rival and competing. They are rival lines to some extent for local
business. They form parts of rival lines for distant business with the
North and West. It is a new proposition in this Commonwealth to unite
rival and competing lines. This competition will be increased with the
opening of the tunnel line. The Lowell is the natural terminus of the
Northern line, and the Fitchburg is the natural terminus of the tunnel
line. Whatever advantages may accrue to the corporations themselves
from such a consolidation, the public results will be unmitigated
evil. Not one witness unconnected with the interested corporations
appeared before the Committee to testify in favor of such a
consolidation. The evidence against it was strong and conclusive. The
Northern line by way of the Lowell and Vermont Central was shown to be
of great value to Boston and to Massachusetts. It is now in a measure
consolidated under contracts having twenty years to run, and it is
surely bad policy for the Commonwealth, having expended $12,000,000 to
create a new line, to commence its operations with the destruction of
one in full and vigorous existence. Moreover, such a consolidation
threatens more than anything else state control of the tunnel itself.
A powerful corporation, owning the whole line except the tunnel, would
soon compel the transfer of that, and until such transfer, would throw
upon the State as the owner of the tunnel the responsibility for all
the sins and omissions of the line.
The important question of an interchange of depots and tracks by the
railroads entering Boston on the north has been somewhat involved in
this hearing.
The avoidance of railroad crossings is undoubtedly of great
importance, but it has no proper connection with the disposal of the
tunnel. The Eastern Railroad Company and Boston and Maine Railroad are
agreed what changes can and should be made to avoid these crossings.
All that is essential to secure this end is to remove the passenger
station of the Fitchburg Railroad west of the Lowell, where it
properly belongs. The legislature has full power in the premises. It
can, independently of any consolidation, require the Fitchburg
Railroad Company to provide passenger accommodations west of the
Lowell station, and thus leave its present station on Causeway Street
free for the use of the Eastern Railroad Company.
If the State acquires the Fitchburg Railroad under this Act, it can
easily provide for the change. The whole question of interchange of
depots is independent of the far more important question of the
disposition of the tunnel, and should not control it. If the Lowell
Railroad can provide for the wants of the Fitchburg Railroad Company
in its passenger station after consolidation, it can do so without
consolidation.