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age, and now when its charges are only about 50 per cent lower than the 

 average charges of the Southern Pacific, its volume of tonnage per mile 

 of road is over 800 per cent greater than ours. We carry 300,000 tons 

 of freight per mile of road per annum, and they carry 2,700,000 tons. 

 This relation of tonnage to rates is a very important one to railroads. 

 Some people say: "Reduce your rates one half and people will give you 

 double the tonnage." If you have double the tonnage you must neces- 

 sarily have more expenses. You may not have any more taxes to pay, 

 but you will have more expenses, more fuel and supplies to buy, more 

 engineers and firemen to pay, more conductors and brakemen to pay, 

 more station service, more wear and tear upon your road, and more roll- 

 ing stock to be kept up. At any time when a railroad is in a normal 

 condition of prosperity, the lowering of its rates, if it gets enough in- 

 crease in tonnage, will not injure it; but if it lowers its rates without 

 getting a proportionate increase in tonnage, it is on the road to poverty. 

 California is in the experimental stage of development. When the 

 supply of any one of its peculiar products approaches the demands of 

 the existing markets, the profits of the industry, pending the building 

 up of new markets, are likely to be uncertain. Railroad companies of 

 this State are necessarily in hearty sympathy with every industry and 

 the interests of the community they serve. But they cannot always 

 stand in the breach between the producer and the consumer in such a 

 way as to always insure profits to the former. When they sacrifice their 

 profits to the necessities of their patrons, get down with them to a cost 

 basis and move freight for the mere cost of carrying, they should not be 

 asked to go lower. To show how far the Southern Pacific Company has 

 gone on the road toward poverty, let us look at their average rates on 

 commercial freight from 1872 up to the present time. I have a little 

 table here. It shows that in 1872 the average rate per ton per mile was 

 3.66 cents, and in 1894 for the first seven months 1.32 cents. The 

 passenger rate in the same time has gone down from 3.83 cents to 1.8 

 cents per passenger per mile. Had the rates of 1872 been maintained, 

 we would have earned over $35,000,000 more than we did actually earn 

 in 1893. Even had the rates of 1880 been earned on the traffic carried 

 during 1893 our earnings would have been nearly $19,500,000 more than 

 actually taken in by the company. So far, then, from fixing its rates 

 and standing to them, regardless of the necessity of its patrons, the 

 Southern Pacific Company has in fact, by the adjustment of its opera- 

 tions to the ever changing commercial conditions and interests of the 

 Pacific Coast, lowered its rates until it has, of its earning power, given 

 up to its patrons, even as compared with 1880, a period when the fruit 

 industrv was just beginning to become a factor in transportation, nearly 

 $20,000^000 per year. 



Our profits have come down just as the profits of all other industries 

 have come down. 



Something has been said here by way of comparing the rail rates of 

 our Pacific Coast region with the rates in other countries. I could tell 

 you a good deal about that, because it is a subject in which I have felt a 

 very great interest. The general fact is that railroad rates in America — 

 the rates overland, we are talking about — are the lowest in the world. 

 Australia has been mentioned. I know a great deal about the Govern- 

 ment railroads in New South Wales. It was my privilege last year to 

 entertain what you would call the General Superintendent of those roads, 



