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lar discontent resulting from discrimination and extortionate charges and the profligate disposition made of the proceeds of land-grants and of aids of various sorts extended by the State, and by counties, towns, and individuals.
The Potter law embraced the establishment of maxima rates and the prevention of unjust discriminations. Provision was made for instituting summary proceedings, and severe penalties were denounced.
This law appears to have been subject to several serious objections, very clearly set forth in the report of the commissioners of Wisconsin for the year 1874, the first of these objections being that it bore very heavily upon the new roads. Since the amount of traffic upon a road is the most important condition of cheap transportation, evidently it would be impossible even to pay the operating expenses of a new road if freight-charges were limited to the rates prevailing on roads having a large and well-established traffic.
A second objection mentioned by the commissioners is that the law was not sufficiently elastic. The varying conditions of commerce obvi. ously point to the necessity of a change in freight-tariffs corresponding with the fluctuations of trade, but the law made no provision of this sort.
Third, the law took no account of short distances. For example, the charge allowed for transporting a car-load of freight one mile was the same as for twenty-four miles.
Fourth, the law treated connecting lines as continuous, but was silent as to a division of earnings.
The various inconsistencies of the law are set forth by the commis. sioners, and they are also presented in several documents submitted to the Wisconsin legislature by the Chicago and Northwestern Railroad and the Chicago, Milwaukee and Saint Paul Railroad Companies. The commissioners themselves, after a very thorough investigation of the whole question of the governmental regulation of railroads, have reached the conclusion that the regulation of fares and freights by the State should be regarded rather as an expedient for the correction of abuses than as a permanent substitute for the management of railroads by officers in the employ of the railroad corporations. This view is clearly set forth in the following extract from the report of the commissioners for 1874 :
Surely there is no apology for the exercise, on the part of the State, of any power over corporations which can be safely and as wisely exercised by the corporations themselves. There is no principle of American government so thoroughly or so properly established as that which limits the province of legislation, at all times and under all circumstances, to enactments for the general good, and which denies to Government the right or the duty of unnecessary interference with private or public enterprise.
Sabsequently the railroad law of Wisconsin has been modified in several important particulars.
A better understanding of the railroad question in the State of Wisconsin has resulted from the experience acquired under the Potter law. The information which has been gained has tended to correct many erroneous views, and the disposition manifested by the railroad com. panies to comply with the legitimate demands of the people, with respect to their commercial and industrial interests, has also tended very much to bring about a change in public sentiment.
Michigan.—The office of commissioner of railroads was established in Michigan by act approved April 10, 1873. This act required the commissioner, in his annual report, to offer such suggestions as he might deem appropriate, as to “ whether a classification of freights can be made, and, if so, in what manner; also, whether any railroad corporations make any discrimination in the matter of freight-charges between points intersected by competing lines and points not so intersected, and what change should be made in the law to promote the interests of the railroads and of the public.”
In the first report of the railroad commissioner, submitted December 31, 1873, the difficulties attending any attempt to prescribe rates are set forth. It was found that the operating expenses of three railroads had exceeded their gross earnings; that the net earnings of others had not equaled the interest on their funded debts, and consequently that such roads were gradually sliding into bankruptcy; and also that the average income, even of the most prosperous roads in the State, after deducting operating expenses, was only about 6 per cent. on the investment made in them. In consideration of these and other facts touching the different conditions affecting the cost of transportation on the railroads of the State, the commissioner reported very decidedly against the plan of regulating freight-rates by law, the opinion being also expressed that the State should rather seek to develop its railroad system by a liberal policy than adopt any plan of restrictive legislation which might tend to check the construction of new lines. In each of his subsequent reports the commissioner has adhered to the recommend. ations made in 1873. The State has never yet adopted any law limiting freight-charges.
The duties of the commissioner relate chiefly to matters of a police nature, especially to those pertaining to the safety and convenience of travel and transportation. He is also charged with the important duty of collecting information as to the operations and the financial status of the various roads of the State. Such information and facts, presented by the commissioner as the result of his general investigations of the rail. road question, bare tended to throw much light upon the subject. The moral effect of this information, and of a kuowledge of the effects of restraints upon railroads in States where restrictive legislation has been adopted, has tended to prevent unjust discriminations and extortions. There appears to have been a steady reduction in rates, both on the main and on the branch lines of the State.
Onio.—The people of Ohio have for several years taken a deep interest in the railroad question in that State. In the year 1867 measures were instituted for collecting the necessary information in order to arrive at a proper understanding of the subject, and the office of railroad commissioner was created. That officer was charged with the duty of attending to the enforcement of railroad laws, and especially to requirements in regard to the safety and comfort of passengers as well as to the obligations of railroads as common carriers.
The commissioner is required to present to the legislature annually a report embracing statistical and other facts in relation to the operation of the various railroads in the State, according to forms prescribed by law. The commissioner is also empowered “ to examine into all violations of any of the laws of the State relating to railroads by any officer, employé, or agent of any railway company coming to his knowledge by complaint or otherwise, and, if true, to report the same in his annual report to the governor; and, further, he shall prosecute or cause to be prosecuted all violations of any of the laws relating to railroads."
The railroad commissioner, in his report for 1875, says that “this requirement is apparently mandatory, but, if so intended, subsequent legislation has in some cases ignored and in others nullified it.” A civil engineer charged with the duty of inspecting bridges, cars, and the superstructure of the roads is employed under the general direction of the commissioner. The legislature of Ohio has passed laws forbidding discrimination by the charging or receiving of a larger sum for the transportation of freight than is charged by the same line for an equal or greater distance in the same direction for similar freight, (act March 11, 1872,) and by act of the legislature of March 30, 1875, maxima rates were established, as follows:
Passenger rates not to exceed 3 cents per mile for a distance of more than 8 miles, provided the fare shall always be made that multiple of 5 nearest reached by multiplying the rate by the distance, and for transportation of property not exceeding 5 cents per ton per mile when the same is transported a distance of 30 miles or more, and in case the same is transported a less distance than 30 miles, such reasonable rate as may be from time to time fixed by said corporation or prescribed by law.
Certain exceptions are made with regard to the transportation of coal, pig iron, mill-stones, iron-ore, undressed stone, and lamber.
The commissioner, in his report for 1875, points to a very glaring defect in the law, namely, that it "only specifies a maximum rate per ton per mile, without reference to whether coal, ore, lumber, or the lighter and more valuable articles which of necessity cannot be carried so cheaply or economically.”
It is believed that the railway question is becoming better understood in the State of Ohio, and that a more amicable feeling is growing up between the people and the railroads.
Iowa.-The railroad question has been one of great interest in the State of Iowa during the last five years, the complaints urged with respect to discriminations, exorbitant charges, &c., being quite similar to those which have been made in other States. The principal source of complaint was that unjust discriminations were made between shippers. The published rates of some of the companies are said to have afforded no indication of the rates actually charged, except to occasional shippers. Special rates appear to have been made 40 per cent. be. low the published rates. Such practices were evidently in the face of well-established principles of law regarding the duties of the common carrier, and were calculated to paralyze legitimate trade.
In 1874 the legislature passed a railroad-tariff law, fixing the maxi. mum rates for fare and freight, and prohibiting unjust discriminations. The schedule of rates was copied from the schedules adopted by the rail. road commissioners of Illinois. Attention is called to the elaborate statement presented to this Department by Col. Milo Smith, of Clinton, Iowa, covering the whole question of railroad legislation in that State. (Appendix, page 92.) It is therein shown that the practical workings of the law, as applied to the commercial interests of Iowa, are entirely different from those which apply to the Illinois roads. The trunk-lines of the State of Illinois, lying mainly within the territorial limits of the State, are subject, both with respect to their local and through business originating in the State, to State regulation. The case is, however, quite different in the State of Iowa, the traffic being mainly between different States, and, as such, subject only to regulation by the National Government. This fact is clearly indicated by the following statement as to the proportion of the traffic of the various trunk-roads of the State, which is "local,"and therefore subject to regulation under the law:
Percentage of local traffic
Chicago, Burlingt and Quincy Railroad
15 to 20 20 to 25 23 to 27 15 to 20
It may be stated generally that only about 20 per cent. of the traffic of the principal railroads of Iowa is subject to the State laws regulating rates and fares. The companies may therefore recoup from their through or interstate traffic in whole or in part what they lose in consequence of the operation of the laws relating to their local traffic, the only restraint upon them being the effects which the competition of rival roads and of rival markets may exert in controlling through rates.
The Iowa railroad-tariff law of 1874 appears to have been rery crude. Rates on branch lines were made the same as upon the trunk-lines, and the law in various ways produced discriminations. This led to subsequent modifications, designed to correct the mistakes made through inexperience in railroad legislation.
Missouri.—The State of Missouri, by act of the legislature approved March 29, 1875, adopted almost the identical provisions of the socalled “Potter law” of the State of Wisconsin. No attempt had been made prior to the passage of this law to obtain information in regard to the economic, commercial, or financial conditions surrounding the railroads of the State, a knowledge of which is necessary in order to determine the distinction between just and unjust discriminations.
There are certain discriminations made by the railroads of Missouri which are manifestly in the interests of the citizens of Missouri. For example, the discriminations made by roads leading to the city of Saint Louis, the chief commercial city of the State, in order to enable those roads to defend their own interests and those of the city against rates made by competing railroads tributary to rival cities in other States.
The act of 1875 provides for the appointment of three commissioners, charged with the duty of annually reporting to the legislature in regard to the economic, commercial, and financial interest of the various roads of the State, of attending to the enforcement of the laws with reference to matters of safety and police, and with the duty of prosecuting all violations of the State laws in regard to railroads. The commissioners are now earnestly investigating the whole subject of the relation of the roads to the State, and the results of their labors will be presented to the legislature at the next session.
In a special report made by the commissioners, dated February 25, 1876, it is stated that only five of the shorter roads in the State have complied with the terms of the law, the other roads maintaining the position that, by their charters granted prior to the adoption of the new constitution of the State, they are exempted from legislative control. The legislation of the State of Missouri touching the granting of charters to railroads, presents many legal complications, and the question as to whether the roads shall or shall not comply with the provisions of the recent law is yet to be determined by the courts. The commissioners have pointed to several glaring defects in the law, among which may be mentioned a failure to provide the proper means for the enforcement of its provisions.
New Hampshire and Vermont.-Railroad commissioners have been appointed in the States of New Hampshire and Vermont, charged mainly with the duties of collecting statistics and of attending to matters relating to the condition of road-way and equipment and matters of safety and comfort of passengers, and of annually reporting in regard to the condition of the various roads of the State.
Concluding remarks in regard to State regulations. An obstacle to the efficacy of State regulation of rates and fares on railroads is presented by the fact that the chief commercial movements of the country are across State lines, and therefore not subject to the provisions of State laws, but fall within the jurisdiction of the National Government.
In a decision rendered in the year 1875, by Judge Dillon, in the United