PART VII.-VIEWS AND OPINIONS OF RAILWAY MEN.

Among the questions contained in letters sent out to railway presidents and other officers were the following:

"What, in your judgment, are the elements of strength and of weakness in American railway charters?"

"What provisions should a model railway charter of the future contain?"

In most instances these letters were answered by the officers addressed. In a number of cases they were referred for reply to counsellors or other officers.

The extracts given below are representative of the replies received. As a class the railways represented belong to the important systems of the continent. It is probable that nothing of vital importance touched upon in any letter received is not reflected in the expressions quoted below.

"In a general way, I should say that an important point would be gained if all railroad charters were issued under general laws instead of specific legislation for each charter, and uniformity between laws of the States be brought out as far as practicable. This would avoid the creeping in of many faults which get out under special legislation."

W. G. RAOUL, President The Mexican Nat. R. R. Co.

"In my judgment, there should be some provision in each State that would make it impossible for speculative roads to be built. By speculative I mean that class of roads that are organized for the purpose of crippling an already existing road in the hope of so annoying the property already in the field that in self-defense they pay a good round price in order to get rid of a competitor when the original line is serving the public well and a paralel line would probably wreck the stronger line. I think it is the history of railroads that the weaker can pull down the stronger."

W. J. CARPENTER, President Chicago and Eastern Illinois Railroad Company.

"Personally, I believe that the time has come when future railroads should be built under the supervision and control of some State board, and that the laws should be such that they could not be overcapitalized and no roads should be built to parallel another road already in existence, unless it could be proven that the business in the territory through which the new road was to run was sufficient to justify and make a paying investment on a legitimate amount of capital invested." R. S. KAYLOR, Commissioner of Railroads and Telegraphs, Ohio.

"The general incorporation laws of this State seem to be fairly well adapted to our condition and situation, and, while affording ample protection to the interests of the State, they are sufficiently liberal to encourage the organization and successful operation of railway companies.

Under the constitutions of this State railway companies are subject to legislative control."

THOMAS BURKE, Counsellor, Seattle, Wash.

“All railroads in the State are operated and controlled under the provisions of a general railroad law. No special charters have been granted railroad companies

since 1865, the constitution of the State prohibiting special legislation of any character. There are 2 or 3 charters granted prior to 1865, and which are still in existence, but the companies comply with the provisions of general law. The operation and control of railroads of this State are satisfactory, and there seems to be no good reason for changing the present status regarding these matters."

"If it be intended to effect an improvement in the incorporation acts of the individual States, I can think of no greater improvement than a uniformity of such laws in all the States, so that a corporation would not come under different laws at the crossing of every State line." J. B. REDFIELD,

"I am frank to say, however, that I believe the best thing possible for owners of railway enterprises-and hence for their property-as well as the best for the people at large will never have been done until all the great lines doing a through business shall have come under the control substantially of a single organization, for until then there will always be bickerings, jealousies, rate cuttings, rebates, and drawbacks of all kinds and unjust discriminations in favor of particular patrons, and a host of other evils too numerous to mention. Under one organization, which would mean one broad general policy, the charging of greater rates for a short than for a long haul would not be, as it were, a necessity of the situation, excepting perhaps where the road came into direct competition with water lines; everybody would be charged the same price for the same transportation, and the saving in the expense of management would be enormous. I believe that $100,000,000 would hardly pay the additional expense entailed by the expenditures made in New York for railroad offices, employees, etc., which are made necessary under the present system in order to solicit and compete for business for the different railroads, involving an enormous aggregate for rebates, and an enormous loss on account of rate cutting, which does not help the public at large, but is wasted in incipient and constant warfare. As it is to-day, a man who has 10 carloads of freight to ship will be sought by probably 20 men on the average from different railroad offices, who in their scramble for the business are almost sure to cut the rate to the disadvantage and detriment of the vast body of shippers— especially the smaller ones-who should by right have precisely the same privileges and opportunities that fall to the lot of some favored man who has large enough shipments to make and to attract the cupidity of the various carriers." C. P. HUNTINGTON, President Southern Pacific Railway Company.

"Answering your letter of July 11, we have to say that railroad companies are organized in this State under the general incorporation laws of the State. No special charters are permitted by the constitution of the State. By the terms of the constitution the legislature reserves the right to regulate railway transportation and to prescribe reasonable maximum rates which transportation companies should charge for freight and passengers. The constitution. also gives the legislature power to require by law that railway companies shall interchange cars and transport products in bulk from one point in the State to another point in the State. The legislature, however, has not passed any law to make this provision of the constitution effective. The only fiscal limitation on railway corporations in this State is that they should not issue bonds to more than twice their capital stock.

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"Foreign corporations have the same rights in this State as local corporations, upon complying with the law which requires a foreign corporation to file its articles and appoint an agent upon whom service of process can be made. We think that a defect which should be corrected in all railway law now existing is the want of uniformity. Modern railways are the means of carrying on interstate commerce, whether the physical property be located within one State or more than one. Any State legislation which assumes to affect transportation within the boundaries of a State necessarily has its effect upon interstate business. For this reason we do not think it would be any stretch of the spirit of the Constitution of the United States to place the whole transportation business of the country under a Federal law which would be uniform throughout the

INDUSTRIAL COMMISSION:

TRANSPORTATION.

country and would exclude local legislation by the several States. Such a uniform law providing for uniform regulation and control by a commission having judicial powers would in our judgment go far toward relieving transportation companies of many of their difficulties, and at the same time giving better service to the public. Under authority of such commission competition and pooling could be controlled, better service given to the public and at cheaper rates, while the stockholders would receive more regular dividends, and would be protected against wild-cat financiering."

CROWLEY & GROSSCUP, Counselors, Tacoma, Wash.

"Under present conditions in the United States, the issuance of charters by each State is, it seems to me, pernicious in its results. The laws of the different States vary considerably, but in the most of them a charter can be secured for a small fee. This, in my judgment, has resulted in many blackmailing schemes, and has probably resulted in more railroad bankruptcies in this country than from all other causes combined.

In my opinion charters should only be issued by the Federal Government, except for street railways and such enterprises as are known to be absolutely local in their sphere of operations. To accomplish this result will, no doubt, be very difficult while the doctrine of State rights is so firmly held by many people.

"This, it seems to me, ought not to stand in the way of a discussion of what ought to be accomplished. My view is that a commission, the members of which are appointed on the same basis as the members of the United States court, should constitute a body before which all applications for railway charters should be laid. This commission should be nonpolitical in its character, and composed of civil engineers, lawyers, and men of business qualifications, limited to say 5 in number, and charters for railroads should only be issued on the recommendation of this commission followed by legislative enactments.

"Some new method for the issuance of charters is certainly very necessary, not only in the interests of investors, but also in the interests of the people, as the present practice has resulted in the building of many cheap and unnecessary railways, which have much increased the expense of transportation over what it would have been had the railways constructed been built on strict requirements, necessary attention having been given to securing a line of the least expense in operation, which, in most cases, has been grossly disregarded. The result is that the people have to support these railways, improperly built, and therefore incur an enormous tax which might have been avoided under judicious governmental supervision."

President Mexican Central Railway Company.
A. A. ROBINSON,

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"I think the only addition I would make to what he (Mr. E. W. Meddaughsee next quotation) suggests is that the charter should provide somewhat in detail as to the character of the road that should be built; in other words, should specify the alignment, curvature, width of embankments, maximum gradients, character of masonry, bridges, number of ties per mile, weight of rail, and character of crossings over highways, whether level, overhead or subways, and the same as to intersections of other railway lines, all of which should be in accord with the specifications prescribed by the board of railroad commissioners for the State, or other board vested with such authority. This would prevent, more than any other provision that could be enacted, the building of superfluous and unnecessary lines not demanded by public necessity, but built for purposes of speculation and blackmail-something which has in the past prevailed to a great extent and which is responsible for the competition and unremunerative rates prevailing on many of the railways of the United States."

CHARLES M. HAYES,
General Manager Grand Trunk Railroad System.

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"The elements of weakness' in American railway charters are more numerous than the elements of strength.' Very few special charters have been granted within the last thirty years. Railway corporations which have come into being within that period have been organized under general incorporation acts, and are

subject to constitutional or statutory provisions reserving to the legislature the power to amend, alter, or repeal. This reservation deprives the corporation, in some degree, of the contract immunity from legislative interference. However, even with this reserved power, there is a limit beyond which the legislature can not go. Unreasonable rates of transportation can not be prescribed. The legislature can not interfere with or control the corporation in the management of its affairs not affecting the safety, health, or reasonable convenience of the public. Whether or not a legislatively prescribed rate is reasonable is a judicial question, and the carrier may always have recourse to the courts for its determination. But the test of reasonableness is not fully settled.

"And so it may contest the validity of any legislative act touching the management of its internal affairs. But here, too, there is uncertainty. The boundary line between matters of such public concern as to warrant legislative interference, and matters of which corporation has exclusive right of control, is not clearly defined nor easily definable.

The almost unlimited taxing power of the States under these general acts of incorporation as respects railway property is, perhaps, the most to be feared in the future. The power has been abused in most of the States, and the manifest tendency is everywhere to impose on railroad property a gradually increasing portion of the common public burden. This policy is, of course, popular with the people, as the higher the tax on railroads the lower the tax on other property, and the legislators represent their constituents. If there exists any judicial remedy for this it is not apparent.

Now railroad property differs from other property in that it is devoted to the service of the public. A railroad once built must remain and be operated so long as it will pay operating expenses, even though its owners never realize $1 on their investment.

Rates of transportation may be fixed by the legislature. These conditions would justify, if they do not in justice demand, consideration by the Government in prescribing a system of railway taxation. Under existing methods the public take toll at both ends. They get low rates of transportation and a high rate of taxation-both through legislation.

"A model railway charter would irrevocably fix the percentage on the capital investment which a railway company should receive from its earnings-thus prescribing a limit to legislative curtailment of rates. It would define, as accurately as well-chosen general language can, the boundary line between legislative right of interference with or control of the business and the corporation's right of exclusive management. Something helpful can be done in this direction, I am

sure.

"It would prescribe a definite basis of taxation, having reference to the exceptional character of the property and the fact of its permanent dedication to the public use, and this basis would be irrevocable.

Finally, it would make the issuance of a free pass or the gratuitous transportation of property cause of forfeiture of the charter."

But my idea of the charter for a railway would be that every point which might possibly arise in the future should be definitely determined in the charter, such as power of eminent domain, the privileges attached to the use of water from streams or artificial ponds, with condemnation of lands for such uses if neccessary; also the right to use any material on the right of way at any point on the line where it might be needed, with the rates and fares for freight and passenger traffic fixed, or at least a minimum fixed, so that no future legislature or railway commission could interfere therewith. Whether such a charter as this could be obtained from any legislature in the United States I very much doubt, but a charter with such provisions would be to my mind much better than to leave the railways to the mercy of succeeding legislatures or railway commissions."

In reply to your question, I would say that the elements of strength in American railroad charters rested, for many years, on the well-known Dartmouth College case, but that decision has been frittered away by the courts and belittled by Federal and State legislation to such an extent that there is little left of it, and

to-day the weakness in American railroad charters is that, as contracts, they seem to bind the corporations without binding the States which granted them.

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To my mind the ideal charter would be one which, whatever its provisions might be, should state them clearly, and forever equally bind both the State and the corporation to their fulfillment.

"I may add that the railroads of this State, under its general railroad laws, which are subject to alteration, amendment, or repeal at any time, have received reasonably fair treatment at the hands of the legislature. While the transportation facilities, with respect to territory and population, are very extensive by rail in comparison with other places, as well as by water, the railroad transportation companies of this State have been very unprofitable investments. The company, under its special charter, is practically the only railroad which has not been a losing venture. It has never defaulted, and has paid interest and small dividends upon the very reasonable amount of its bonds and capital, and by virtue of the arrangement which it has made for the operation of other lines, under the general railroad law, it has conducted their operations and unquestionably saved several of them from bankruptcy. The industries of the State have grown, and there have been but few complaints from shippers.

"With respect to the portion of the State served by this company, operating under its charter, whether by reason of the fact that it is the most fruitful and populous territory reached, or whether by reason of the facilities extended by the company, it is certain that this portion of the State has excelled the rest in the increase of population and value of property."

HENRY RUSSELL. Counsellor, Michigan Central Railroad Company.

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"The railroads in this Commonwealth have very little more power than ordinary business corporations, the right of eminent domain being the most important, and that exercised under very rigorous restrictions. All railroads in this State are now subject to the general laws and are under the supervision of a board of railroad commissioners, of which the power is very plenary. The general law in reference to Massachusetts railroad corporations and the powers of the railroad commissioners are set out in chapter 112 of the Massachusetts Public Statutes and the amendments thereto contained in the acts from 1882 to 1899. In addition to this chapter, railroads are subject to section 3, chapter 105 of the Public Statutes, which makes every act of incorporation subject to amendment, alteration, or repeal, at the pleasure of the general court. In view of these general laws the original charters under which these railroads are operated are of little or no material value. The incorporation, organization, laying out of route, issuing of stock, exercise of eminent domain, rates of fares, and all the smaller details of railroad operations are provided for in the general statute applicable in all

cases.

"In the original charters of at least two of the railroads organized here, a right in the State to purchase the railroad at any time for the amount of investment with 10 per cent a year added was reserved. This, however, is superseded by a general right to take possession of any railroad in the State reserved to the Commonwealth in sections 7 and 8 of the aforesaid chapter 112."

LUCIUS TUTTLE,

President, Boston and Maine Railroad Company.