As if foreseeing what has taken place in our day, Washington, in his Farewell Address, said:

It is important, likewise, that the habits of thinking, in a free country, should inspire caution in those intrusted with its administration, to confine themselves within their respective constitutional spheres, avoiding, in the exercise of the powers of one department, to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create, whatever the form of government, a real despotism. A just estimate of that love of power, and proneness to abuse it which predominates in the human heart, is sufficient to satisfy us of the truth of this position. The necessity of reciprocal checks in the exercise of political power, by dividing and distributing it into different depositories, and constituting each the guardian of the public weal, against invasions by the others, has been evinced by experiments, ancient and modern; some of them in our own country and under our own eyes. To preserve them must be as necessary as to institute them. If, in the opinion of the people, the distribution or modification of the constitutional powers be, in any particular, wrong, let it be corrected by an amendment in the way which the constitution designates. But let there be no change by usurpation; for though this, in one instance, may be the instrument of good, it is the customary weapon by which free governments are destroyed.

Do not understand me as suggesting that the intelligent and honorable men who are and have been members of the Interstate Commerce Commission have attempted to usurp power, but only that all the other branches of government, and particularly the courts, look with disfavor upon the exercise by one body of these three functions of government.

Washington's plea to his fellow-countrymen on behalf of the constitution was addressed not only to their patriotism but to their pocketbooks. To guard against the despotic encroachments of one branch of government on the others is to-day our duty and our interest. But what are we as a nation doing in respect to the corporations which carry our domestic commerce by rail? Nearly every state has legislated and is legislating, not for the regulation of the railroads as a whole but selfishly in respect to those within its borders and chiefly in the direction of the curtailment of the profits of the business, and our National Congress is aiming to do the like. Congress has gone so far toward what Washington called creating a despotism as to authorize one body, the Interstate Commerce Commission, to exercise legislative, executive and judi

hours of labor; to take from the railroad companies (which the law requires to safely conduct their business) the right of selecting their employees, and to lessen among such employees the measure of care which they have heretofore exercised over the safety of the passengers and goods in their charge. What does fining a railroad corporation effect except to lessen the profit of the innocent stockholders and diminish the inducement to build new railroads, or extend and better old ones?

There is in the highest and truest sense "an indissoluble community of interest" between the nation and the railways. The real owners of the latter are our own people and as much entitled to the fostering protection of our laws, federal and state, as are any other individual citizens. That our courts are of this way of thinking is well known. One of the judges of the Supreme Court of the United States, Mr. Justice Brewer, in an opinion rendered a fortnight ago, in the case of Interstate Commerce Commission v. Chicago and Great Western Railway, said:

It must be remembered that railroads are the private property of their owners; that while from the public character of the work in which they are engaged the public has the power to prescribe rules for securing faithful and efficient service and equality between shippers and communities, yet in no proper sense is the public a general manager. As said in Int. Com. Com. v. Ala. Mid. R. R. Co., 168 U. S. 144, 172, quoting from the opinion of Circuit Judge Jackson, afterwards Mr. Justice Jackson of this court, in Int. Com. Com. v. B. & O. R. R. Co., 43 Fed. Rep. 37, 50:

"Subject to the two leading prohibitions that their charges shall not be unjust or unreasonable, and that they shall not unjustly discriminate so as to give undue preference or disadvantage to persons or traffic similarly circumstanced, the act to regulate commerce leaves common carriers, as they were at the common law, free to make special rates looking to the increase of their business, to classify their traffic, to adjust and apportion their rates so as to meet the necessities of commerce and of their own situation and relation to it, and generally to manage their important interests upon the same principles which are regarded as sound and adopted in other trades and pursuits."

It follows that railroad companies may contract with shippers for a single transportation or for successive transportations, subject though it may be to a change of rates in the manner provided in the Interstate Commerce Act-Armour Packing Co. v. The United States, ante,-and also that in fixing their own rates they may take into account competition with other carriers, provided only that the competition is genuine and not a pretense. (Citing authorities.)

It must also be remembered that there is no presumption of wrong arising from a change of rate by a carrier. The presumption of honest intent

and right conduct attends the action of carriers as well as it does the action of other corporations or individuals in their transactions in life. Undoubtedly when rates are changed the carrier making the change must, when properly called upon, be able to give a good reason therefor, but the mere fact that a rate has been raised carries with it no presumption that it was not rightfully done. Those presumptions of good faith and integrity which have been recognized for ages as attending human action have not been overthrown by any legislation in respect to common carriers.

It is high time that our legislatures, federal and state, should call a halt and consider the real interest of our whole people. That there is much of wrong in railroad management I am free to admit. But now that rebating and other discriminations have been stopped, not at all through the passage of new laws but through the enforcement of old ones, the wrong is no longer to the public, but consists almost entirely of frauds committed by the managers, presidents and directors, on the stockholders who have irrevocably dedicated their private means to a public use. Against breaches of trust committed by officers and directors, on their stockholders, the common and the statute laws provide abundant remedies. But in the administration of those laws practices have grown up, which make it almost impossible for the minority to assert and maintain their rights against a majority in power.

As I said here, in Philadelphia, a year ago, in an address before the Wharton School of Finance and Commerce of the University of Pennsylvania, "No railroad fortune was ever made through enhancing rates, oppressing shippers, or withstanding the general tendency of rates to decrease. And what is more, every dishonest railroad fortune has been made, not by oppressing shippers, but through robbing the stockholders. Should you ask why these stockholders have not sued for restitution, I would remind you of the cost and delay of such litigation, and of the fact that if restitution should be made, it would be to the corporation, of which in all probability the same persons would remain in control, as the majority holders and as officers and directors, so that the funds restored would simply revert to their custody and their tender mercy."

It has been shown that the increase in the wealth per capita has grown with the growth of our railroad mileage. The nation

each needs to husband all its resources. Not long after the Civil War a distinguished Southern Senator, later known as Mr. Justice Lamar of the Supreme Court, in his epoch-making eulogy on Charles Sumner, said, "My countrymen, come to know one another and you will come to love one another." Can we do better than to hope that through discussions such as we are having to-day, the nation and the railways may come "to know one another and to love one another" for the mutual good of both?

FIVE YEARS OF RAILROAD REGULATION BY THE

STATES

BY GROVER G. HUEBNER,

Harrison Fellow in Transportation and Commerce, University of Pennsylvania.

In 1902, the Interstate Commerce Commission, in an exhaustive report, tabulated the laws which the state legislatures for twenty years past, had enacted for the control of their common carriers. Since then, five legislative years have passed, and at no other time of equal length in the history of state railroad control, have the commonwealth legislatures enacted more railroad laws than during the last half of this period. In half a decade, over eight hundred separate provisions were enacted to regulate the common carriers engaged in intra-state traffic.

For purposes of analysis, the chief provisions may be classified into six groups: (1) The newly created commissions; (2) Amendments to older commission laws; (3) Freight rate and passenger fare acts; (4) Acts designed to regulate the service of public carriers: (5) Corporate affairs, and (6) Public safety.

(1) Newly Created Commissions.-While in 1902 there were thirty-one state1 railroad commissions, at present there are thirtynine. As seven of the old commissions, however, were displaced by bodies vitally different, it is permissible to say that during the last five years fifteen new commissions were created.

For purposes of comparison these newly created commissions may be divided into four groups. First, and most numerous, are those whose rate fixing authority, consists of the power to revise rates as distinct from the power to make complete schedules. The commissions of Wisconsin, Ohio, Colorado, Michigan, Nevada, New York, Oregon, and Vermont, are of this type. In these states, the work of making the complete schedule of rates for the intra-state traffic

Including Virginia Corporation Commission, created by constitution in 1902, but not appointed until 1903.

The commissions of Wisconsin, Ohio, Colorado and Michigan consisted of but one commissioner; those of New York, Alabama and Vermont were displaced by new commissions.