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Railroad Commission of Ohio
Columbus, Ohio, November 15, 1908.
Hon. Andrew L. Harris, Governor of Ohio:
SIR:-On October 31, 1907, this Commission submitted to you its. second annual report, covering the period between January 1, 1907, and the date of its rendition, as required by the statute. In that report the Commission was particular to set out all the various subjects brought to its attention for administration, that the public might be advised of the nature and scope of its work. In this report the Commission has not gone into particulars so minutely. The public by this time no doubt understands the character of the work of the Commission. The thousands of cominunications annually received at this office, as well as the many complaints of a formal and informal character, demonstrate this fact.
Following out, however, the plan adopted, the present report contains in full all of the formal decisions of the Comniission rendered since the date of the last report, including reference to all cases undisposed of at that time, and the new ones since filed. The new informal complaints are also reported for such benefit as they may be to the public. The statistics of the steam and electric roads likewise constitute a very important part of this report. Other less important subjects which, in the opinion of the Commission, will be of interest to the people of the state are likewise set forth.
The Commission has been organized now for more than two years and has had a fair opportunity to demonstrate the adequacy of the law and the usefulness and practicability of the board itself.
The statutes constitute the foundation of effective regulation as concerns the public and the carriers, but regulation really assumes a much broader range, with the result that concessions are made by the railroads through the mediation of the Commission's authority, which ofttimes goes beyond the strict legal requirements of the carriers, as well as the legal rights of the public. Such concessions are due, in the main, to informal discussion, by personal conferences or by correspondence, ending in ultimate action, and based upon principles of justness and fairness cheerfully recognized by the railroads, wiio have at such times thrown aside the multitude of technical objections which might be raised. Regarding rather the question of what should be done, instead of what must be done, the carriers have oftentimes strengthened their friendships with the public by conceding something which might not have been wrung from them by legal procedure. It is this spirit which the Commission has set itself to promote and which, we congratulate ourselves, we have succeeded in doing in large part. It is to be expected that there will be occa-sions when the carrier as well as the shipper or traveler may assume unreasonable positions, but the fact that so many foi mal complaints have been settled without a hearing and an order, and that a large proportion of the informal complaints have met with satisfactory adjustment, is the best evidence of the promotion of this spirit.
The public has, since the enactment of regulating statutes, begun to discover its legal rights, while the carriers have likewise recognized that, though their business is in a sense private, yet, serving a public purpose and exercising a part of the sovereignty of the state, the public is in a way a partner in the business, and, as such, is entitled to certain rights, some of which are enumerated in the written statutes and others dependent upon the common law. It is this understanding of the mutual rights that is leading to satisfactory results in our work.
The old sin of transportation—rebating—in any form or device has been almost entirely discarded. This result has been not only to elevate the morai tone of these vast business transactions, but has resulted in replenishing the exchequer of the carriers who have been the victims of this nefarious practice until the strong hand of the law reached out to protect them from an iniquity in which they were often unwilling participants. If the regulatory law had done no other good, this one action is sufficient to justify it, and the carriers have been the beneficiaries. We feel safe in saying that no railroad company would voluntarily retrace its steps and re-establish this practice, if it were left to its choice. This may be mentioned as one of the beneficial results to railroads flowing from legislative action. There are a multitude of other benefits which might be enumerated, indicating that not only the public but the carriers themselves have been greatly benefitted, morally and financially, by regulation,
In the beginning, many shippers hesitated to make complaints against a carrier lest such complaint would be regarded as a manifestation of personal animosity toward the carrier or its representative, with the fear that retaliatory action might be taken upon the shipper. This fear has been almost entirely dissipated, as the carriers generally recognize that the complexities of railroad operation frequently evolve problems which require a full demonstration or disclosure of actual conditions, only to be had through the medium of a commission investigation. Ofttimes in these investigations the carrier learns much to its own profit and benefit, sometimes affecting the question under discussion and sometimes irrelevant to that particular subject, but nevertheless important.
The carriers find in the Commission clothed with regulative power a tribunal established for their protection no less than for that of the shipper and the traveler. In these days of legislation affecting transportation it is fortunate that our state has seen fit to clothe a body with such powers as are granted this Commission. The complaint that legislatures are not competent bodies to pass upon the subject of rates, regulations and various other services of the carrier is not without much justice. In the very nature of things a legislature cannot investigate nor properly determine what are just rates in a particular case nor what service or regulation may be required in all or many instances. By the delegation of this authority to a commission that objection is removed and an administrative body has been established which patiently hears all the various points and all the facts affecting a particular charge or service and renders its opinion accordingly. The same care and thoroughness is thus given to both sides of the controversy that could be given it by a court of law. Nearly all the states have established commissions with similar powers, and the delegation of these powers by the General Assembly has been upheld by the courts upon the principal ground that executive or administrative authority may legally be employed to carry out and give effect to the generally expressed intention of the legislature, subject to restraint by judicial tribunals when constitutional rights or privileges are invaded.
Contests in the courts have resulted from orders of this Commission, and there doubtless will be other contests in the future since the carriers have the right to an appeal. In time, however, we believe, as the principles are established, there will be less litigation and more general acquiescence in the orders of the Commission. It is impracticable for courts to grant judicial approval of rates or rate schedules prescribed by law, the tendency being to fix the lowest rates then deemed desirable, without first being able to ascertain the facts that constitute the basis for such rates. The courts have throughout the Union shown a disposition to give full weight to the findings and conclusions of commissions, so that this tendency leads to the conclusion that the commissions of the states will be regarded as the permanent tribunals for the settlement of disputed questions in connection with transportation. This fact is bound to require even a more general acquiescence in the orders of the Commission in the future.
The necessity for an improvement in the system of accounts of both steani and electric railroads has been apparent for some time. Efforts have been and are being made by state commissions as well as by the Interstate Commerce Commission to secure the necessary facts by way of reports for consideration in any rate case as well as to take into account the value of railway properties. The work of preparing a classification of accounts for reports has been an arduous one. This Commission has participated in the joint discussions of commissions, statisticians and accountants with the view of securing the most practicable and thorough reports. The statute requires the Commission to adopt such forms as the Interstate Commerce Commission shall prescribe when practicable. Having participated in the conferences upon the uniform classification of accounts, this Commission has adopted the classifications and forms of the interstate body. The statistics under the new classification of the steam lines will appear in this report, while the new classification of the electric lines will not appear until the report of 1909, as the same does not become effective, under the order, until January 1, 1909. A classification for express companies is yet to be constructed.
Car Shortage. At the time of the organization of this Commission and until one year ago, the most prolific source of complaint was due to car shortage, and the feeling that there was discrimination upon the part of the carriers in the distribution of the available supply of equipment. Particularly were there many such complaints from noncompetitive points. It appeared to the Commission that these coniplaints, especially the latter class, were, in large part, justified. Noncompetitive points have always been more or less discriminated against, and it is but natural to expect that in times of shortage of equipment the carrier would show a preference in the distribution of its available supply to the points at which it was brought in competition. It also appears that, like many other practices in transportation, many of the roads had at this period no well defined and equitable rule for the distribution of cars. The Commission, whenever complaints of this character were brought to its attention, took the shortest and most direct method to reach the difficulty and secure relief for the complaining party. Numerous cases of quick relief might be cited. It is also to the credit of the carriers in these instances that they waived the formalities upon which they might have stood, and upon