TRACK LAID DURING THE FIRST SIX MONTHS OF 1885.

This table shows that in the period named fifty-three miles of track were laid in this State. Georgia stands second among the States lying south of the Ohio, and east of the Mississippi rivers, in railway construction during the first six months of the present year.

There are six new lines of railroad now in actual course of construction in this State, as shown by this table. In new enterprises of the character mentioned, Georgia stands, with Texas, at the head of the list in the whole country. From this it can hardly be reasonably inferred that the action of the Railroad Commission of this State has had the effect of either preventing or crushing out railroad enterprises within our limits.

What we have already said on this point, together with what we shall hereafter add, when we come to speak of the direct effect which the execution of the Commission laws has had upon our railroad interests, will show very conclusively, we think, that the existence of such laws has produced no injurious consequences to the people of the State.

2nd. Has the exercise of the powers given by law to the Commissioners proved injurious to the railroad interests of the State?

It is claimed that the execution of the law by the Commissioners has had the effect of impairing the credit of the railroad companies. It is alleged that they cannot place new bonds so as to redeem their old ones, because their business, instead of being controlled by themselves, is in the hands of the Commission. Are these allegations correct? We beg to present the following table showing the values of the stocks and bonds of a number of the railroad companies of this State, on the 1st day of July of the years mentioned. This statement is taken from reports which we find in the Atlanta Constitution:

The foregoing table shows that the old bonds of the companies are at a high value in the market, notwithstanding the ruinous effect which it is pretended the exercise of the

Commissioners' powers has had upon the railroad interests of the State. If the acts of the Commissioners have not depreciated the old bonds, it is difficult to understand how such acts could have the effect of so impairing the credit of the companies, as to prevent the redemption of their old securities by the issuing of new ones.

We submit that the facts demonstrate that the fears felt upon this subject by the companies are merely imaginary.

But it is also claimed that the action of the Commissioners, in the exercise of their powers, has depressed the value of the railroad stocks of the companies of the State.

Taking the case of the Central Railroad and Banking Company, as an illustration, we find that its stock fluctuated in value from 1879, the year the Commission was established, to 1883 inclusive, as follows: On July 3, 1879, the price offered was 64c. On the same date, in 1880, the offered price was 78c; in 1881, on the same date, $1.22 was offered; in 1882, the same date, 89c was offered; in 1883, the same date, 97c was offered.

Since the last named date, the stock of the Company, with many fluctuations, has generally declined, and the offered price for the same, on June 30, 1885, was reported at 60c. The chief reason for the marked decline in the value of the stock of the Central Company, after 1881, will be found in the fact that the Company, since that date, has issued to its own stockholders forty per cent. of 6 per cent. interest bearing certificates of indebtedness, upon the entire stock of the Company. This issue, although called "certificates of indebtedness," is really in the nature of preferred stock, the interest thereon being payable before any dividends are allowed on the common stock of the Company. The effect of this operation can be seen at a glance. Under the weight of this heavy encumbrance, the value of the common stock necessarily declined. It needs not to say that the decline thus caused was the consequence of the action of the Company itself, and is in no way justly chargeable upon the Railroad Commission of the State.

But whether there has been an actual decline in Central Railroad stock since 1881, is not to be correctly ascertained, by the apparent decline therein, since that time. The script issued, as above mentioned, is an encumbrance running with the common stock of the Company, and, as a matter of course, depressing the value thereof in the market. To illustrate: Suppose the holder of a share of the common stock should call for his annual dividend thereon. If no script had been issued upon his share, the holder would be entitled to claim eight dollars, we will suppose, but he is informed that he is not entitled to receive so much, because script, in the nature of preferred stock, has been issued to the amount of forty per cent. upon his share, and that that script belongs to and is the property of another person, who has already received his 6 per cent. interest upon the same; and that consequently no more than the remaining portion of the dividend will be paid to the share of common stock presented. This illustration shows the practical effect which the issuance of the script has had upon the market value of the common stock. The interest in the Company, which was, in 1881, represented by shares of stock alone, is no longer so manifested. A hundred dollar share of stock, plus forty per cent. of script issued thereon, are both now required to represent one share of the stock as the same stood in 1881.

But the Central Railroad Company has not only depreciated its stock by issuing script to its own stockholders, as above stated, but momemtum has been given to the decline by the issuance of 32 per cent. of the like script upon five millions of dollars to the stockholders of the South Western Railroad Company. The railroad and branches of the latter Company were leased some years ago by the Central Company, at an annual rental of seven per cent. upon a capital stock of $5,000,000. The amount of script issued to the South Western Company was $1,600,000. The annual interest at 6 per cent. upon this script is $96,000,

The rental agreed to be paid is $350,000, being 7 per cent. upon the capital, as already

LIBRARY

OF THE

LELAND STANFORD JUNIOR
UNIVERSITY.

JAMES M. SMITH,
CAMPBELL WALLACE,
LEANDER N. TRAMMELL,

A. C. BRISCOE, Secretary.

COMMISSIONERS.

REPORT.

OFFICE OF THE RAILROAD COMMISSION,
ATLANTA, GA., July 6, 1885.

His Excellency, Henry D. McDaniel, Governor, Etc.:

}

SIR: We have the honor of presenting the following report of the work of the Railroad Commissioners, since the date of our last semi-annual report. We do not deem it necessary or proper to burden the text of the report with a minute and detailed statement of all the labors of the Board during the period mentioned. The office of the Commission has always been open to the railroad companies, and to the general public, and our records and correspondence show, in minute detail, all the work which our official duties have required us to perform.

We attach hereto, in the form of an appendix, official copies of circulars issued to railroad companies since our last report. These orders are in themselves sufficiently explicit to show the objects which the Commissioners had in view in issuing them. The appendix also contains other matter, to which we respectfully invite your Excellency's attention.

Much dissatisfaction has been expressed by the railroad companies of the State in reference to the powers conferred upon the Commissioners by the Act of 1879. An attempt will be made at the approaching session of the General Assembly, we learn, to have the law so amended as to make it more consistent with the views and wishes of the railway corporations. In view of this, we deem it not improper to give expression to our opinions upon this very important subject, through the medium of this report.

The constitutionality of the law of 1879, under which the Railroad Commissioners were appointed, has been settled by the highest Judicial authority of the State.

The Supreme Court of the State, in the case of the Georgia Railroad et al., vs. Smith et al., Commissioners, after referring to the provisions of the Constitution of 1877, which confers power and authority to regulate rates on the various railroads of the State, upon the General Assembly, and to the legislation intended to carry that provision into effect, used the following language:

"Thus it appears that the Constitution provided that the Legislature should have power to regulate railroad freight and passenger tariffs, and to require reasonable and just rates for both; that it also made it the duty of the Legislature to pass laws necessary for its execution, and that in pursuance of that duty, the law complained of was passed."

"It was not expected that the Legislature should do more than pass laws to accomplish the end in view. When this was done, its duty had been discharged."

The Circuit Court of the United States used the following language in the Tilley case: "Under the Constitution of Georgia, power and authority is conferred upon the Legis

lature to pass laws to regulate freight and passenger tariffs on railroads, and require just and reasonable rates; and it is its duty to pass such laws, that it may prescribe such rates, either directly or through the intervention of a Commission, and the question whether the rates prescribed by the Legislature, either directly or indirectly, are just and reasonable, is a question which, under the Constitution, the Legislature may determine for itself." Again, in the same case, the Circuit Court says:

"The railroad company, after testing the results of the schedule of rates fixed by the Commissioners, and finding it to be unjust and unreasonable, can apply to the Commissioners for redress. If redress is denied them there, they can appeal to the Legislature for relief. Believing the law under which the Commissioners are appointed to be within the Constitutional power of the Legislature, the redress must come either from the Commissioners or the General Assembly; it is not in the power of this Court to give relief."

Keeping in view the construction above given by the Courts, as to the nature and extent of the duties imposed by the General Assembly, and to the manner in which such duties may be performed, we respectfully invite your Excellency's attention to the following suggestions:

Power and authority are especially given by the Constitution to the General Assembly to regulate rates of freight and passenger tariffs, and to prohibit unjust discriminations, on the various railroads of the State. The Constitution declares that, "the Legislative, Judicial and Executive powers shall forever remain separate and distinct, and no person discharging the duties of one shall, at the same time, exercise the functions of either of the others, except as herein provided." Code, 50: 15.

It is no where provided in the Constitution that the power and authority of regulating rates of freight and passenger tariffs, and of preventing unjust discriminations, on the various railroads of the State, may be exercised by any but the Legislative department. The powers mentioned, and the duty of executing the same, are both alike conferred and imposed upon the Legislature. Hence such powers and duties are made entirely legislative in their character, by the organic law. It would seem to follow, that a law providing thatthe duty of exercising such powers might be discharged by the Judiciary, would be unconstitutional and void. It would clearly be violative of the provision of the Constitution, which requires that the Legislative, Judicial and Executive power shall forever remain separate and distinct from each other.

A Judge who might take jurisdiction under such a law, would be exercising functions which, by express provisions of the Constitution, are conferred upon the Legislature alone. Any person discharging the duties of a Judge is prohibited, while discharging such duties, from exercising any functions, which are legislative in their character.

Nor would it, in our opinion, make any difference, even if a court were created by the Legislature, for the specia. purpose of hearing and determining cases of alleged wrongful over-charges and unjust discriminations by the roads. Such a court, although it might be styled a Railroad Commission, would be no more than an inferior court, under the Constitution, and could not be given any powers not judicial in their character. Such a court would simply be a part of the Judiciary department of the State government. It could not discharge the legislative function of regulating freight and passenger tariffs, and prohibiting unjust discriminations, on the roads of the State. Powers might be conferred upon such a court, to adjudge that wrong had been done by a railroad company in the past, but no power could be given to it to regulate, by judicial proceedings, the rate business of the railroads, so as to prevent wrong and injury from being done in the future. This power we repeat, can be exercised, under the Constitution, by the Legislature only.

Complaint has been made by the railroad companies that the right of appeal from the