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beef, fertilizers, oil, etc., transported between sections of the country where these articles have attained a commercial and shipping importance which has made necessary specific rules for their transportation differing from those covering classified traffic, as well as a somewhat lower scale of rates than is applied to the latter.
Class tariffs are arranged to show the rates of the respective classes contained in the freight classifications. In the latter are found the great majority of articles carried by the railways, classified in accordance with the various elements that properly enter into the determination of freight charges. Under these also are found the commodities above mentioned, and although exceptionally treated in certain sections as to rates, they are all amenable to some rule of the classification. The rate-making foundation for all commodities is seen to lie largely in the freight classification. The development of the railroad business of the country has been followed by the enlargement and extension of freight classifications. These publications are now current guides to the shipping public and have an enormous circulation. They are arranged in an enlarged and convenient manner, wherein may be found all commodities of commerce, described in every probable form of shipment, with a rate reference for each description, together with the rules and regulations under which each will be accepted for carriage. The classifications as now constructed have chiefly for their foundation the following elements: The competitive element or the rates made necessary by competition; the volume of the business—that is, the tonnage movement; the direction in which the freight moves; the value of the article; the bulk and weight; the degree of risk attending transportation; the facilities required for particular or special shipments.
CHANGES IN COMPETITIVE RATES.
The through or competitive traffic of the United States is divided into several well-defined sections, the rate-making basis of each of which, as well as the competitive conditions under which the railways operate, is distinctive in many features. Briefly described, these sections are as follows: (1) The territory north of the Ohio and Potomac rivers and east of Chicago and the Mississippi River; (2) the territory south of the Ohio and Potomac rivers and east of the Mississippi River; (3) the territory west of Chicago and the Mississippi River; (4) competitive traffic to and from the Pacific coast.
In each of these sections the traffic is divided into several general descriptions, distinguishable by the character of the commodities, the direction of movement, and the operation of freight associations. For each the more important rates have been selected and such data given as will most fully present the tendency of the changes.
CHANGES IN LOCAL RATES.
Rates charged between points located upon the same road are designated as “local rates.” The changes in such rates are, as a rule, less frequent than in joint rates. The tables appearing in the report show the changes in local class rates between important points on some of the principal roads in various sections of the country, the changes in most cases being shown from and including the year 1886 to the present time. After 1887 the rates are shown for the years 1890, 1895, 1900, and 1902.
An examination of these tables will show that the rates in 1886 were, in most cases, on a higher basis than in 1887 and subsequent thereto. The reduction in local rates in 1887 was no doubt due to efforts on the part of many carriers to make their tariffs conform to the rule of the fourth section, commonly known as the long and short haul section, of the act to regulate commerce. While the tables show reductions in some cases since 1887, it can not be said that there has been
marked tendency toward a decrease in local rates since that date.
PART IV.--STATE REGULATION OF RAILWAYS.
This report embraces a compilation of State statutes so far as they pertain to the organization, control, and administration of railways. This compilation shows the situation as it existed in 1890, and all changes which have taken place from that date up to the adjournment of the State legislature in 1902. The tendency in railway legislation during the last twelve years, as well as the present situation, may be learned from this report. The following are a few of the more important facts which the report discloses:
RAILWAY CONTROL THROUGH COMMISSIONS.
The number of States which in 1902 exercised control over railways through commissions was 30. Six States which in 1890 were without commissions established them during the period, of which 2 were subsequently abolished; 4 States which in 1890 had commissions abolished them, but in two instances subsequently reestablished them. In the case of 2 States, however, the abolition of railroad commissions does not indicate a disposition to relieve railways from public control. On the contrary, the purpose was to clear the way for the organization of a system of control believed to be more efficient than that of railroad commissions.
CLASSES OF STATE RAILROAD COMMISSIONS.
State railroad commissions are found to be of two general classes, which, for convenience, may be termed the “weak commissions” and the strong commissions,” the former including those which do not have control over passenger and freight rates, the latter those which are clothed with the power to exercise such control. Of the 28 commissions in existence in 1890, 15 were strong and 13 were weak; of the 30 commissions existing in 1902, 20 were strong and 10 were weak. No State which in 1890 was clothed with the power to regulate rates has lost that power. The tendency during the past twelve years, so far as the expressed will of legislators is concerned, is in the direction of more efficient control over rates.
EXTENSION OF REGULATIVE POWER OF RAILROAD COMMISSIONS.
Another pertinent fact disclosed by this compilation of railway statutes is the tendency toward an extension of the regulative power of commissions over transportation agencies other than railways. In 1902 8 commissions exercised control over street railways, 4 over steamboat companies, 13 over express companies, 8 over telegraph companies, 2 over telephone companies, 5 over transportation companies, fast-freight companies, etc., 5 over railroad-bridge companies, 1 over railroad-tunnel companies, 3 over railroad-ferry companies, 5 over warehouses, 3 over union-depot companies, 6 over car companies, 7 over sleeping-car companies, 1 over harbor companies, and 1 over all railroads operated by steam or otherwise, including tramways, making in all 72 cases of control by State railroad commissions over agencies of transportation other than railways, as against 41 in 1890.
METHODS OF APPOINTING RAILROAD COMMISSIONERS.
A change also may be noted in the method of appointing railroad commissioners. In 1890 18 were appointed by the governors of the States, as against 13 in 1902; 6 were elected by the people in 1890, as against 15 in 1902, and 2 were appointed by the legislature in 1890, as against 1 in 1902. In one case appointment is made by the executive council; in one case, in 1902, is a railroad commissioner an ex officio appointee. There is a slight tendency toward an increase in the length . of the term of office. This, however, is not marked. The salaries paid railroad commissioners range from $1,200 in North Dakota to $8,000 in New York. The typical salary for a railroad commissioner is perhaps $3,000. There seems to be a slight tendency toward the method of payment out of public funds rather than by a special tax on railways.
WAYS OF CONTROL BY RAILROAD COMMISSIONS.
Setting aside the question of joint rates, there are two ways by which a commission may control the passenger and freight charges of railways. Thus, a commission may be empowered to make a general schedule of rates for each road, or it may, either upon complaint or upon its own motion, investigate existing rates and issue orders for the substitution of a reasonable for an unreasonable rate. The tend
ency in legislation during the twelve years subsequent to 1890 is clearly in favor of the more strenuous form of control. Thus, in the case of both passenger and freight rates, thirteen commissions in 1902 are authorized to make general schedules, as against seven in 1890. The power to make joint rates has been slightly increased, this power, so far as freight rates are concerned, being conferred upon the commissions of nine States in 1902 as against five States in 1890.
TENDENCY AS TO INCORPORATION OF RAILWAY COMPANIES.
With regard to the incorporation of railway companies, the tendency seems to be in the direction of incorporation under general railway laws. The situation is as follows: In 1902, 41 States provided for incorporation under general railway law as against 38 in 1890; 4 pro vided for incorporation under special act in 1902 as against 7 in 1890; in 6 cases either method was allowed both in 1890 and 1902.
STATE RAILWAY STATUTES.
The larger portion of State railway statutes pertains to the construction, the maintenance, and the operation of railways. Laws have been enacted modifying and extending the character of public regulation since 1890 in 467 particulars. Of these 73 pertain to right of way, 94 to railway crossings, 126 to the movement of trains, 58 to stations, 41 to tickets and baggage, 25 to employees, 2 to obstructions to railway business, 48 being unclassified. These are for the most part an exercise of the police powers of the State. A study of the railway statutes during the past twelve years
indicates a slight distrust of the ability of railroad commissions as at present organized to control the railway situation. It also shows a tendency (not as yet very marked) toward including other corporations as well as railway corporations under the control of State boards. The most marked illustration of the former is found in the court of visitation, established in Kansas in 1898. The law establishing this court” aimed to combine administrative and judicial functions deemed necessary for the satisfactory control of railway operation. In 1900 it was declared void on the ground that in it the “legislative, judicial, and administrative powers are so inextricably interwoven as to render their separation impossible.” An illustration of the second tendency referred to is found in the Virginia Corporation Commission, which came into active existence March 1, 1903. In general, this commission is empowered to supervise all corporations.
This report upon State railway regulation is in the form of tables, which are so drawn as to permit one to learn quickly what the facts are relative to any particular phase of railway regulation. The tables further refer to the page and section of compiled statutes, thus serving as an index to particular statutes for one who desires to make special investigation.
-STATE TAXATION OF RAILWAYS AND OTHER TRANSPORTATION
This report shows a compilation of State statutes relative to the taxation of railways and other transportation agencies, as also the condition of State taxation as it existed in 1890 and the changes which have taken place prior to June, 1902. The significance of this report is found partly in the fact that railways contribute annually in excess of $50,000,000 to the support of government, but more especially in the confusion and uncertainty which attend the levy and collection of this tax. To the railways this confusion and uncertainty means the exposure to double taxation; to the agencies of government it means liability to tax evasion.
STATE RAILWAY TAXATION.
This report covers three tables: The first shows in a general way the kinds of taxes used by each State, the second presents an analysis of statutory provisions for the administration of the law of taxation, the third presents an analysis of statutory provisions for reports relative to taxation required from railways and allied transportation agencies. These tables are followed by a text which describes in detail the taxing system of each State, so far as it pertains to agencies of transportation. This text presents, first, the constitutional provisions of each State; second, the law as it stood in 1890, and third, the changes in State taxation from 1890 up to and including 1902.
The general fact relative to State railway taxation is that railway property is taxed on the basis of valuation. The special rules of taxation for this species of property refer rather to the assessment, the levy, and the collection of the tax than to theory or general principles. In 1890 it was commonly said that the tendency in railway taxation was toward the substitution of taxes on gross or net earnings, or on dividends or some other feature of special taxation, for taxation based on valuation. A review of the tax laws in 1902 does not warrant such a statement at the present time. There seems to be no tendency during the past twelve years toward the abandonment of the theory of the general property tax, so far as railways are concerned.
CHANGES IN LAWS OF TAXATION.
The changes which have taken place in the laws of taxation since 1890 refer rather to methods of valuation and to the machinery of administration; they also indicate many experiments in the apportionment of the proceeds of railway taxation between the States and the minor civil divisions. There is some slight indication of a tendency toward what is termed the segregation of railway taxation, by which this species of property is made the basis of contribution for State expenditures; but one can not say that this tendency is clearly expressed in the statutes thus far enacted.