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FOR 1907


To His Excellency,

B. B. COMER, Governor.

Sir :—The Commission has the honor of transmitting herewith its annual report of the work of this department for the year ending June 30th, 1907. The report has been slightly delayed by reason of the failure of the railroads in filing their annual statements with the Commission. This was caused by some change in the usual form heretofore required of them.

The recent session of the Legislature enacted laws placing the transportation companies under the supervision and control of the Commission. The former Commission working under laws granting only advisory powers in many respects, and with limited duties to perform, had no data in the office to guide and assist the new Commission in the discharge of their duties.

The present Commissioners assumed charge of the office in March. The Railroad Commission Act enlarging their powers and duties, with the companion act, “To regulate Common Carriers, secure reasonable rates and adequate service, and prevent unjust discrimination," were approved Feb. 23rd. With the passage of these laws, the Commission with its increased powers, set about equipping its office with tariff schedules, contracts and such other data pertaining to the affairs and workings of the transportation companies within the State as were necessary for the proper conduct of the affairs of the Commission. This day the office is fairly

supplied with this information, which is being arranged in systematic shape with daily additions.

With these new laws, however, came an injunction from the Federal Court directed to the Commission, restraining the enforcement of certain Acts, among which was that generally known as the Maximum Rate Law. This act prescribed the rates obtained and in effect January 1st, 1907, as the maximum rates to be charged by the railroads. This order of the court had the effect of virtually barring the Commission from any action wherein the revenues of certain railroads were involved. This injunction however, has recently been dissolved, which leaves the Commission free to consider the unreasonableness of individual rates and practices, and issue such orders in the premises as may appear just. There has been many attempts during the last twenty years to secure a railroad commission law similar to that recently enacted, placing all public carriers in the discharge of their public duties under the supervision and control of the Commission. All efforts in this line however, met with such strenuous objection they came to nauglit. Since the law has become a reality, officials of the transportation lines acknowledge the neces. sity of correcting various abuses of common carriers, which has increased with the growth and development, of public utilities. This must be gratifying to those who have realized that for the State to reach its highest state of development there must be absolute commercial freedom and independence, and that railroads must rely upon the co-operation of the people whom it serves through the medium of state government.

There is a basis upon which the railroads can perform their duties to the public without injustice to either, and this will gradually be accomplished under the new

laws by the application of wisdom, justice and persistence.

One of the greatest impediments in the path of railway managers reaching a satisfactory and proper adjustment of these evils is the financial custom which has developed unrestrained, in the consolidation and manipulation of these great properties. This custom has recently been amplified to the public by testimony adduced from Mr. Harriman in a hearing before the Interstate Commerce Commission. There was nothing new developed in this testimony except to show the rapid progress being made in days of prosperity in confiscating the anticipated earnings for future decades. The public generally became frightened at the enormous issue of securities, valuable only as the whims of manipulators may dictate, and gradually began to dispose of all railroad stocks which caused a congestion at financial centers. This lack of confidence is still unal. la ved, and has spread to the industrials, a great many of which has to some degree practiced the same system of inflation.

This method should be restrained by bringing the capitalization of the railroads directly under the control and scrutiny of the law. We realize the difficulties in accomplishing this, either by the State or nation, but the great shrinkage in certificates supposed to represent values, entailing enormous losses to individuals, enticing and abetting speculative spirit, thereby a standing menace to the fianncial welfare of the State, cry out for some law by which issues of securities in excess of the values of the properties can be restricted. This would not retard railroad development, but promote it by increasing the demand for such securities for investment instead of speculation. To the promoter and builders there should always be permitted such


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