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The Commission a constitutional office created in "disregard of precedents".

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Startling minority announcements annually made and repeated..

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How open letters to the people through the Governor have saved the country.

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A suggestion that the Commission might be improved by dividing it into three

minorities.

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Recommendations renewed

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Brief reference to the several exhibits contained in the Appendix

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A sham schedule.

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Resolution by Commissioner Foote

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Order introduced by Commissioner Carpenter relative to the same subject, with the

reasons therefor..---

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A distance tariff tested by the first principles and factors of railroad service--

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Citations from other Commissions relative to uniform and competitive rates.

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Directions by Judge Deady for running a railroad with reference to the real exigen-

cies of its business ---

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The beginning of controversy between the Commission and the Atlantic and Pacific

Company, now owning and operating the Southern Pacific road from the Nee-

dles to Mojave in this State...

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Proceedings of the Commission relating to the Atlantic and Pacific Company in 1885. 25-32

Order by Commissioner Carpenter requiring answers from the Atlantic and Pacific

Railroad Company concerning its road in California..

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Blank form for annual report forwarded to said company, with the request that it
be filled out and returned

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Answer of said company, by its General Solicitor, J. A. Williamson, assigning legal
reasons for non-compliance with such request.

26-28
Response of the Commission, presented by Commissioner Carpenter, unanimously
adopted and forwarded to said company.

28-32

Order presented by Commissioner Carpenter and unanimously adopted, approving

freight tariff and classification on the road or roads of the Atlantic and Pacific

Railroad Company in this State.

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Mileage of railroads west of the Missouri and Mississippi Rivers.

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Recent alignments of leading roads in transcontinental systems...

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The Oregon Division of the Central Pacific Railroad-its importance and progress. 34-35

Interest of California in her railroads and their interstate connections

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The State and its pioneer railroad both monopolists...

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The Golden Gate the objective point of transcontinental systems.

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Railroads as instrumentalities of development...-

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Demagogues who canie just in time to bewail the rnin of the country by its railroads. 36-37

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REPORT OF COMMISSION.

BOARD OF RAILROAD COMMISSIONERS OF THE STATE OF CALIFORNIA, )
AT OFFICE IN THE CITY OF SAN FRANCISCO,

January, A.D. 1886.

To his Excellency GEORGE STONEMAN, Governor of California :

The feet of this Commission are planted, not in party platforms, but in the Constitution by which it was created. With reference to its constitutional origin, it has been said by a close observer and competent judge in another State, to have been created in " disregard of precedents.” It exists, nevertheless, by virtue of a law which is paramount to precedents, to disregard which, for any personal or partisan purpose, would be to conspire against itself and to commit self-criminating suicide. But while it is administered in defiance of the shallow platitudes and insolent demands of blustering factionists and agitators, it can stand against their treacherous conspiracies, which have always been infamous crimes against the Constitution and every public and private interest under its shelter.

STARTLING MINORITY ANNOUNCEMENTS ANNUALLY MADE AND REPEATED.

If the Railroad Commission as constituted by the Constitution, is its legitimate offspring, and is alone recognized as such, it follows that an adopted minority is without lawful parentage or purpose. But aside from a preposterous clause of the Constitution, which says " the act of a majority of the Commişsioners shall be deemed the act of the Commission” (Constitution, Art. 12, Sec. 22), we have no desire to forestall the startling minority announcements annually made and repeated in open letters to your Excellency, styling themselves "reviews," "communications," and reports of “my own." Referring to the first pages of those for 1883 and 1884, relating to the "mystifying" manner in which we sign and send off a report, we find this distinguished expositor of motives and conduct piping through your Excellency, as if the office of Governor were a tin trumpet, as he says " to the people of the State, to let them know through you the interior workings of the Board of Railroad Commissioners, the members of which were elected as the custodians and protectors of the people's rights against what I deem to be the merciless exactions of the railroad corporations of this State." The leading points in the ludicrous exposure by which he. devotes himself to the cause of the people are as follows: “On the seventh day of January, 1884, at about twelve o'clock noon of that day, I was at the office of the Board of Railroad Commissioners in the City and County of San Francisco. Commissioners Carpenter and Humphreys were both present.” He might have said "both present” as usual; and instead of saying "I was at the office," he might have said that his colleagues had telephoned for him two days previously, and that he came in while the

and so opinions are divided, and there is no telling what can or ought to be done. Having no recommendation or remedy to offer, we only suggest, that it might be better to divide the Commission into three minorities, required to perform the enormous labors of one, and to continue its reforms, by swinging a dark lantern at the wrong end of the train, and hooting at the monopoly.

RECOMMENDATIONS RENEWED.

Bailiff was out after him. After all this rigmarole about nothing, he comes to the first rascally outrage on the people, and says:

“Mr. Carpenter went to his desk, and from one of the drawers thereof drew forth a roll of manuscript, which he presented to me with the remark that this was his report," and more like it. Possibly if the people had been told which drawer they would have avenged the outrage. It appears that after this sensational drawer scene the Commission changed base and took up a new position against the people. He says: “All three of the Commissioners went into the next room, which is occupied by the Secretary of the Board, Mr. W. R. Andrus, who was then present I here announced that for reasons which were sufficient to my mind 'I should decline to sign the report.” In honor of this trial and triumph of struggling virtue in the “next room," there should be some suitable public demonstration. Coming down to last year we find these thrilling passages repeated by the correspondent of the people through your Excellency. He devotes four mortal pages to the old outrage and a new one, which consists in adopting our last report while he was in Sacramento, and submitting it to him there, where there were no such suspicious accessories as a desk with a “drawer thereof," or a “next room with its horrid reminiscences. This last offense against mankind was aggravated by the fact that the report, all the same as this one, "was never seen, even by the Secretary of the Board, until it was presented for adoption.” And the last of these open letters to be forwarded to the people by your Excellency is left open at both ends by the saving announcement that its reserved and reticent author is not in the habit of making complaints to newspapers or others of my official associates.”

By the "disregard of precedents” in the creation of this Commission, to which we have adverted, it is the only one in the United States which can exercise no conditional or advisory control oyer railroad facilities and accommodations, involving the convenience, comfort, and safety of the public. The cause of this difference will be found in the narrow mandatory policy adopted in this State, but elsewhere generally condemned and rejected. If, therefore, the Commission is to be continued and to subserve the most useful purposes of State control, as attested by the experience of other States, it should have the powers recommended in our last report, for the reasons therein stated. The recommendations are renewed, and again respectfully submitted, as follows:

STANDING ORDER TO EXPEDITE THE PREPARATION AND SERVICE OF SCHEDULES.

HOW OPEN LETTERS TO THE PEOPLE THROUGH THE GOVERNOR HAVE SAVED

THE COUNTRY.

To acknowledge the great service to the country of these letters, we are severally, in our private capacities, at liberty to resort to them, and may invest with still greater significance the startling State secrets which they contain. "Without them your Excellency might never have been notified that the Commission was in open rebellion against an individual member who had set up for himself. In default of the alarming information that the Commission was setting itself and the Constitution above its self-constituted custos morum, and his thrice rejected platform, there could have been no efficient exercise of gubernatorial power to " see that the" platforms "are faithfully executed.” (Constitution, Art. 5, Sec. 7.) Without them the most watchful agitation, under the shadow of an unknown peril, might have slept on its arms, lulled into fatal apathy.

On the fifth day of September, 1883, Commissioner Carpenter introduced a standing order to expedite the preparation and service of schedules, which is self-explanatory. On the fifteenth day of the same month it was adopted unanimously, and is as follows:

BOARD OF RAILROAD COMMISSIONERS OF THE STATE OF CALIFORNIA. WHEREAS, By Section 11, Chapter 59, of the Statutes of 1880, entitled “An Act to organize and define the powers of the Board of Railroad Commissioners," it is provided that: “Whenever said Board, in the discharge of its duties, shall establish or adopt rates of charges for transportation of passengers or freight, pursuant to the provisions of the Constitution, said Board shall serve a printed schedule of such rates and of any changes that may be made in such rates, upon the person, copartnership, company, or corporation affected thereby; and upon such service it shall be the duty of such person, copartnership, company, or corporation to immediately cause copies of the same to be posted in all of its offices, stationhouses, warehouses, and landing offices affected by such rates, in such manner as to be accessible to public inspection during usual business hours. And, whereas, it is further provided in said section and Act that the rates of charges established or adopted by said Board, pursuant to the Constitution and this Act, shall go into force and effect the twentieth day after service of said schedule of rates, or changes of rates, upon the person, copartnership, company, or corporation affected thereby, as herein provided." And, whereas, unless waived by the party to be affected thereby, as aforesaid, the mode and time pre scribed exclude all others. And, whereas, it is optional with such party to waive said time, and

also service of printed copy of said schedule; and, whereas, it is competent and proper for this Commission, when it shall " establish or adopt rates of charges," as aforesaid, to consult the convenience and preference of such party as to the form and clerical preparation of the schedule it is required to copy and post for inspection and use as aforesaid:

Now, therefore, it is hereby ordered, That in pursuance of said section of said Act, this Commission can and will establish or adopt rates of charges for the transportation of passengers and freight only by schedule; and that in the preparation thereof in the usual form for convenient use as aforesaid, the Secretary of this Commission is hereby authorized and directed to avail himself of such form or draft of such schedule as may be most conveniently copied and used by the party to be affected thereby.

And it is further ordered, That upon the completion of any schedule of rates and charges, so drafted and prepared as aforesaid, the same shall be submitted to the Commission, and it shall be established and adopted," as aforesaid. A certified copy of the order adopting the same shall be served by said Secretary upon the party to be affected thereby; and in case such party shall prefer for its own convenience, and to simplify the duties of all concerned, to make its own copy of all such schedules, and shall consent to put the same in operation within twenty days from and after the service of said order, and in accordance therewith, it may do so without further preliminary process or proceeding to enforce the same; provided, that said party, or its general manager, shall, within three days from and after the service of said order, acknowledge the service of said schedule by printed copy, expressly waiving all other service or notice thereof, in writing, addressed to said Commission, and to be filed and reniain of record in its office.

And it is further ordered, That if such acknowledgment and waiver, as aforesaid, shall not be filed in said office within three days from and after the service of such order as

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A SUGGESTION THAT THE COMMISSION MIGHT BE IMPROVED BY DIVIDING IT

INTO THREE MINORITIES.

Although the imminent peril is passed, the cause remains, and it is time .to consider and determine what should be done with a Commission that is constitutionally in the way of a minority. A Credit Mobilier of professional reformers, who always predicate perfection of the rascality to be abated, would have it turned over to them and converted into a den of thieves. Some would make it a sort of coalbunker or tender to a party machine, with the three Commissioners as stokers, of no earthly use to railroads or their patrons. Others would merge the majority in the minority, two in one and no remainder, and be entirely rid of it in that way;

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aforesaid, then, and in that case, said Secretary shall immediately proceed to print such schedule and order, and to serve printed copies thereof on the parties to be affected thereby, and shall keep a record of his action in the minutes of said Commission.

LEGISLATION SUGGESTED.

This standing order relates to the office work of the Commission, and to its most important duties. It conforms to the simple and definite methods of the Constitution, which terminate in orders and decisions. But there is, also, the statute of 1880, Chapter 59, Section 11, which imposes upon the Commission the endless mechanical labor of pre paring "printed schedules” of the rates of fares and freights it establishes or adopts, and is an unreasonable and ungrammatical supplement to the Constitution. It makes the Commission, in the matter referred to, a sort of one clerk inconvenience to the companies subject to its jurisdiction, without their force or facilities for doing the work required, and to the manifest detriment of all concerned. And, while acknowledging accommodating waivers of the cumbersome service required of the Commission, they are regarded as pertinent admissions of what the law should be. It is, therefore, respectfully urged that Section 11, supra, be so amended as to require of the Commission only those constitutional determinations, known as orders, or decisions, in compliance with which the company or companies to be affected thereby, shall be required, within a reasonable time, to tabulate, print, and post the necessary schedules.

careful and accommodating service, is not always to be attributed to its magnitude or hazards. That the highest order of mind and manhood, while marshaling the forces and factors of railroad management and industrial development, could sometimes profit by prudent advice and warning, is attested by casualties and accidents some of which might have been prevented. That the legal liabilities of railroad companies, for the wrong or negligence of themselves or agents, are not a sure safeguard of life and property, is affirmed in actions for damages, by the verdicts of juries, and the judgments of Courts.

Thus, upon such considerations of law and fact, as may be predicated of all railway management, the Commissions of other States have been invested with such visitorial and remedial powers and duties as have brought them into their most useful and friendly relations with railway companies. By authorized inspection and findings of fact, touching the facilities and instrumentalities of transportation, and power to advise or order repairs and betterments, they exercise a watchful and suggestive supervision, conducive to the safety and convenience of all concerned. It is thus that corporate self-government is subjected to such and so much State control as carries with it the official evidence and assurance of reasonable regulations-suitable facilities, and the safest attainable and most accommodating management. It is, therefore, recommended that the inspection and finding of facts, which would otherwise be an idle display of unofficial intermeddling, be required of this Commission; and that its general supervision of railroad and other transportation companies in this State be accompanied by such appropriate powers and sanctions as shall insure compliance with its authorized orders and decisions.

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REFORMED RETURNS RECOMMENDED.

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In this connection, and for reasons which will be made apparent by an examination of the stereotyped annual statements of railroad companies, filed in this office, copies of which will be found in this volume, it is recommended that the several transportation companies owning or operating railroads in this State, be required to make verified returns and reports of all matters touching the ownership and operation, the condition and management of their respective roads, at such times, and in such manner and form, as this Commission shall prescribe. And the Commission should be empowered and required, with due regard to the convenience and established regulations of said compa-, nies, and each of them, to prepare, in time for use, blank forms of such return or report, and to change and amend the same as shall be deemed expedient. By this method of bringing returns to the point and purpose for which they are required, it will be possible to substitute more important information for stale repetitions, sígnifying not much if any. thing; and the reasonable requireinents of the Commission, for the habitual courtesy of railway officials.

Shows the number of meetings held by the Commission in 1885, and the members present.

Exhibit B

JURISDICTION OF FOREIGN CORPORATIONS.

It is only by due process of law that any official act of this Commission can be supported or enforced. The validity of every order, decision, and proceeding rests upon jurisdictional facts of record, the first of which is service of process upon the proper party. If it be a foreign corporation, having its principal place of business in another jurisdiction, and

Summarizes the operations of the Central Pacific Railroad, and leased lines, for the years 1881, 1882, 1883, and 1884, and shows:

First-Total earnings and income from all sources.
Second-Total income, operating expenses, and taxes.
ThirdInterest paid on debt.
Fourth-Paid United States and Sinking Funds.
FifthTotal payments fronı income.
Sixth--New construction, betterments, etc.

The total expenditures for the four years, excluding dividends paid, was $89,515,890 92. In addition to this sum there was expended for construction and betterments of rolling stock on roads owned and operated (excluding those operated but not owned) by the Central Pacific Railroad Company, the further sum of $5,514,433 35.

It appears, therefore, that for the four years to which this exhibit relates, the Central Pacific Railroad has expended, excluding dividends, the sum of $95,030,323 27. Excepting what was paid to bondholders and to the United States, the greater portion of this sum was expended in this State, and more than $30,000,000 was paid out and expended for labor.

Attention is especially invited to this exhibit for an analysis of the gross earnings, operating expenses, and net earnings, per passenger and freight train miles for each, and the average for all, of said years. From this it will be seen that had the average for the first three continued through the last of said years, the net income from passenger trains would have been $1,791,571, and from freight trains, $1,270,146—more than it was in 1884. Whether this diminution of net income was caused by reductions of rates in both departments, or by depression of trade and business, or by both, the effect is the same, and the cause continues. If resulting from reductions, it is enough for us to say that they were not made for that purpose, but upon the theory that railroads, like steamships, steamboats, and other instrumentalities of transportion, belong to their owners, and that all alike,

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operating a railroad in this State, it is required by the Act of April 1, 1872, to file, in the office of Secretary of State, an appointment, designating, by name and residence, some person upon whom process may be served. As for all the purposes of such appointment, it should be made a record of this office, it is recommended that any foreign corporation, operating a line of water or rail transportation in this State, be required to file in this office a written appointment, duly made and authenticated by its corporate seal, designating some person, residing in this State, upon whom all legal process and official papers may be served. It should also be required to show, by a statement in said appointment, or otherwise, whether it is operating such line of transportation as owner or lessee, and if as lessee, the terms and conditions of its lease.

NEW POWERS AND DUTIES.

Thus far the Commission has only outlined “such further powers" as are clearly contemplated and authorized by Section 22, Article XII, of the Constitution. They go to the exercise of powers already possessed, as means to an end. In a power conferred, with the means necessary to its exercise, is implied the correlative duty to be discharged. But an official duty without corresponding advisory or other power, if supposable at all, can subserve no useful purpose. Hence, to confer upon this Commission visitorial supervision over the railroads of this State, corresponding to that of like tribunals in other States, involves the imposition of new duties, coupled with appropriate advisory or administrative authority. The power and duty to "establish or adopt rates of charges on railroads," has never been extended to their general management. If done at all, it must be by further legislation, the expediency of which is the only question to be determined. It has two sides, and if this Commission could not consider both with the dispassionate fairness of an inipartial judge, it would be unfit to exercise the contemplated power.

The onus of showing the utility of change is always upon its advocates. That none is urged, or should be made, by reason of any pretended conflict of rights or interests between the railroads and their patrons, may be conclusively presumed. That the most moribund monopoly of a franchise for public use, worth nothing for any other purpose, has a vital selfish interest in its safety and convenience must be admitted. That the most enlightened -self-interest and knowledge inspired by railroad enterprise are not sure guarantees of

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