has shown that this reduction, while greatly beneficial to the public, has not injured the interests of the railroads. On the contrary, the increase of travel, occasioned thereby, has added materially to the earnings of the roads. The right to reduce passenger fares below the maximum fixed by the Commissioners, has not been restricted. The law places these upon a different footing from freight rates, and the Commission has, therefore, left with the railroads themselves the power to fix their respective passenger charges at any amount below the maximum of four (4) cents per mile, established by the Commission.

FREIGHT RATES.

Since our rates went into operation, the revenues of the roads from the freight traffic-the most important branch of their business-has largely increased over corresponding periods in previous years; and this, too, in the face of the fact that large reductions in rates, on the principal articles of production and consumption have been made. For more particular information, at this point, we respectfully refer your Excellency to the statements contained in the accompanying document marked Exhibit A.

COMPETITION.

It is evident that there is no advantage to be secured to the people, nor to the railroads of the State, by allowing other roads, not under the jurisdiction of the Commissioners, to take the business uncontrolled by what we regard to be the legitimate principle of competition, yet not of force or recognized by roads without the State's limits. It should be remembered that competition affects the whole round of transportation, from end to end and back, and that this complex condition, so largely affecting our roads, exists principally beyond our jurisdiction.

The most important regulation adopted by the Commission in regard to competition, was briefly referred to in our first report, and is as follows:

"RULE 6.-The freight rates prescribed by the Commission are maximum rates, which shall not be transcended by the railroads. They may carry, however, at less than the prescribed rates, provided that if they carry for less for one person, they shall for the like service carry for the same lessened rate for all persons, except as mentioned hereafter; and if they adopt less freight rates from one station, they shall make a reduction of the same per cent. at all stations along the line of road, so as to make no unjust discrimination as against any person or locality.

"When, however, from any point in this State there are competing lines, one or more not subject to the jurisdiction of the Commission, then the line or lines which are so subject, and are working at the lowest rate under the rules, may at such competing point or other point injuriously affected by such competition, make rates below the Standard Tariff, to meet such competion, without making a corresponding reduction along the line of road."

By this rule it was intended to make competition conform to principles of right and justice. Thus, instead of a war of rates being confined to any little village along the line of two countries, say for example, Canada and the United States, such war, if made, would, under the operation of this rule be declared along the whole line. The roads may thus make legitimate war, but it would extend to every station on the line. Such we regard to be legitimate competition, as distinguished from illegitimate and injurious competition. If rates are lowered at strictly competitive points alone, the neighboring stations are injured, and a result brought about of freights being shipped back and in the opposite direction to their destination, to be carried a second time over the same part of the road, more cheaply than by direct shipment to the point of delivery. To avoid this result, when the rate is lowered at the immediate point of competition, a graduated

rate is supplied to neighboring stations, so as to make the direct charges something less from the initial point to that of destination, than the sum of the two rates from the shipping station to the near competitive point, and thence back to the place of destination.

The Commissioners are of the opinion that they have no power to force competition between the roads, nor do they think that they ought to be invested with such power. Experience proves that unrestricted competition is often detrimental to the best interests of the public, as well as the carrier. We claim the right to restrict competition within legitimate limits, and we think this object can be accomplished by the enforcement of Rule 6, of our regulations.

EMBARGOES PREVENTED.

The Commissioners have always believed that shippers are entitled to the benefits of any market they may select, according to the natural or artificial advantages it may possess, unrestrained by arbitrary rules. Our labors have been diligently and systematically devoted to the accomplishment of this end.

One of our most recent efforts in that direction is shown in the accompanying order, dated October 29th, 1880. The effect of this order, we think, will be to remove the practical embargo which for some time past has been laid upon commerce between certain points in this State and other points without the State's limits. Heretofore, there seems to have existed some reason which induced a number of railroads, in the State, to decline to receive for shipment more than certain percentages of freights of a particular character or class.

The order just referred to is as follows:

STATE OF GEORGIA.

Office of the Railroad Commission,

ATLANTA, October 29, 1880.

In consequence of the accumulation of cotton at this point and elsewhere in this State, and an injurious

blockade of freights anticipated and now partially existing, the railroad companies in this State are hereby notified that no avoidable blockade of freights will be permitted; and that when such avoidable blockade occurs, because of any arrangement existing between railroad companies for distributing amongst themselves for transportation, according to percentages, the cotton or other freight offered for shipment, such companies will be held accountable for damages arising from such detention. And the railroad companies are requested and directed to remove cotton and other freights when delivered for shipment, to the extent of their facilities, without unnecessary delay, and without regard to any contract, express or implied, that may exist amongst themselves in reference to the division and distribution of freights between the respective companies.

By order of the Commissioners.

R. A. BACON, Secretary.

Your Excellency will observe that this order contemplates nothing more, nor requires more of the railroad companies than a faithful discharge of their duties, as contemplated by the laws of the State governing common carriers, irrespective of the powers conferred by the act creating this Commission.

MANUFACTORIES.

It has been the intention of the Commissioners to permit the railroads to offer such inducements to manufacturers, as would encourage them to make investments in the State. This is clearly effected by Note 1 of our rules, from which we give the following extract:

The rates specified for ores, sand, clay, rough stone, common brick, bones, lumber, shingles, laths, staves, empty barrels, wood, straw, shucks, hay, fodder, corn in ear, tan bark, turpentine, rosin, tar, household goods, and for articles manufactured on or near the line of said road, and for materials used in such manufacture, are maximum rates; but the roads are left

free to reduce them at discretion, and all such rates are exempted from the operation of Rule 6."

This note permits the railroad companies to make lower rates for articles manufactured on or near their own lines, or the lines of connecting roads, without coming under the restraining clause in Rule 6; provided that no more is charged for a less than for a longer distance.

COMPLAINTS.

Numerous requests and complaints have been received by the Commissioners, both from the citizens and the railroads, and occasional discussions have been heard of conflicting interests. Considering the number and importance of the questions presented for solution, the changes made in our tariffs and regulations have been few. The railroad companies, in some instances, casually omitted to furnish us with full information of their unprinted or special rates. Most of the changes made by us, after the first publication of the standard tariff, were rendered necessary by these omissions.

With a view of placing ourselves in possession of the information needed for a proper revision of our standard tariff, we issued a circular, addressed to all the railroad companies of the State, calling on them to furnish us a comparative statement of the earnings and expenses of their respective roads, during the months of May and June, 1879 and 1880. The action of the Commissioners, based upon responses to this Circular is embodied in Circulars Nos. 7, 8, 9 and 10, herewith transmitted.

The operation of Circular No. 10 has led to some discussion, not so much in regard to actual as to relative rates. The Commissioners gave the whole subject their most thoughtful consideration, and we think that their action will be found satisfactory.

The question of the operation of the Central Railroad as a unit, or in the several divisions expressed in Cir