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Would not the objects here stated be defeated by any legislation allowing the railroad companies to fix their own rates? It seems to us that such a law would, in effect, be an attempt to perpetuate, and even legalize, the very evil against which the framers of the Constitution found it necessary to provide a remedy in the fundamental law of the State.

Before the adoption of the Constitution of 1877, the railroad companies exercised the privilege of fixing rates on their respective roads. The Courts were then in the possession of all the powers which could now be given to them by statute, to enable them to correct the abuse of this privilege. "For every right there exists a remedy," is, and always has been, axiomatic in the law. Our courts have ever been open to complaining parties; but, notwithstanding all this, the framers of the Constitution, finding that the remedy through the Courts was entirely inadequate, and that the evil growing out of allowing the roads to regulate their own rates had become intolerable, devested the companies of this privilege, and imposed the same as a special duty upon the General Assembly.

But finally, upon this particular subject, we respectfully suggest that the remittal of the rate-making power either directly to the railroads themselves, or indirectly to the Courts, would be an abdication by the General Assembly of powers which the Constitution expressly enjoins upon the Legislative department. It would, in effect, be a refusal by the Legislature to discharge the duties imposed upon it by the organic law of the State.

We would next invite your Excellency's attention to the reasons given by the railroad companies for desiring a modification of the powers of the Commission. These reasons are too numerous to be here discussed, or even mentioned in detail; but they may all be summed up in two propositions, viz:

1st. That the exercise of the powers given to the Commissioners greatly injures and damages the railroad interests of the State.

2nd. That the very existence of the Commission, clothed with the powers given to it by existing laws, is injurious to the public interest.

We will, with as much brevity as we may find consistent with the importance of the subject, now proceed to discuss these propositions, but in inverted order from that in which they are above stated.

It is contended that the very fact that the Commission exists with its present powers prevents capital, for the building and equipping of railroads, from being brought into the State, thus causing injury to the Commonwealth. It is urged that capitalists abroad will not invest their money in railroad building here, because the Commissioners may possibly so exercise their powers as to render such investments unproductive and valueless.

In reference to this particular subject, the Commissioners used the following language in their last semi-annual report:

"It has been assumed that the policy of the State in establishing a Railroad Commission for the purpose of regulating railroad traffic within this State, has been detrimental to the interests of the railroads as well as injurious to the general welfare of the people; and, in its operations, has had a tendency to retard the building of railroads in the State. In response to this assumption we desire to call your Excellency's attention to the following facts, showing the same to be without any foundation:

"1st.

The records of this office show that for the five years previous to the establishment of the Commission (in 1879) there were built within this State less than one hundred miles of railroads, and that during the five years since the establishment of the Railroad Commission more than six hundred miles of railroads have been constructed within the limits of the State.

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Again, it is an undeniable fact that more of the stock of the railroads within the State of Georgia have been taken by foreign capital and at higher rates since the establishment of the Commission than at any like period of time previous to its existence.

"Further, neither the policy of the State in enacting laws for the regulation of railroad traffic nor the action of the Commission has deterred non-resident capitalists from purchasing the following roads already built, namely:

"The Macon and Brunswick Railroad, one hundred and ninety-eight miles in length; the Brunswick and Western Railroad, one hundred and seventy-one miles in length; the majority of the stock of the Western and Atlantic Railroad Company; nor from taking one-half of the lease of the Georgia Railroad for a period of ninety-nine years, at six hundred thousand dollars per annum, which is equal to a fraction over fourteen per cent. annual dividend on the capital stock of $4,200,000.00 of said road.

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"Not only has foreign capital flowed into the State and been invested in the trunk lines which have been constructed since the establishment of the Commission, and those in existence before its establishment, but, from the records in this office, showing the number of miles of branch roads built and being built by the citizens of Georgia, it would seem that they have been stimulated to a degree in providing themselves with railroad facilities that has not been equaled in any five years in the history of the State preceding the same."

The truth of these statements has never been questioned upon any reliable evidence, and we are warranted in saying that their correctness cannot be successfully assailed.

Speculations as to how many miles of railroad have been built in States where commissions have not existed, or what might have been done in a similar direction here, if no commission had ever been created in Georgia, amounts to nothing, either as evidence or argument. The fact that the spirit of railroad building in this State has not been destroyed or even weakened, still remains in tact.

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We take occasion just here to remark that we do not call to mind a single instance, in which New York or other foreign capital, has been subscribed for the building of a railroad in this State, in the inception of the enterprise. instances may have existed, but we think that they have been of very rare occurrence. The usual course pursued by foreign capitalists has been to buy up the roads of greatly embarrassed or bankrupt companies at almost nominal prices, capitalize the property, (sometimes using much water in the process,) and then reimburse themselves for all investments they had made by extorting as high rates from the people as business would bear. In this way the public has often been made to repay the capitalists in the form of oppressive rates, the original cost of railroad property, and also for all the improvements placed thereon. This was doubtless a portion of the evil which the constitutional convention found it necessary to correct through the organic law.

Every good citizen ought to encourage the introduction of capital, intended in good faith, to be applied towards developing the resources of the State; but we submit that this end can never be accomplished by legislation, which would only be effective in promoting the schemes of mere speculators in railroad enterprises.

We insert, as pertinent here, a tabular statement taken from THE RAILWAY AGE, of July 2, 1885, the leading railroad organ in the United States, showing the number of miles of railroad track laid during the first six months of the year 1885:

TRACK LAID DURING THE FIRST SIX MONTHS OF 1885.

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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:

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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.

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