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Also, west-bound through traffic originating:

First-East of Ogden and terminating in California, Nevada, and Utah. Second-East of the Needles and terminating in California.

Third-East of Deming and terminating in California, Arizona, and New Mexico.

Fourth-East of El Paso and terminating in California, Arizona, and New Mexico.

Fifth-Total passenger traffic originating on the Central Pacific Railroad. Sixth-Total west-bound passenger traffic terminating on said road. Seventh-Total passenger traffic on the Central Pacific Railroad and leased lines for said year.

It also shows as to the same factors of passenger traffic for the same year, the proportion:

First Originating and terminating in California.
Second-Originating in and passing out of State.

Third-Originating east of terminals and passing into State.

Finally it shows the passenger traffic, average miles traveled and average charge per mile per passenger, on the Central Pacific road and leased lines west of El Paso, from 1872 to 1884, both years inclusive.

Exhibit D.

From the annual address by the Hon. M. M. Estee, before the State Agricultural Society, we take with his comments the facts and figures furnished him by A. N. Towne, General Manager of the Southern Pacific Railroad and leased lines. They show by the shipments east for a series of years the progressive increase in the production of green fruits and vegetables, of canned and dried fruits, of brandies and wines; and also, how these important industries have been fostered and developed by corresponding and continuous reductions in the rates of transportation. In themselves reliable and valuable, the facts and figures are invested with peculiar interest by the instructive use that is made of them.

Exhibit E.

This is a series of tabulated statements showing recent changes and reductions of through and local passenger fares by the Southern Pacific Company. By the first it will be seen that on the first day of January, 1885, this company consummated arrangements with its connecting lines from the Missouri River, to attract and facilitate European immigration to

this coast by the very low charge of $30 per passenger. The table appended shows in parallel columns the proportions and rate per mile received by the Southern Pacific Company before and after the reduction.

The second shows that round trip tickets, good from a Friday or Saturday until the next Tuesday, were issued during the past season at all terminal points to sportsmen and excursionists at reduced rates, which continued until the thirty-first day of October, 1885.

The third shows that since January, 1884, the through rates to Portland, Oregon, have been greatly reduced, and that the extension since that date of track and train service to Delta has increased the pro rata of the Southern Pacific Company. Lower rate limited tickets were also sold at Stockton, Sacramento, and Marysville.

From the fourth it will be seen that special round trip tickets from San Francisco, Stockton, Sacramento, and Marysville to Strawberry Valley, Sissons, and other Summer resorts, were sold at reduced rates, and that the increased proportion received by the Southern Pacific Company is due to increased rail mileage north of Redding.

Within this year, also, third-class or emigrant rates via Ogden, Kansas City, and other Missouri River points, have been reduced from $50 to $47 50, of which the proportions of the Southern Pacific Company, west of its eastern terminals-taking Kansas City as an example-are shown by the tabulated statement of the old and new pro rata and rate per mile.

The fifth shows the stations and reduced rates at which round trip tourists' tickets to Lake Tahoe and return by stage via Truckee, have been issued during the past Summer. It will be seen also that thirty-day excursion round trip tickets from Los Angeles to Lang and return, and vice versa, are at the rate of $3 75.

The sixth relates to reduced round trip excursion rates and divisions by rail and stage to Summit, Soda Springs, and back.

The seventh is a tabulation of rates and reductions from San Francisco via Reno to Beckworth, Genesee, Greenville, Janesville, Milford, Mohawk, Plumas, Eureka Mills, Quincy, Susanville, and Taylorsville, and will show large reductions and the proportions and rate per mile received by the Southern Pacific Company.

The last reductions of through and local lower-grade rates on the Southern Pacific system, took effect on the thirteenth day of October, 1885, at which time the company commenced carrying emigrants on its express trains, and also reduced second-class passenger rates from San Francisco to Los Angeles from $18 to $15.

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Exhibit F.

These elaborate comparisons of charges for the same classes of freight, by careful equations of distance and weight, on the Chicago and Northwestern, the Chicago, Milwaukee, and St. Paul, the Union Pacific, the Missouri Pacific, the St. Louis and San Francisco, the Texas Pacific, and the Atchison, Topeka, and Santa Fe roads, with those on the Central Pacific (now Southern Pacific) road and leased lines, are reliable and instructive. They show that the freight rates prevailing on the Southern Pacific road and leased lines, when closely compared with those of seven leading roads west of Chicago and the Missouri River, and also with the freight tariff adopted and finally rescinded after a year's consideration, two decisions and one rehearing by the Kansas Commission, are comparatively low, and may be "set down as the accustomed reward for like services." (Coe vs. Goodwin, 19 Wendell, N. Y. 261; 2 Kent's Commentaries, 599.) "It is to be

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supposed that a common carrier can afford to carry at much the same rate of hire as that which is exacted universally by carriers similarly situated, and which; if it has been found to remunerate them, may, upon the best grounds, be called reasonable. The word reasonable, therefore, is to be the criterion of the price which a common carrier has a right to demand." All the books, and Browne on the Law of Carriers, p. 82. "Like circumstances" construed to mean and include cases where the labor, liability, and expense of the carriage are the same. (Great Western Railway Company vs. Sutton, H. of Lords, 38; J. L. Exch. 184; Browne on the Law of Carriers, p. 258; Walf. Sum. Law of Rys., p. 317; Ransome vs. Eastern Co.'s Ry., 4 C. B. [N. S.] 63.)

Exhibit G.

Briefly generalized, this is a condensed presentation of dry but instructive facts and figures contained in the annual returns to this office of twenty-five roads. It has been carefully prepared and compared with the original returns by Commissioner Humphreys, and is more convenient for reference than the full returns in their undigested form. It will be seen by reference to this exhibit, that the roads reporting to this office are generally in sound financial and physical condition, and during the year covered by the returns were participating to some extent in the peace, plenty, and prosperity of the State. They have, of course, shared in the depression caused by the short crop of 1885.

Exhibit H.

Showing incidental expenses of the Commission for the year ending December 31, 1885.

A SHAM SCHEDULE.

The Commission, in its report of last year, page 25, pricked the bubble as follows:

EXAMINATION OF COMMODITY RATES ON DISTANCE PLAN.

In May of this year, upon his own motion, without complaint or petition, Commissioner Carpenter, with the clerical assistance of Secretary Andrus, renewed investigations of grain and other commodity rates from interior points to tide-water. The method adopted was to compare tariffs on the Central Pacific system with those of other roads for the same classes of freight, and for like distances. It was done by preparing a trial sheet with distances and key, compared and scaled rates in parallel columns, and was intelligible enough for its purpose. Only the column of distances and of the rates finally established could have any place in a schedule. Some time after the preparation of this trial sheet, as one of the various methods of systematizing the study of comparative charges on different roads, and determining what they should be on those of California, it was copied for Commissioner Humphreys, and thereafter, with slight changes, for Commissioner Foote, as whose schedule it is now known. It was presented by him at a meeting of the Commission held on the twenty-ninth day of November, 1884, and together with lengthy comparative and statistical statements (vide Exhibit C, p. 39) submitted by the Central Pacific Railroad Company, was passed for consideration on the second ultimo.

On the day appointed it was taken up, and General Freight Agent, Richard Gray, being present, explained the statements prepared in his office, and at the instance of Commissioner Foote, had leave to make some additions thereto. Whereupon the Commission adjourned to meet at the call of the Chairman.

At the subsequent and last meeting in 1884, it was passed without further action. And in the absence of Commissioner Foote during the first six months of 1885, further proceedings upon it were deferred. On the thirtieth day of July, 1885, all the Commissioners being present, on motion of Commissioner Carpenter, the Central Pacific Railroad Company was notified that the Commission was ready to receive its report, touching the matters

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referred to it on the second of December, 1884. By reason of the absence of Mr. Gray on the fourth, and of the official stenographer on the fifth, the next meeting was held on the sixth of August, when the newspaper schedule was taken up. It consists of three trial sheets representing the plan of examination before stated. So much of it as relates to grain rates, is a faithful copy, at second hand, of that prepared under the direction of Commissioner Carpenter, with some additional comparisons on the same plan of rates on wool and live stock. Of every four columns of figures which it contains, only two could have any place in a schedule, of which it never had the semblance, and into which it could not be converted by copying. As one of many methods for studying and comparing rates, it is precisely the same as the one from which it was copied, and without the slightest credit to any one, is relatively good or bad for that purpose. But as a pretended schedule it was never more nor less than a transparent sham.

In response to the notice given, Richard Gray, General Freight Agent of the Southern Pacific Company, submitted a number of tabular statements (vide Exhibit F) of which the following is a brief synopsis:

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In his oral examination he said that the grain rates of California were lower than those of Kansas, Iowa, and Nebraska. The rates on the Southern Pacific system were in many instances lower than the tariff adopted by the Kansas Commission, and thereafter rescinded by reason of its injustice to the railroads of that State. To controvert the previous statement of Commissioner Foote that Kansas and Nebraska were not leading grain-producing States, he referred to statistics from which it appeared that Kansas produced more corn, and with one exception, more grain, than any State in the Union; and that for grain Nebraska ranked third, and for corn was second only to Kansas.

In answer to questions he explained why his company for the last three months had been charging grain shippers to Port Costa and other terminal points for unloading. Until within the last three months, shippers at Port Costa had been allowed the cost of unloading on their bills. Now, as with all other classes of freight, at all other terminal points, the burden was on the shipper. One of the reasons for the regulation was to prevent the detention of cars by the shipper, who was charged eight cents per ton for unloading. As that was the actual cost of the service it could have no effect on the price of grain.

He said that the earnings of his company, in 1884, were $2,500,000 less than in the previous year, and that by reason of the partial failure of the grain crop the prospect for the present season was not good. Hence it had

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ceased extending its lines, had discharged large numbers of men, and had sought to reduce expenses and economize in all departments of its business. During the past year it had discharged 2,000 workmen and employés, but continued to pay better wages and salaries than any company in the United States.

Referring to the abandonment of special contracts as the result of competition by overland roads, Mr. Gray said that the tariff of rates was about the same as before. Through the transcontinental pool the Southern Pacific Company received 184 per cent of the traffic over the Atchison, Topeka, and Santa Fe, and the Atlantic and Pacific roads. Of the freight and passenger traffic over the Omaha route the Union Pacific received 54 per cent, and the Central Pacific Company 46 per cent. As nearly all the wool of California was shipped directly east, and did not come to San Francisco at all, it was subject to overland rates not within the jurisdiction of the Commission. In his statements, therefore, he had regarded wool rates as of comparatively little importance.

He further stated that less than one half the wheat of California was handled by his company. Of 1,200,000 tons in 1883 it carried to shipping points 500,000 tons, and of 1,609,000 tons in 1884 it carried 643,000. North of Marysville there might be about an average crop, but about Fresno and Merced there would not be more than one third of the usual product. The overland fruit business had improved. Of fresh fruit transported on passenger trains the quantity had doubled, and the cost of carriage per carload to Chicago, had been reduced from $800 to $600. Cherries which could not be sold here for 2 cents per pound were shipped to Chicago and netted 8 cents. Oranges go by freight train at 1 cent per pound or $200 per carload. During the past six months 2,000,000 pounds of oranges had gone east. Of all the fruit handled by the railroads fully 95 per cent goes east. Most of that brought to the San Francisco market is transported in boats. In all his experience in the freight department of his company he had never known an increase of rates once established, and unless shown to be unreasonable the Commission should not again reduce them.

At the conclusion of Mr. Gray's statements, Commissioner Foote desired time to examine them, but introduced the resolutions following:

OFFICE OF THE BOARD OF RAILROAD COMMISSIONERS OF THE STATE OF CALIFORNIA,} SAN FRANCISCo, August 6, 1885. WHEREAS, An examination and comparison of the freight schedule of the Central Pacific system of railroads demonstrates the fact that unjust discriminations have been and are now being made in certain sections of this State upon certain classes of freight; therefore, be it

Resolved, That the Secretary of this Board be and he is hereby instructed to immediately prepare and serve upon the proper officer of said companies a schedule of freight rates in accordance with the schedule here following; provided, that where the rates now charged are less than those provided by said schedule, they shall remain as they now are; in all other cases they shall be fixed as provided in said schedules.

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We commend this resolution, as the last and best of its class, to the considerate judgment of all concerned. It brings bald assertions by resolution up to date. It matches and mates a schedule of freight rates in accordance with the schedule here following." It will be observed that the conventional whereas "demonstrates" "discriminations" as usual, not specified, and the only certainty of which is, that they are "in certain sections of this State, upon certain classes of freight." As a substitute for these hypothetical "schedules," "sections," and "classes," Commissioner Carpenter introduced the order following:

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BOARD OF RAILROAD COMMISSIONERS OF THE STATE OF CALIFORNIA.

It is hereby ordered that the tabulated trial sheets, heretofore prepared by the Commission for purposes of comparison, and now under consideration as the proposed basis of freight schedules, be placed on file for reference.

And pending further proceedings and the hearing of shippers in the premises, it is held and decided:

First-That the cost to the carrier, or the value to the shipper, of any railroad service, involves the consideration of other factors beside that of distance.

Second-That the direction of carriage is also to be considered, and that the constitutional prohibition of a greater charge for a short than a longer haul, of the same class of freight in the same direction, means aggregate charge for such distance, and not rate per mile.

Third-That other conditions being substantially the same, the rate per mile for the longer haul should be less than for the shorter included therein.

Fourth--That subject to the foregoing provision of the Constitution, to which the railroad tariffs of this State now conform, the rate of charge on each and all roads should be governed by the class and volume of freight, by the distance and direction of carriage, and by the general nature and vicissitudes of the service rendered.

Fifth-That by express provisions of the Constitution and law creating and governing this Commission, it is distinctly and fully authorized, in the exercise of its own unbiased judgment, to "change," "establish," or "adopt" existing rates of charge upon any or all of the railroads of this State, but is nowhere required to raise or reduce existing rates. Sixth—That every proposition to put them up or down has two sides to be considered, and that the real parties in interest entitled to be heard by themselves or their authorized attorneys, are shippers and carriers.

Seventh That by reason of the law and the evidence, the finding and decision of this Commission are against uniform rates, based upon any single factor of transportation, and in favor of such differential tariffs of rates as shall conform to the essential and diversified conditions of railroad construction, operation, and extension in this State. Eighth-Holding, therefore, as the Commission does, that producers who have ample railroad facilities are not to be further favored to the lasting detriment of those who have none, and that the interests of all are to be considered, it finds from the record of this office that no shipper of grain, wool, live stock, fruit, or other staple of domestic production, or commerce, has appeared by himself or his authorized agent, to controvert or question any of the numerous statements, returns, or exhibits presented and filed by railroad companies. That the real parties in interest upon the other side may be heard, pending the further proceedings of this Commission, shippers and producers may supply such oral or written statements and recommendations in the premises as they have hitherto failed to make.

Commissioners Humphreys and Carpenter voting for, and Commissioner Foote against, this order was adopted.

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STALE ASSERTIONS OF RAILROAD ABUSES WITHOUT LEGAL MEANING OR PROOF.

This order embodies very conclusive reasons for its adoption. It distinctly discards and denies the drivel and pretense of resolutions, by which vague charges of extortions and discriminations are resolved into something like Carlyle's "solution of universal slush." It takes decided issue with the stale assertions of railroad abuses, not specified, and which shippers have failed to discover or expose. It recognizes the rights of the "real parties in interest," so often falsely personated by partisan road agents, who have been totally ruined by having nothing on earth to ship, and so are good enough to demand relief for others. Upon every principle of justice and decency, it assumes that in default of evidence upon which a Justice of the Peace would render judgment for one dollar, the alleged abuses are not proven, much less "demonstrated." It repudiates unsupported suppositions and assertions of discriminations which, in the mouths of brawling agitators, have lost their legal meaning, and requires some evidence of their actual existence, whereof the records of this office are as barren as those of the Extra Session, and as those of the Courts which always had, and now have, exclusive jurisdiction of actions sounding in damages for the alleged abuses. Thus it is grounded, not only in the clearest presumptions. of law and fact, but also in the uncontroverted proof, that the freight rates in question are among the lowest in the schedules of this State, and that,

all things being considered, the railroads concerned are maintained and operated by thoroughly competent and accommodating managers, and at reasonable and constantly diminishing charges.

A DISTANCE TARIFF TESTED BY THE FIRST PRINCIPLES AND FACTORS OF RAILROAD SERVICE.

Besides the reasons for our action in the particular instance, we restate and adhere to the first principles and factors of railroad service. They are in different degrees and combinations the established criterions of its mere cost to the carrier, and of its real value to the shipper. And a tariff of freights based on any one of them, to the exclusion of all the others, is not only a perversion of the one adopted, but a stupid fraud upon the whole of them. If upon distance alone it ignores the crucial test of earnings and expenses by the train-mile as the unit of railroad service, whether at a loss or a profit, and the ton-mile as the unit of public use, measured by distance and quantity. It takes no account of the difference to a railroad company, whether its cars are loaded both ways or are filled with emptiness in one direction. It takes no notice of the further fact that there are general expenses and fixed charges having no relation to the distance of movement, and which would be more properly charged to the ton of freight as a unit of quantity, than to the ton-mile, as the unit of quantity and distance. Again it sets gradients and the law of gravitation at defiance. But as the force required for moving a loaded train one mile over a gradual ascent of only twenty feet, is about the same as for moving it two miles on a level track; and for moving one hundred and seventy-two tons of freight one mile over the maximum gradient of one hundred and sixteen feet, is nearly equivalent to fifteen hundred and twenty-six tons the same distance over a level track, it follows that a tape line tariff is a false measure of compensation. For one more illustration we might take the reduced charges established by a railroad company at and between terminal points for purposes of competition, as authorized by the Constitution, Art. 12, Sec. 20. To carry such charges by arbitrary reductions to non-competing points, over a whole road, or system of long and short roads, would be to convert the constitutional privilege into an unjust penalty, and to eliminate the element even of distance by a cut rate as the only remaining factor of an ideal schedule that should never get beyond the trial sheets by which its absurdity is shown. Such a tariff would defeat itself by the reductio ad absurdum.

RESULTS OF SUCH ABSURDITIES, AND OPINIONS OF COMMISSIONERS, JURISTS, AND STATESMEN CONCERNING THEM.

By such absurdities, the first Granger tariffs and legislation served only to harrass and handicap the railroads and their patrons. The State Commissioner of Ohio, in his report for 1870, referring to nine tariffs as waning examples, said: "They were the most fruitful source of complaint." In 1874, the year in which Iowa, in hot haste, repealed its Granger tariff on classified roads, the advisory Commission of Maine commented on the situation as follows: "In the minds of those who give this subject the fairest consideration, and possess knowledge enough of it to appreciate fully the difficulties, it becomes a conviction, more positive the longer it is dwelt upon, that the only sure way to obtain permanently low rates on railroad traffic, and especially on freight, is to leave the problem untrammeled by legislative enactments, to those whose special business it is to study

out all its intricacies." (Report, 1874, p. 18.) Down to its last report the Massachusetts Commission congratulated itself and its constituents that it had never been invested with the coercive power to fix the charges for transportation. The New York Commission, in its report for 1885, exercised its advisory function, by recommending its continuance, and says: "No power over rates is vested in this Board except that of recommendation. * * * The facts established by the experience of our neighbors, clearly prove that New York State has made a happy choice of the wisest preliminary means to deal with the transportation problem. It is better to let light and intelligence seek the solution, rather than to allow public opinion to be guided by passion and prejudice into passing short sighted shifts of statutes"-and, a fortiori, they might have said "short sighted shifts" of schedules. (Report, Vol. I, p. 70.)

To the "experience of our neighbors," including that of Georgia, Tennessee, and Texas, might be added that of England, with its half century of intermittent railway inspection and supervision, as attested by Boards o Trade, Parliamentary Committees, and Royal Commissions. It thus appears from the experimental facts, that what should have been expected has actually occurred, and it may be fairly presumed that a wider induction of examples would show the same sequence of meddling supervision and conservative reaction. It goes without saying, also, that whether such supervision be by Legislatures, or by Commissions, the result is the same. Sooner or later it brings all who have real interests at stake to the inevitable conclusion that railroads, as was said by a celebrated Legislative Committee of New York, "must be run by brains, and not by legislation." By this disposition of the subject those precocious reformers, who know so much beforehand and nothing afterwards, will have a rest from their excessive labors. And as for such subterfuges and shams as arbitrary uniform rates, equal mileage, and competitive charges, prorated over a whole road, or systems of roads, they always had, and will always have the merit of making great men out of small ones, and then defeating themselves.

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CITATIONS FROM OTHER COMMISSIONS RELATIVE TO UNIFORM AND COMPETITIVE

RATES.

In our report for 1884 we cited opinions by the Commissions of Alabama, Georgia, Iowa, and Virginia, in substance, as follows: "It is a great principle of the common law that all rates of transportation shall be reasonable, and however low through rates on railroads may be brought down by competition, this fixed principle of natural justice should always be observed as to the local rates." (Report of Virginia Commissioner for 1878, p. 9.) The Commission of New Hampshire is the only one in any eastern State having authority to determine what charges for railroad service are just and reasonable. In doing so it has proceeded upon the same settled principles and rules of decision as those by which we have been governed. In its report for 1885 they are stated as follows: "The first point raised was whether the tables of maximum charges should be uniform upon all the railroads of the State." Upon this point it says: "The conditions are so unlike in several vital respects that uniformity would be rank injustice." Again it said: "The first conclusion reached was, that each road's circumstances should determine the maximum rates for that road." Placing the burden of proof where the law does, it was held by the Commission as a rule of procedure that those "interested" were entitled to a hearing, and "if no complaints appeared, then it would be proper to assume that the rates already established and in operation were fair and reasonable.”

In its able and instructive report for this year the Iowa Commission says: “Equal, stable, reasonable rates must be desirable, and care must be taken lest while avoiding one, the public shall be overtaken by another evil. Every method should be taken to instruct both shippers and carriers in these two great fundamental truths, namely, that while competition is desirable, it may become ruinous and therefore undesirable, and that while unjust discrimination is an evil, to be absolutely prohibited, yet a wise, honest, and impartial discrimination is both necessary and desirable for the proper and healthy development of the country."

DIRECTIONS BY JUDGE DEADY FOR RUNNING A RAILROAD WITH REFERENCE TO THE REAL EXIGENCIES OF ITS BUSINESS."

For their very explicit and pertinent application to the subjects we are here considering, we take from the Chicago Legal News of May 16, 1885, the following statement of facts and instructions by Judge Deady, in ex parte Richard Koehler, Receiver of the Oregon and California Railway, United States District Court, District of Oregon. The way this clear-headed Judge slashes the nonsense out of the stale platitudes of partisan pettifoggers, is both refreshing and instructive. We commend his clear-cut distinction between competition and discrimination, and his imperative command to his subordinate, to make the non-competitive short haul pay reasonable compensation, even though it be more than the restricted charge for a longer haul, in the same direction, but subject to competition. In this connection he tells his receiver, that if the short haul shipper pays only reasonable compensation, it is none of his business (or words to that effect) what the railroad does to compete with water craft, or what a shipper having a choice between them pays for a competitive service. As the only difference between the Constitutions of Oregon and California turns upon vested rights and the authority of the State to control railroads at all, it does not touch the instructions of the Judge as the judicial manager of a railroad, and which are as follows:

Deady, J. On January 19, 1885, Mr. Richard Koehler was appointed receiver by this Court in the suit of Harrison et al. vs. The Oregon and California Railway Company et al., of the road of said company, comprising upwards of four hundred miles of track leading from Portland via the east side of the Willamette River to Ashland, near the southern boundary of this State, with a branch from Albany to Lebanon, and from Portland via the west side of said river, to Corvallis.

On February 20, 1885, the Legislative Assembly of the State of Oregon passed an Act. entitled “An Act to regulate the transportation of passengers and freight by railroad corporations," which will take effect, by operation of the Constitution, on May twenty-first. On April twenty-third, the receiver presented a petition to this Court, asking for instructions concerning his duty in the management of said property in certain particulars covered or affected by said Act, which he says he is advised by his counsel is unconstitutional and void.

The Act is very verbose and unskillfully drawn, but so far as it relates to the matters about which the receiver seeks direction, it may be briefly stated as follows: 1. The fare for the transportation of passengers shall in no case exceed 4 cents a mile. 2. All charges for transporting property shall be reasonable, but the rate charged on January 1, 1885, by any corporation, shall be its maximum rate.

3. "No greater or less" compensation shall be charged one person than another "for like and contemporaneous service" in transporting property.

4. No rebate or drawback shall be allowed in any case except when property is shipped for points beyond the limits of the State.

5. Pooling freight or dividing the earnings of "different and competing" railways is prohibited.

6. No greater rate shall be charged for carrying similar property a short haul than a long one, in the same direction.

Any person who violates any provision of the Act is made liable to the person injured in treble damages and a fine of $1,000. * * * It is commonly understood that now and prior to the passage of the Act, the fare between Portland and Albany, Lebanon and Corvallis, was 4 cents a mile; between Albany and Roseburg, 6 cents; and between Roseburg

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and Ashland, 7 cents; and on mileage tickets between Portland and Oregon City, 2 cents a mile; between Portland and Albany, and Lebanon, 3 cents, and all other points 4 cents a mile. Owing to the increased cost of operation, and the limited population and travel, it is probably true that a rate which would be reasonable in the Willamette Valley would not pay expenses to the south of it. * * While the road remains in the hands of a receiver of this Court, it is not desirable that there should be any conflict between its management and the policy of the State, except when the latter is clearly contrary to the * legal right and substantial interest of the road. * * As to the matter of long and short hauls, the question although prima facie one of discrimination, directly involves the right to a reasonable compensation. I assume that the State has the power to prevent a railway company from discriminating between persons and places for the sake of putting one up or another down, or any other reason than the real exigencies of its business. * * The provisions of this Act that I have condensed in paragraphs 3, 4, and 6 aforesaid, are intended to prevent this practice.

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But where the discrimination is between places only, and is the result of competition with other lines or means of transportation, the case, I think, is different. For instance, the Act prescribes a reasonable rate for carrying freight between Corvallis and Portland, or from either to points intermediate thereto. But Corvallis is on the river, and has the advantage of water transportation for some months in the year. The carriage of goods by water usually costs less than by land, and as water craft are allowed to carry at a rate less than the maximum fixed for the railway, they will get all the freight from this point, unless the latter is allowed to compete for it. But, if to do this, it must adopt the water rate for all the points intermediate between Portland and Corvallis, where there is no such competition, it is in effect required to carry freight to and from such points at a less rate than that which the Legislature has declared to be reasonable, or else give up the business at Corvallis altogether. And the same result would follow as to Salem, and other points on the east and west side lines, where there is convenient access to water transportation. If the Legislature cannot require a railway corporation, formed under the laws of the State, to carry freight for nothing, or at any less rate than a reasonable one, then it necessarily follows that this provision of the Act cannot be enforced, so far as to prevent the railway from competing with the water craft at Corvallis and other similarly situated points, even if in so doing they are compelled to charge less for a long haul than a short one in the same direction. It is not the fault or contrivance of the railway that compels this discrimination, but it is the necessary result of circumstances altogether beyond its control. It is not done wantonly for the purpose of putting the one place up or the other down, but only to maintain its business against rival and competing lines of transportation. In other words, the matter, so far as the railway is concerned, resolves itself into a choice of evils. It must either compete with the boats during the season of water transportation, and carry freight below what the Legislature has declared to be a reasonable rate, or abandon the field, and let its road go to rust.

Nor can the shipper at the non-competing point, or over the short haul, complain so long as his goods are carried at a reasonable rate. It is not the fault of the railway that the shipper who does business at a competing point has the advantage of him. It is a natural advantage, which he must submit to, unless the Legislature will undertake to equalize the matter by prohibiting the carriage of goods by water for a less rate than by rail. And when this is done the inequalities of distance, as well as place, may also be overcome, by requiring goods to pay the same rate over a short haul as a long one, and then the shipper at Ashland will be as near the market as any one.

As to the interchange of freights with the Oregonian Railway Company, the case stated in the petition does not seem to be one of pooling freights or dividing earnings, but rather a case of a long haul at a less rate than a short one in the same direction, to meet the contingency of river competition at Ray's or Fulquartz's Landing. Pooling freights or dividing earnings is resorted to by rival and competing lines of railway as a means of avoiding the cutting of rates, which, if persisted in, must result in corporate suicide. It is not apparent how a division of the earnings of two such roads can concern or affect the public, so long as the rate of transportation on them is reasonable. But assuming what is not admitted, that the Legislature has the power to prohibit the practice, the Oregon and California and the Oregonian railways do not appear to be competing ones, but rather supporting ones-the latter serving as a feeder, branch, or continuation of the former. Nor is the arrangement between them a pooling one, but simply one by which each carries for the other at a fixed price per ton per mile. There is nothing in the arrangement which prevents the receiver from doing a "like service" for any one else on the same terms, and I have no doubt he would be glad to.

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The receiver is instructed

(1.) To carry passengers at a rate not exceeding four cents a mile on any portion of the road, and for as much less on the whole or any part thereof as he may think advisable. (2.) To charge no more for the carriage than the maximum allowed by the Act, nor no more for a short haul than a long one in the same direction, except to and from points where the rate obtainable is affected by water transportation, in which case he may carry at as low a rate as the water-craft do, without reference to the length of the haul. (3.) To continue the interchange of freight with the Oregonian Railway on the footing of the present arrangement as long as he may think advisable. (4.) In the discharge of his duties to otherwise obey and conform to the provisions of the Act.

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