parallel and competing lines of railroads, canals, or other companies, and restricting the officers of such companies; empowering juries to decide whether companies are parallel or competing lines; and making the violation thereof a misdemeanor, and providing a punishment for the same.

AN ACT

To carry into effect the provisions of Section three, Article seventeen, of the Constitution of Pennsylvania, relating to the transportation of persons and property; and making the violation thereof a misdemeanor, and providing a penalty for same.

The passage of the above recited acts shows conclusively the changed attitude of the public mind toward common carrier and transportation companies. Here were positive mandates of the State Constitution covering most important subjects that the interested corporations had succeeded in nullifying by their predominating influence in preventing and defeating legislation for the enforcement of the fundamental law, from the time the Constitution went into effect, January 1, 1874, until the year 1907, a period of 33 years. The violations of these provisions of the Constitution are now made misdemeanors punishable by fines. This has placed in the hands of the Departments of the State, vested with the powers of supervision of the railroads, an effective remedy for violation of the laws in these respects. Comparatively few persons have any adequate idea of the effect of this legislation upon the railroads. It necessitated a radical re-arrangement of their investments in stocks and bonds of other companies, which added, without doubt, to the disturbance of business and financial conditions throughout the State. In defiance of the expressed purpose of the Constitution and by reason of the impotency of executive officers for want of penal legislation to enforce compliance, the railroads through years have gone on creating an extensive system whereby control through leases and stock ownership has been secured of many roads that seem to be competing roads. Many railroad managers seek to justify this policy by the argument that free competition often works to the ruin of the competing roads, and eventually to the disadvantage of the public. That this is frequently a fact cannot be denied, but laws on the statute book should, nevertheless, be enforced until the fact that they are unwise or inexpedient is fully demonstrated, when they should be promptly repealed. The State now has the opportunity to learn by experience the character of these provisions of its fundamental law.

from the Legislature of 1907. The most important act affecting them is the one granting the right of eminent domain and the privi lege of carrying certain classes of freight. So far, there has been little to indicate that many of these corporations have availed themselves of these supposed advantages. It may be too soon to expect noticeable results as freight carriers, as considerable change in and addition to equipment would certainly be necessary to handle suc cessfully even light freight in quantities. The right of eminent domain should greatly facilitate the construction and promotion of street railways.

This law was passed in response to an unmistakable public demand and the public will certainly be interested in observing results. In connection with the regular annual reports required of these companies, the Bureau of Railways will next year seek to obtain statistics relative to these subjects, that should prove useful and interesting.

Some restrictions have been placed upon the incorporation of street railways and upon the power to issue stock and bonds that are deserving of especial attention. The act of 14th May, 1889, has been amended so as to provide that letters patent shall not issue for the incorporation of a street railway company "until, and unless, there be filed with the same a duly certified copy of an ordinance, or ordinances, of all of the cities, boroughs and townships of the first class, and by resolution of the board of supervisors of townships of the second class, through which the route of the company extends, authorizing the construction thereof by the company, and evidencing the consent of the local authorities, required by the Constitution and this act."

There are a great many street railways in the Commonwealth that exist only on paper. A large percentage of them, possibly, were undertaken with a genuine purpose of building; many, however, simply represent efforts to speculate in franchises and rights over promising routes. An effort should be made to distinguish between these corporations, and to compel the abandonment or vacation of the charters of such as have no prospects of completion.

In the act creating the Pennsylvania State Railroad Commission, there is a clause as follows:

"The Commission may, whenever in its opinion the public interests require, in connection with any proposed increase in the capital stock, bonds, or other fixed indebtedness of any common carrier subject to the provisions of this act, employ competent experts to investigate the character, cost and valuation of the property of such common carrier, and the necessity for the proposed increase of capital or indebtedness and shall report to the Secretary of Internal

Affairs of the Commonwealth the result of such investigation for his consideration and action."

It is pretty certain that a start will now be made to correct the generally recognized abuse of loading new street railway undertak ings with unwarranted and burdensome issues of "watered stock" and inflated bonds. It is not a difficult matter to perceive that this practice is at the present time more prevalent among promoters of street railway companies than of steam railroads or of other corporations. A false basis, we believe, has been used in the past in the reports of these corporations in respect to the item of "Cost of road and equipment." It is quite apparent that generally the aggregate of capital stock and funded and unfunded indebtedness has been returned instead of the actual or real cost. The cost of road and equipment, therefore, as returned to the Bureau of Railways, cannot but be very different in many cases from the commerical value of the roads. This is consequently deceiving both to the public and prospective investors in the securities of the companies. That steps will be taken in the coming year to largely correct this condition, which the public has come to look upon as fraudulent and abusive of corporate privileges, may be expected; especially in the cases of new companies promoted and constructed. It is an important problem, not devoid of difficulties in arriving at a correct solution. Pennsylvania is almost wholly dependent upon railroad construction for the development of its great natural resources in the future. In its interior, it has practically no waterways capable of utilization for the purpose of commerce, such as are found in many other states and in many sections of our country. The possibilities of railroad construction as profitable enterprises are not yet exhausted. This is particularly true as to railways operated by electrical power. The work of developing the inland streams of the State for the purpose of furnishing cheap electrical power, has just begun. It is a field of tremendous possibilities and should in time be productive of many electric railway enterprises. The part of wisdom would seem, therefore, to demand that no unnecessary impediments should be placed in the way of railroad building.

The history of railroad building in the past shows that the promoter and watered stock have played important parts. That the opportunities which the entire absence of supervision and regulation presented were much abused, is well known. And yet, it is doubtful if railroad construction both steam and electric, will progress unless there shall be some provision in our laws for fair promotion profits.

Of all the new laws relating to railroads passed by the Legisla ture of 1907, the most important was the act creating the Pennsyl

laws for reasonable regulation of railroad companies, and a well organized Commission with full authority to enforce the laws. Our State laws relating to railroads are not nearly so drastic as those of many other states. They are fair both to the companies and to the public, and the recent great slump in the prosperity of the railroads is but another warning that conservatism in all matters pertaining to these important interests is the best policy.

When the exact relation of the new Pennsylvania State Railroad Commission to the public comes to be more generally understood by reason of a careful and conscientious exercise of its functions by that tribunal, an era of better feeling between the railroads and the public should result.

Attention has been directed to the principal laws enacted by the Legislature of 1907. At the end of this report will be found the full text of all the laws passed by the last Legislature.

General Remarks.

The use of standard forms of reports is a great convenience both to the reporting companies and to this Department, but it has also many disadvantages. The reports of interstate railroads are necessarily burdened with much information that does not in any manner relate to their business in this State, while on the other hand it is almost impossible to get at, with any degree of accuracy, the actual operations of these companies within the State. It is a problem, the solution of which is exceedingly difficult. To essentially change the established system would practically necessitate the companies changing their methods of bookkeeping so as to be able to account separately for the operations of their lines wholly within the State. This could only be done at immense cost and inconvenience to them, and this Department has no desire to unnecessarily harass them in the conduct of their business. Yet, we feel that the Department is entitled to more definite knowledge than it has been able to secure in the past and in the ensuing year an effort will be made by conference with the companies to arrive at a basis of reporting in addition to that now in use, by which the operations of the companies within the State may be differentiated from those outside, to the extent, at least, that the same may be practicable.

It is possibly gratifying to citizens of Pennsylvania to read in this report that the total assets of the steam railroads reporting to the Department, aggregate $4,701,182,950, being approximately one-third of the entire railroad assets of the United States, and further, that the increase in assets during the year was $203,475,961. But examination and analysis of the tables published herewith, will show

that by far the largest part of these assets is owned by companies having but an inconsiderable mileage in this State, and that the principal increase in assets during the year was by the same companies.

The aggregate of mileage of the steam railroads reporting to the Department is 62,247.68, of which the total of miles operated in the State is 11,983.07. The total increase in mileage for the year reported by all companies is 923.57, of which increase there was but 163.79 within the State.

There are in the State about 150 steam railroad companies whose lines are wholly within the State and which operate independently. They are particularly State railroads. They vary in length of line from but a few miles to several hundred miles. As a general proposition it may be asserted that they are not over prosperous. Their road-beds are poor and their equipment shabby, out of date and inadequate. Yet, they perform important services to the communities they traverse and practically prevent the isolation of large sections of sparsely settled country. We believe that the departments of the State vested with the powers of supervision and regulation of railroad companies should pay more attention to these companies with the view of being helpful to them, and that in all future legislation upon the subject of railroads the welfare and encouragement of these weak, independent companies should be carefully considered and guarded.

The Bureau of Railways.

By the Constitution, the Secretary of Internal Affairs is charged with certain duties in relation to railroads, canals and other transportation companies, and through the Bureau of Railways, as authorized by law, these duties are discharged. The Bureau has done an important work for many years most satisfactorily, considering the limitations on its powers, by reason of the failure of the Legislative branch of the government to provide it with sufficient laws to regulate the companies subject to its jurisdiction and to enforce its decrees. The creation of the Pennsylvania State Railroad Commission, by the last Legislature, gives the State two different depart ments with supervisory powers over transportation companies. It is natural to conclude that complications might result from this condition of affairs, but plans are already being considered whereby the two departments can co-operate harmoniously and avoid any conflict of authority and jurisdiction.

In closing these remarks, attention is particularly called to the assembled data as it appears in the consolidated tables, both with