whether rich or poor, are "entitled to reasonable compensation and no more." (Civil Code, Sec. 2173.) To this time-honored and codified rule of the common law the Constitution expressly refers such orders and decisions of this Commission as are "deemed to be conclusively 'just and reasonable.' (Art. 12, Sec. 22.)

Exhibit C

Analyzes and distributes by States and Territories the passenger traffic of the Central Pacific Railroad and leased lines, for the year 1884.

It shows the number of passengers, the mileage, the earnings, the average miles traveled by each passenger, and the average charge per passenger per mile in cents, originating and terminating in each of the following States and Territories, namely: California, Nevada, Texas, Utah, Arizona, and New Mexico.

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, haye 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.

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

All

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.' 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 Raj., 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

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:

A comparison of the cattle rates showed the following result: Central Pacific Railroad, .02069 cents per ton per mile; proposed rate, .02121; Kansas Commission rate, .01908; Union Pacific rate, .02749.

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

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: