millions of dollars annually to this great grain producing section of our country.

The relative economy of transportation by water and by rail, respectively, is well illustrated by the following statement taken from the report of the Senate Committee on Transportation to the Seaboard;* showing, as it does the distance that wheat and corn will bear transportation by land and by water:

f

20

.do

Value at market ..

$49.50 $24.75 $49.50 $24.75 $49.50 $24.75 10 miles from market. 49.45 24.70 49.35 24.60 48.00 23.25

49.40 25.65 49.20 24.45 46.50 21.75

The direct influence of water lines of transportation on railway transportation is well illustrated by the following statement from the report of the Senate Committee, showing the difference between summer rates and winter rates by rail:

AVERAGE monthly freight charges per bushel on wheat from Milwaukee and Chicago to New York by water (lakes, Erie canal and Hudson river), by lake and rail (lake to Buffalo and thence all rail to New York), and by all rail 1870 to 1872 inclusive.

"During the year 1672 the "all-rail" rates were 24.5 per cent, higher than the "all-water" rates, the “lake-and-rail” rates were 7 per cent. higher than the "all-water" rates, and the "all-rail" rates were 16.3 per cent. higher than the "lake-and-rail" rates.

"The average summer rail rate for 1872 (May, June, July, August, September, October and November), was 314 cents, and the average winter rail rates in 1872 (December, January, February, March and April), was 36% cents, the average winter rate being 16 per cent. higher than the average summer rates. By comparing the “all-rail" rates for the months of June, July and August with the "all-rail " rates for December, January and February, we obtain a more accurate expression of the effect of ample water facilities in competition equally ample rail facilities. The average "all-rail" rate during the three months just named was 27 cents, and the average of the winter months was 39

cents, the winter average heing 44.4 per cent. higher than the summer aver age, when the competition of water transport was in full force. It may be supposed that the increase in the rail rates during the winter months is caused by the increased cost of transport during that season of the year, but this is true only to a very limited extent. The chief cause of this is the absence of competition by lake and canal. This is evident from the fact that although the cost of transportation by rail is not greater in October and November than in June and July, yet the average of the rates during the former months is 44.4 per cent. higher than the average of the rates during the latter months. The pressure of traffic during the months of October and November, here the facilities for transport by water are limited, in connection with the fact that the Erie Canal is at that time taxed to its utmost capacity, causes an advance in the rates on the lake and on the canal, and the rail rates at once go up to about the average for the winter months,"

In view of the foregoing, and of a multitude of other facts, which it is not important to quote, it must be apparent that the true policy of the state is to encourage the improvement and efficiency of all feasible water routes, both within our own state and between the western states and the seaboard.

STATE SUPERVISION NOT FULLY TESTED.

We

We have already expressed the opinion that for this country, and certainly for our own state, executive supervision of transportation matters is the best, if not indeed the only, practical method. admit that it has not yet been so tested in the United States that its success can be considered as fully established; but the facts that it bears the test of reason, and that it has succeeded well elsewhere, under circumstances like our own, are warrant for the conclusion that it will succeed here also-not in just the form in which it has been applied in the European states, but in a form consonant with American ideas and institutions, as well as with the nature of the case and the conditions involved.

It must be admitted by us that in the one or two instances in which state supervision has been attempted in other states, the result has not been all that was hoped. But, on the other hand, it must be admitted by any who deny its practicability, that there has as yet, been no complete trial of it anywhere in this country. Even in England, where the Parliament, the government, and the public agree as to its being the only feasible plan of holding the railway corporations to a proper accountability, its resources have not been fully brought out.

MANNER OF EXERCISING STATE SUPERVISION.

Having thus disposed of the question of form of state interference in the affairs of railway companies, we come now to a consideration of the way in which state supervision should be applied. It is a fundamental principle of free government that there should be in all cases as little interference as possible with the rights and privileges of the citizen, whether in his individual or associate capacity. And accordingly, in devising any plan for the supervision of railroad corporations, the aim should be to leave them the largest freedom of action compatible with a proper security of the public interests.

WHOLESOME RESTRAINTS BY GENERAL ENACTMENT.

Acting upon this principle, and believing that the state does not possess, and never can possess the necessary foresight and knowledge of the ever shifting conditions upon which railway earnings depend, to enable it to prescribe details of management by statute, we believe it may and should determine the general conditions of both organization and management. In addition to legislation against discrimination, as already suggested, the legislature may most practically fix a maximum of aggregate earnings, and possibly of gross operating expenditure upon a definite investment. In this respect the state may accomplish all that it deems best to accomplish, and all that the scope of its duties or the interests of the public require in this regard, by general enactments.

It is suggested that laws thus framed, limiting without endangering the rewards of capital, protecting without jeopardizing the public interest in railway enterprise, its administration subject to the immediate supervision and in some degree to the discretion of the railway commissioners, would be most likely to combine all the wholesome restraints claimed for an enlightened public opinion, with the more efficient restraints of positive law.

It is practicable to limit railway charges by law in one of two ways: either by establishing a direct limitation of rates, or by fixing a limitation of profits.

1. Direct limitation of charges-Maximum rates fairly deter

mined.

It is manifest that if maximum rates are to afford the public any real security, and yet not do the companies injustice, they can

only be determined with great care, and upon a correct basis. A few words on both these points; and first of the basis:

Rates not determinable on the basis of actual cost.-Before dismissing this branch of the subject, permit us to call your attention to the fact that no experience, either in Europe or in this country, has demonstrated the utility of attempts to determine the actual value of railroad property upon the basis of actual cash expenditure in the course of construction. In addition to the difficulties attending the question, already enumerated, it must be remembered that no railroad, especially in the United States, is ever fully and perfectly completed; that under the present financial system of railway management, no capital account is finally closed. The rolling stock and bed of every railroad, however apparently complete in its original character, demands and receives continuous additions and improvements. This is a law of railroad enterprise as inexorable as the immutable law of progress. The safety of human life and every public interest demand a recognition of this law, and a continuous increase of total investment from the beginning the new taking the place of the old, multiplying the capital account and enhancing the value of the resulting product. A comparison of the present condition of any of the older lines of railway in Wisconsin with their condition at the date of their completion, or of any old line with any old line of road recently constructed, will illustrate this principle of inevitable and legitimate progress in cost.

Again, the question presents itself, is actual cost in this case, or in any case, the just measure of value, and the appropriate basis of restrictive legislation?

Governments do not tax property upon the basis of actual cost, but rather upon that of existing money value. The courts deal with property-including railroad property-upon a similar principle, ignoring actual cost. Every individual estimates his property, also, in accordance with its marketable value. The question has been raised, whether there is any sufficiently good reason for a change of the universal rule in the case of railroad property. One railway company constructs its road by extravagant expenditure, while another company proceeds economically. The rule of the existing law in such a case necessarily rewards the one company for the vice of prodigality and punishes the other for the virtue of wisdom and prudence. It is not denied that a railway company is the absolute owner of the visible