SECOND ANNUAL REPORT OF THE RAILROAD COMMISSION. OFFICE OF THE RAILROAD COMMISSION OF GA. To His Excellency, Alfred H. Colquitt, Governor, &c. SIR-In making a second semi-annual report to your Excellency, it is our purpose to present a simple review of the action of the Commission, and of the general effect of such action upon the railroads of the State. It was our intention to make the present report full and elaborate upon all matters of interest connected with the Commission and its labors; but this has been rendered impossible, for the present, by the severe illness of one of the Commissioners. We hope to be able, at no distant day, to present to your Excellency a report covering the entire field of our duties and labors. ACTION. In the action of the Commission we have sought to keep constantly in view the two great objects of the law, viz: the prevention of extortion, and of unjust discrimination in freight and passenger rates. The whole animus of the Commissioners has been to do equal and impartial justice to both railroads and people. In our view, we have come much nearer this end by our present rules and rates than by those of force at the date of our last report. We reasonably hope for more constant approximation, as study and experience familiarize us with our duties. There have been complaints, more or less well founded, of the correctness of our views; but in general the comment applies, that local prejudices have yieded, on discussion, to broader views, and that many of the complaints as to discrimination on our part have come from places or classes once the beneficiaries of partial and unfair advantages. It is not unnatural that those favored by unjust discrimination should desire a continuation of that policy. It would be tedious to go through with the entire work of the Commission, in detail, in the body of a report. We submit herewith to your Excellency, documents showing our action in establishing rates, rules and regulations for the railroads, and the means adopted by us to prevent unjust discrimination in freight and passenger rates. RESULTS. Since the organization of the Commission, very material reductions in rates have been effected as a result of its operations, and much has been done in the way of graduating and equalizing rates to standards. One of the most useful effects of the labors of the Commission has been to enlarge the mutual knowledge of the railroads and the public, and to bring each to a clearer recognition of the rights and duties of the other. Increased knowledge of rates has been achieved, and to tenndency resulting from our work has been to reduce speculation and encourage reliance for success, on sound business principles. PASSENGER RATES. The maximum passenger rates on many of the railroads of the State have been reduced by the Commissioners' tariffs from five cents, and in some instances six cents per mile, to four cents per mile. Experience has shown that this reduction, while greatly beneficial to the public, has not injured the interests of the railroads. On the contrary, the increase of travel, occasioned thereby, has added materially to the earnings of the roads. The right to reduce passenger fares below the maximum fixed by the Commissioners, has not been restricted. The law places these upon a different footing from freight rates, and the Commission has, therefore, left with the railroads themselves the power to fix their respective passenger charges at any amount below the maximum of four (4) cents per mile, established by the Commission. FREIGHT RATES. Since our rates went into operation, the revenues of the roads from the freight traffic-the most important branch of their business-has largely increased over corresponding periods in previous years; and this, too, in the face of the fact that large reductions in rates, on the principal articles of production and consumption have been made. For more particular information, at this point, we respectfully refer your Excellency to the statements contained in the accompanying document marked Exhibit A. COMPETITION. It is evident that there is no advantage to be secured to the people, nor to the railroads of the State, by allowing other roads, not under the jurisdiction of the Commissioners, to take the business uncontrolled by what we regard to be the legitimate principle of competi tion, yet not of force or recognized by roads without the State's limits. It should be remembered that competition affects the whole round of transportation, from end to end and back, and that this complex condition, so largely affecting our roads, exists principally beyond our jurisdiction. The most important regulation adopted by the Commission in regard to competition, was briefly referred to in our first report, and is as follows; "RULE 6.-The freight rates prescribed by the Commission are maximum rates, which shall not be transcended by the railroads. They may carry, however, at less than the prescribed rates, provided that if they carry for less for one person, they shall for the like service carry for the same lessened rate for all persons, except as mentioned hereafter; and if they adopt less freight rates from one station, they shall make a reduction of the same per cent. at all stations along the line of road, so as to make no unjust discrimination as against any person or locality. "When, however, from any point in this State there are competing lines, one or more not subject to the jurisdiction of the Commission, then the line or lines which are so subject, and are working at the lowest rate under the rules, may at such competing point or other point injuriously affected by such competition, make rates below the Standard Tariff, to meet such competion, without making a corresponding reduction along the line of road." By this rule it was intended to make competition conform to principles of right and justice. Thus, instead of a war of rates being confined to any little village along the line of two countries, say for example, Canada and the United States, such war, if made, would, under the operation of this rule be declared along the whole line. The roads may thus make legitimate war, but it would extend to every station on the line. Such we regard to be legitimate competition, as distinguished from illegitimate and injurious competition. If rates are lowered at strictly competitive points alone, the neighboring stations are injured, and a result brought about of freights being shipped back and in the opposite direction to their destination, to be carried a second time over the same part of the road, more cheaply than by direct shipment to the point of delivery. To avoid this result, when the rate is lowered at the immediate point of competition, a graduated rate is supplied to neighboring stations, so as to make the direct charges something less from the initial point to that of destination, than the sum of the two rates from the shipping station to the near competitive point, and thence back to the place of destination. The Commissioners are of the opinion that they have no power to force competition between the roads, nor do they think that they ought to be invested with such power. Experience proves that unrestricted competition is often detrimental to the best interests of the public, as well as the carrier. We claim the right to restrict competition within legitimate limits, and we think this object can be accomplished by the enforcement of Rule 6, of our regulations. EMBARGOES PREVENTED. The Commissioners have always believed that shippers are entitled to the benefits of any market they may select, according to the natural or artificial advantages it may possess, unrestrained by arbitrary rules. Our labors have been diligently and systematically devoted to the accomplishment of this end. One of our most recent efforts in that direction is shown in the accompanying order, dated October 29th, 1880. The effect of this order, we think, will be to remove the practical embargo which for some time past has been laid upon commerce between certain points in this State and other points without the State's limits. Heretofore, there seems to have existed some reason which induced a number of railroads, in the State, to decline to receive for shipment more than certain percentages of freights of a particular character or class. The order just referred to is as follows: STATE OF GEORGIA. Office of the Railroad Commission, ATLANTA, October 29, 1880. In consequence of the accumulation of cotton at this point and elsewhere in this State, and an injurious |