railway in question exceeded a certain per cent, usually 10. Thus a Massachusetts charter of 1829 reserves to the legislature the right to revise the schedule of rates every 4 years if the net income exceeds 10 per cent. A contemporary New Hampshire charter gives the board of directors full power over rates, and permits the legislature to reduce them after 10 per cent net on the investment has been realized. A clause typical of provisions of this kind is found in an early Maryland charter: "That nothing in this act shall be construed so as to prevent the legislature of this State from legislating upon the subject of the tolls reserved in this act at any time after the expiration of 20 years after the passage of the act: Provided, That at no time shall the toll be so regulated or reduced as to yield less than 6 per cent per annum.” Other Maryland as well as Pennsylvania charters embody analogous provisions. Ten per cent net income is by far the most common limit placed upon the discretionary powers of legislatures over railway rates in all the States in which such chartered provisions are found. In a few instances the rate of net profits permitted under the law is very much larger. For instance, in Indiana charters were granted permitting the legislature to regulate rates whenever the profits exceeded 15 per cent, and any excess above 15 per cent was to be paid into the common-school fund.

Another right reserved to the State in a considerable number of charters is the power to purchase the railway after a certain number of years. This power was frequently reserved in the charters of the New England States, the significance of which was perhaps illustrated in the agitation accompanying the recent leasing of the Boston and Albany Railway. Early Massachusetts charters reserved to the State the power to purchase after a period of 20 years. In Vermont this period of discretionary power of the State varied from 20 to 50 years. New Hampshire followed Massachusetts, fixing it at 20. An Illinois charter of 1850 gives the State the right to purchase, after 25 years, by refunding to the company the cost of the entire plant, with interest at the rate of 6 per cent per annum. In New Jersey similar right was reserved after 30 years. An early Michigan charter contains a provision which is typical of isolated charters in all of the Northwestern States: The State shall have the right, at any time after the expiration of 15 years from the completion of said road, to purchase and hold the same for the use of the State at a price not exceeding the original cost of said road, exclusive of repairs thereof, and 14 per cent thereon, of which cost an accurate account shall be kept and submitted annually, on the first Monday in January, to the legislature, duly attested by the oath of the officers of said company, and at such other times as the legislature shall require the same." In Missouri a charter granted in 1837 reserved to the general assembly the right to purchase the railway after 4 years by giving notice in writing. This charter also provided for the appointment of valuers, whose function it was to fix the price of the transfer.

Limitations on the life of charters.—The preceding paragraph illustrates one class of limitations placed upon some charters in all parts of the United States. While a majority of the charters are silent upon this point, now and then charters were granted which were limited in their existence to a certain period of years, varying all the way from 10 and 20 to 99 or more years. One of the powers granted in the charters which do not contain provisions directly limiting their life was that which gave to the board of directors "perpetual succession,” which means, of course, a franchise unlimited in the period of its existence. In the Northwestern States a few charters were granted limiting the life of the corporation to 50 and 60 years. Florida granted a few which were to lapse after a period of 20 years; Louisiana, after 40 and 50, and, in one instance, 25. In one charter, a provision is found that after a certain number of years the same shall expire, and the assets of the corporation shall be distributed among the stockholders. The session laws of the different States contain numerous acts extending the charter period in those cases where the original act contained time limits; and it is obvious that in all those instances in which the charter reserved to the legislature the right to purchase, no time limit whatever was necessary.

Limitations on the power of taxation.-After the country at large had begun to realize the necessity and importance of railway transportation, various means were resorted to to encourage the construction of railways. American manufacturers were unable to provide the necessary material. This had to be imported from abroad, hence it was but natural that legislators should have resorted to the expediency of exempting from import duties materials to be used in the construction of railways. But the railways, after they had been constructed, represented valuable property, and to that extent increased the taxable resources of the territory in which they lay. To provide against the imposition of taxes, which might become burdensome or even discourage the construction of railways, legislatures of States in all parts of the Union incorporated, in some charters, a provision

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limiting the power of the respective States to tax railway property; and, in a considerable number of instances, exempting such property altogether from taxation, usually for a limited period of years. That the capital stock of said corporation shall be and remain free from taxation until the profits collected by said railroad corporation shall be sufficient to afford a dividend of 5 per cent per annum on the capital stock." This is from a Connecticut charter of 1833, and represents analogous provisions found in New England charters of that period. In Massachusetts some charters exempted railway property from taxation for one or more years, after which the legislature had the right to levy a tax not exceeding a certain sum, frequently 25 cents per annum, on each share of the stock. In the Northwestern States isolated charters limit the power of taxation to a certain per cent on the capital stock; others to a certain per cent on the net income. Then, again, other charters make railway property liable to taxation like all other property; and late laws in a few of the Western States specifically state that no railway property shall be exempted from taxation.

State participation.-To a limited extent the individual States participated in the construction of railways, either by becoming stockholders and lending the credit of the State or by giving direct financial aid. The well-known illustrations of the railways owned by the States of Georgia and South Carolina and the city of Cincinnati, stand quite alone in the contemporary railway history of the United States. The history of internal improvements had been such as to discourage the active participation of our commonwealths in the construction of railways. Works of internal improvement, greatly exceeding both the capacity to construct and to utilize them, had been projected by many States. The inevitable failure of these gigantic projects brought these States into disrepute as active economic agents; hence we find in constitutions and charters granted after this period of disaster in State works of internal improvement direct prohibitions of State participation. As a matter of historical interest, however, it may be well to notice a few typical instances of direct or indirect participation of the State in building up our railway system. It should be noted that the term "state" is here used in the specific rather than the generic sense, for even after constitutional prohibitions and statutory restrictions had become common, the smaller political unitscounty, town, village, and city-freely participated in railway enterprises. Large numbers of illustrations can be found in nearly every State. An act of the legislature of Maryland, in 1827, authorized subscription on the part of the State to the stock of the Baltimore and Ohio Railway. A contemporary Michigan charter empowers the State to take stock in the company chartered; likewise in case of New Jersey; also in Arkansas and other States in the Mississippi Valley. An early Indiana charter limits the State in its subscriptions to 500 shares, and in Louisiana the governor is authorized to subscribe a certain amount in behalf of the State after a certain number of shares have actually been paid for by individuals. In turn, the governor may appoint one director to represent the interests of the State. It is important to notice that in this representation of the State in the management of railways to protect the financial interests of the Commonwealth may be found the beginning of attempts at administrative control of our railways. In like manner the board of internal improvements, and later the commissioner of railroads appointed by the governor, were intrusted with the interests of the State in the control of railways to which Tennessee had given aid. Isolated charters in Wisconsin, Michigan, and other Northwestern States, as well as in various other States, authorized the company to borrow money and to pledge the credit of the State in its payment. In a few States, like Wisconsin and Texas, attempts were made to utilize the school fund in the construction of railways, on the plea that such an investment of these funds would be carrying out the provision of the law directing that school moneys shall be invested in the most profitable manner. In the estimation of the promoters of such plans, nothing could be more profitable than the railways which they had projected. Miscellaneous provisions.-Under this head mention will be made of provisions found in isolated charters in States in all parts of the country, being essentially alike in substance, although varying in the form of expression or exact scope of their contents. During the early part of the nineteenth century it was common to organize corporations for a variety of purposes. Experience soon demonstrated that corporations which divided their interests and their energy among two or more enterprises became involved sooner or later in difficulties, if not in absolute failure. As a result of this experience it was not long before State legislatures enacted general laws or inserted provisions in special charters to the effect that corporations shall be organized only for one specified purpose. A few charters, for instance, were granted, which authorized the construction of a railway, as well as participation in other kinds of business. An excellent illustration of this is

found in the title of the Georgia Railroad and Banking Company, which has lasted into our own times. There appears to have existed a very close affiliation between railroading and banking, the same corporation frequently engaging in both kinds of business. A reaction against this is clearly shown in statutes and charter provisions prohibiting railway companies from engaging in the banking business. Such prohibitions are found in the charters of Alabama, Illinois, Kansas, Michigan, Nebraska, Pennsylvania, South Carolina, Florida, Georgia, Wisconsin, and other States.

The route of the railways chartered by the various acts is described with varying degrees of completeness and accuracy. In perhaps the great majority of charters the termini and a few leading intermediate points are named; in others, only the termini; and in still others, nothing more definite than the expression that the railway in question shall be constructed between some eligible point on a certain river to another eligible point on a certain lake or in a certain township. Instances are recorded in which projectors solicited aid in the construction of a railway along one route and then chose another, and repeated their solicitations for aid along the second, and perhaps secured support from both.

The amount of land which the railway company might legally hold was quite generally restricted to that which was necessary for construction and operationa strip of 100 feet in width, and, in addition, whatever may be necessary in order to secure material and for the construction of depots, warehouses, and other necessary buildings. In many of the States the right of way was donated to the company; and, of course, in numerous instances, State and Federal grants were given in aid of railways. But to provide for the purchase of the necessary land, charters usually contain provisions relating to eminent domain or expropriation. Most charters name some officer or tribunal before whom cases relating to condemned property may be heard and the manner in which decisions and awards may be made.

The capital stock of the company was usually named in the charter, although, with very few exceptions, the amount of the capital stock apparently bears no relation to the magnitude of the railway in question. In only a few instances does the charter fix a definite ratio between the number of miles of road and the amount of the capital stock. While now and then a charter does not provide for the payment of anything whatsoever at the time subscriptions are made, or calls for only a dollar or two, in a large number of charters a payment of $5 is called for at the time subscribers enter their names on the books of the company. Usually the manner in which the balance shall be paid is indicated, and the number of days' notice which must be given is stated. The voting power of stockholders is quite generally limited to one vote per share, although in the North and South Atlantic States the graded system of voting, by which the number of votes of the individual stockholder decreases as his holdings increase, is common.

It is a familiar fact that our early railways were built for short distances and without reference to one another, and that our present magnificent systems are but consolidations of large numbers of smaller roads. We are not surprised,· therefore, to find the subject of consolidations rarely touched upon in early charters. To be sure the term is used; and now and then a clause, either directly authorizing or prohibiting consolidations, was put into a charter. The right to cross other railways, as well as to form junctions, is frequently granted; and in reality such a right can easily be construed as the right to consolidate. Similarly, the power to operate and lease other railways was frequently given, although in the Southern States the term "farming" is sometimes used.

Later charters quite generally expressly prohibit the leasing or joint operation of parallel or competing lines; and in numerous early charters companies are protected against the construction of parallel lines either within a certain number of years or a certain distance from their own roads.

A great majority of charters provide for an annual report in one form or another. This report is most frequently made by the board of directors to the stockholders; in fewer instances to the legislature; and, in still others, to both the stockholders and the legislature. The number of items specified in this report varies all the way from less than 10 to more than 100.

Forerunners of laws relating to safety appliances and the protection of persons and property can also be detected in early charters. Provisions may be found relating to the order in which cars shall be put into a train, the manner in which crossings shall be protected, bells upon locomotives, fences along tracks. (It is a matter of curiosity that in some of our earliest charters, provision is made for the construction of gates across the railway tracks, which the train operators are to open and close whenever they cross the public highways.)

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The transportation of troops and munitions of war is occasionally provided for; and in various Southern States railway officers are expressly exempted from the performance of military duty. In a few charters the power of the company to own slaves is treated. A sinking fund is also mentioned in a very few of them. An archaic feature of our charters is found in the provisions relating to the use of the same railway track by different shippers, and the rules governing the construction of rolling stock. For example, in Massachusetts a corporation was authorized to specify in its by-laws the form and construction of the wheels, and the weight of the loads which should pass over its road. This clause had directly in view the use of vehicles other than those owned by the corporation. several charters granted in the Northwestern States the form of the vehicles, as well as the price to be charged for the transportation of goods and owners' vehicles, is specified in the charters. In New Jersey, it is provided “that no farmer belonging to this State shall be required to pay any toll for the transportation of the produce of his farm to market over the said road or roads, in his own carriage, weighing not more than one ton, when the weight of such produce shall not exceed 1,000 pounds, but the same farmer may be charged toll as for empty carriage." It will be noticed that the term "toll" is here used to designate remuneration for the act of transportation, while the term "expense," or "cost of transportation," as was noted in an earlier paragraph, relâtes more particularly to remuneration for the use of the track and represents a contribution to the fixed charges of the road.

PART II. LATER CHARTERS AND EARLY GENERAL LAWS.

General characteristics.-The terms "early" and "late," used with reference to railway charters, are relative in their significance; for the same year which is early in the history of one State may be late in that of another. For instance, charters granted in the New England and Middle States between 1835 and 1840 may be characterized as later, while those granted in States like Wisconsin and Minnesota during those years would decidedly belong to the earlier charters of that section. The legislative history of railways in the various States of the Union is essentially similar, and as we observe the movements of this legislation from east to west we may notice that in turn each State goes through, in the main, all the experiences and stages of advancement of other States which preceded it in railway development. An examination of the contents of these char ters, as one observes their march westward, clearly indicates the fact that the restrictions of the earlier types granted in the East are gradually made milder, if they are not altogether lost. Occasionally there is a reversion to type-a Western charter embodying all the salient restrictions and regulating features of the severest Eastern charters. The additional observation may be made that the maximum-rate provisions, which are rather common in the charters of the earlier East and Middle West, are frequently embodied in later charters. Then, as time advances and the more modern phases of railroading make their appearances, clauses referring to consolidations, discriminations, and even long and short haul are occasionally inserted. Aside from the enumeration of names comprising the board of commissioners, which usually appears in the first or second section of the charter, no regular order is maintained.

It is clear that States copied largely from one another, and in the process of copying different charter sections appear to have become badly mixed; and in numerous instances a considerable number, even a majority, of clauses incorporated in the more complete charter which served as the model are left out altogether.

While large numbers of special charters were granted up to 1870, general laws relating to railways appeared early in the thirties, and in a few isolated cases even before that time. A custom which aided in bringing about the transition from special to general laws was the abbreviation of railway charters by reference to previously granted charters in the same or, in isolated cases, ir other States. Under this custom the charter only contained a few purely individual and local specifications, with the additional blanket provision that the company thereby incorporated shall enjoy all the rights and privileges previously granted to another specified corporation. Thus, in New York numerous charters are abridged by reference to the Attica and Buffalo charter granted in 1836. The same method was largely employed in the construction of charters in Maine, Virginia, Missouri, Indiana, Minnesota, Tennessee, and other States. When, as was often the case, a considerable number of charters were abridged in the same State by reference to some one charter, an element of uniformity was introduced with almost as much efficiency as if general laws had been enacted.

One of the peculiarities of railway legislation in all sections of the country is the granting of special laws after general laws had been enacted in the respective States. Indeed, it is not uncommon to find upon the statute books a comprehensive general law enacted on a certain day and perhaps a special charter granted, if not on the same, then on immediately succeeding days. Large numbers of special charters were granted completely ignoring in their provisions existing general laws.

The Northern Pacific franchise.-A late illustration of the organization of a railway company under special charter is afforded by the history of the Northern Pacific Railroad, the leading facts of which are set forth by the general counsel of that company in the preface to his compilation of the Northern Pacific charters.

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