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From that day to the present time, Switzerland has had its series of laws culminating in the important repurchase act of 1898, under which the present scheme of nationalization of railways is being carried out. The idea of State railways had its beginning in the law of 1852, according to which the federation reserved the right to permit either cantonal governments or private companies to construct railways. The culmination of this idea found its expression in article 1 of the law of 1897:

"The federation may purchase and operate on its own account, under the name of Federal Swiss Railways,' all those Swiss railways which, because of their economic or military significance, serve the interests of the Eidgenossenschaft or of the major part of the same, when these can be acquired without making disproportionate sacrifices."

Thus the laws of 1852 and 1897 constitute the "boundary posts" between public and private railway enterprise in Switzerland. Under the former law, construction by the State was considered chiefly as a possibility, while under the latter it is regarded as an immediate probability. Furthermore, the law of 1897 places the entire railway system in the hands of the federation, while that of 1852 left it between the cantons and private companies.

The next important law is that of 1872, which brought order and system into Swiss railway legislation. Before that time much confusion, incoherence, and uncertainty had existed in railway statutes, all of which was done away with by the systematizing and unifying influence of the new law. Besides, the law of 1872 is in many of its essential features still operative through their incorporation in later acts. This law placed a time limit upon corporate life granted in charters, and restricted transference of charter privileges to direct assent of federal authorities. Time limits, during which construction could be completed, were also fixed, and provisions having in view sound financial organization introduced. The Government reserved the right to order the establishment of stations, double tracks, and other facilities. Railways were obliged to submit, on completion of a line, a detailed and accurate account of the expense of construction to the Bundesrath. Mails were to be transported free, and the Government had the privilege of using the roads during times of war. The manner of establishing railway rates was prescribed, and system and unity were introduced into the classification of rates, as well as into the physical organization of the railway system.

Another important step toward uniformity was accomplished in the enactment of a "normal concession bill." As the name indicates, this law furnished a normal charter, the provisions of which, it was assumed, would be incorporated in every railway charter to be granted in the future, only individual and local variations requiring modified forms. The railway companies had been reluctant to demand the right of the State to legislate in any manner interfering with what they considered their charter privileges. Both the law of 1872 and the normal charter law assert the right of the legislature to enact general laws which supersede the special charters in so far as there is a conflict between them. The charters granted during the years following this legislation contain repurchase provisions. What these were is not essential, since the law of 1898 contains what is applicable to this subject. In 1883 and in 1896 so-called accounting laws were passed. These were a necessary preliminary to the later repurchase act, in that they brought about greater uniformity in systems of railway accounting, and, in addition, provided the data upon which calculations of the repurchase price could be made. It has also been asserted that the methods of accounting prescribed under these laws resulted in lower valuations being placed upon railway property and a consequent saving in repurchase on the part of the Government. Under the federal law of 1897, approved by a heavy majority of the referendum in 1898, the federa ation is empowered to repurchase all the Swiss railways in accordance with the repurchase provisions of their respective charters and the general law. The funds necessary for such repurchase are to be raised by the issuance of bonds. The entire indebtedness is to be canceled within 60 years by means of a well-elaborated plan of amortization prescribed in the law. Other plans may be adopted in case of mutual agreement between the companies and the Government. The ultimate measure of success of the Swiss scheme of nationalization can only be awaited with interest. It is at present altogether too early to pronounce judgment upon it.

In the management of their railways the Swiss have adopted a system similar to that which will be described in case of Prussia. The railway side of the administration rests in the hands of a general directory of from 5 to 7 members and 5 circuit directories, the latter being subordinate to the former. These two classes of administrative organs may be considered as the legally responsible railway authorities. Running parallel with these are two other classes of authori ties, advisory and deliberative in their nature. These are the administrative

council and the circuit railway council. In the organization of these bodies the representation of political, economic, and social interests is made the chief aim. Austria. -In order to illustrate the most important features of Austrian railway legislation, the chief provisions of a charter granted in 1868 to the Austrian Northwestern Railway will here be presented.

The minister of trade is the authority upon whom the final approval of the plan devolves, and no changes and modifications can be made without the consent of the authorities of the State. The franchise is granted for a period of 90 years, during which time the company is protected against the construction of competitive lines. The State may purchase the road at any time after 30 years of corporate life; and in case State purchase does not take place before the expiration of the charter the railway shall revert to the State without compensation to the company at the expiration of the charter limit. The incorporators are also bound by all the provisions of the general laws of 1851 and 1854. The time limits, during which construction shall be begun and completed, are established for different sections of the road and not for the road as a whole, as is common in the United States. The company must permit connections to be made with other railways at any time, and the incorporators must furnish bond in cash or negotiable securities for the faithful execution of all the provisions of the charter. Telegraph lines may be constructed by the Government on the right of way without special compensation to the company, and mails, together with necessary employees, must be carried free up to a certain limit, beyond which the stipulated amount of pay may be exacted by the company. Maximum rates are fixed in the charter for both passengers and goods on the zone system, which was elaborated and generally adopted in both Austria and Hungary in 1899. Special rates must be published as well as the regular rates, and the State authorities have power to reduce rates whenever net profits exceed a certain amount. Rates are also fixed for the transportation of troops and munitions of war. In case of famine and want, special rates known as famine rates" may be established. The charter limits the indebtedness of the road and makes provisions for the amortization of the


Charters granted in 1865 and 1870 are essentially like the one just described, only that in one instance direct reference is made to the Northwestern charter, and the document containing this reference is abbreviated in a manner very similar to that in which New York charters were abbreviated by reference to the Attica and Buffalo charter. One of the companies is specially bound to build whatever branches may be necessary for the development of the territory in which the road lies. In another charter, according to the terms of which the State may become a stockholder, representation of the State in the management of the road is provided for.

These charters contain no reference to pooling, although, as is well known, pooling is legally permitted in Austria. All roads entering into a pool must be duly represented in the commission which draws up the pooling arrangements, and all such arrangements are subject to supervision by State authorities.


Early development.-More attention is given to Prussia than to any other foreign state because of the significance which the system of state railways in Prussia has attained in the railway history of the world. Prussia has developed a system which is peculiarly her own, and which, in many respects, is the most perfect of its kind. In the earlier history of Prussian railways one can find tendencies similar to those which are discernible in the historical development of railways in every other country; but the manner in which Prussian legislation met various contingencies affords instructive lessons to those countries in which legislative bodies pursued a different course. Prussia was not the first German country to begin the construction of railways. One very important road was built in Saxony before the first great Prussian railway was built; and a short road from Nuremberg to Fürth was the first modern railway in the present German Empire. The latter will be briefly considered, because in its projection things were done which are quite typical of procedure in connection with early German railway projects. For purposes of comparative study a presentation of the pres ent legal and administrative organization of Prussian railways would perhaps be sufficient; but in its local history there are so many instructive lessons that one can not afford to pass over Prussian railway development from its beginning to the period of radical reorganization in 1894, upon the basis of which the present system rests.

The Nuremberg-Fürth Railway.—The history of the Nuremberg-Fürth Railway dates back to 1814, when a prominent Bavarian engineer began to interest himself actively in railway projects. Not until 1832, however, when John Scharrer, a wealthy citizen of Nuremberg, revived the project, was work begun in earnest which led to the completion of the road in the immediate future. The men who were associated with Scharrer were practical business men, and the manner in which they entered upon the novel undertaking of a railway shows that their enterprise rested upon business principles. By actual count they determined the number of people that traveled between the two cities. The result showed a daily average of 1,184 persons on foot, 494 in carriages, and 108 vehicles of various kinds. From this daily average they estimated the annual movement of persons between Nuremberg and its suburb, Fürth, at 612,470 persons, and 39,420 pleasure trips. On the basis of this count a detailed plan and estimate were elaborated, fixing the capital stock of the proposed company at 132,000 gulden, on which an annual return of at least 12 per cent was estimated. The stock was sold on May 14, 1833. The largest part of it remained in the two cities between which the railway was to be built, and the Government became a shareholder to the extent of 200 gulden. Following this the shareholders secured a royal charter and a confirmation of their statutes, by which the company secured the exclusive privilege of building and operating a railway between the two cities for a period of 30 years. The organization of the company has remained intact up to the present time, and the financial history of the road has been one of the most prosperous in Germany. This is one of the few early roads which was built with especial reference to passenger traffic. Not until 1836 was freight carried in any quantity. On the 11th of July of that year the first cargo of freight was shipped from Nuremberg to the Wirth zur Eisenbachen" at Fürth; and, quite in keeping with Bavarian custom, the cargo consisted of "2 Fässchen Bier von Lederer."


1 In addition to official documents, the writer wishes to acknowledge his indebtedness to the legal works of Gleim, Eger, and Schroetter; to the historical essays of List, von Mayer, and von Fleck; to the financial compilations of Hoeper; to the economic publications of von der Leyen; and to various essays in the Archiv für Eisenbahnwesen.

The Leipzig-Dresden Railway.-Although not located in Prussia, this railway is mentioned because it is the first great road that was ever built in Germany, and can, in a sense at least, be considered the technical foundation of great systems of railways in the German Empire. Roads projected before this time were more isolated and chiefly local. The Leipzig-Dresden road constitutes the corner stone of the industrial mechanism of modern Germany. All of the stock was sold in 1835, exactly 2 years after the stock of the Nuremberg-Fürth Railway had been sold. A great wave of enthusiasm followed this event which led to the projection of 9 different roads. An expropriation law for the benefit of this company was enacted in 1835, and construction was begun the following year, and a part of the line opened on April 24, 1837. The entire line was not opened for traffic until April 7, 1839.

A ministerial report. --The attitude of the Prussian Government at the opening of the railway era is clearly indicated in the report of Herr Rother, the chief of the department of trade, manufacture, and building, on "the development of highways and the building of chaussees." It is dated August 16, 1835, and addressed to King Frederick William III:

Railroads as avenues of trade, with steam propulsion, have to within very recent times, and with few exceptions, been found only in the few States of North America and in Great Britain. The reports received about dividends paid by these roads, in so far as they are undertakings of stock companies, appear to be unreliable and highly colored in the interests of stock speculation.

Herr Rother then refers to the difference in the conditions under which roads must be built in the several countries. He quotes the case of the first Austrian road from Linz to Budweiss and of the French road from Lyon to St. Etienne as having yielded but a small return. (The former 25 per cent and the latter even less.) And the railway built by the Government of Belgium from Brussels to Mecheln (2 German miles), he says, can not be taken as typical for other states, or even for Belgium. He says the Continent can not yet show a railway which has been successful and which has satisfied a real want. (Serving as an avenue of trade-Handelsstrasse.") Another objection he raises is that there is no experience on the technical side to fall back upon. He even doubts whether he could answer in the affirmative the question whether or not the German means of communication, such as they were, needed any improvement. He points out that the tolls on macadams have been reduced so much that land transportation comes into active competition with that on water. He fears that many demands will be made on the state in consequence of industrial changes ("Verschiebungen ") resulting from the building of railways. Additional objections enumerated in the report are: that the small towns will gain but little, if at all, on being connected with a railway; that the expense of keeping the chaussees in repair will remain the same, while the receipts from tolls will decrease; that the use of the railway (i. e. the track) can not be extended to ordinary wagons; that the cars ("Eisenbahnwagon "-railway wagon) can not be used on chaussees and ordinary roads; that it appears difficult to make a railway pay, and that, finally, there is no occasion for the state to grant valuable charters or to give financial aid to such undertakings.

Rother's report may be taken as a true reflection of public opinion up to May 14, 1835. The report is dated August 16, 1835, and is thus a little behind time, on which day the stock of the Leipzig-Dresden road was sold, and a high wave of railway enthusiasm sent over the country.

The Magdeburg-Leipzig Railway.-The importance of this railway lies in the fact that the charter, under which it was constructed, was made the foundation of the Prussian railway law of November 3, 1838, which has continued in force until to-day, and which in all its essentials constitutes the present railway law of Prussia. It may be said that the Magdeburg-Leipzig Railway accomplished in the province of railway legislation what the Leipzig-Dresden Railway effected toward systematization in railway construction. In the reply of the Government to the committee of Magdeburg merchants who sought a charter as early as May 22, 1835, there can be detected the central thought of all future Prussian railway legislation: that it is the duty of the state to take such a position in relation to railways that it may at any time in the future interfere in behalf of public interests. The royal order, confirming the statutes of the Magdeburg-Leipzig Company and granting the charter privileges, is epoch-making. After extending to the corporation the privileges usually accorded to legal bodies of this kind, the order expressly limits the reserve fund provided for in the charter to 2 per cent of the total original cost. It further expressly states, and makes it a condition of the acceptance of the privileges granted to the company, that the same shall, at any time in the future, be bound by all laws, rescripts, and orders issued in relation to railways. The royal order discussed the relation of railways to the state

and to the public; and because of the quasi-public nature of the undertaking, which was thus early recognized by the German Government, all rights necessary for a proper ordering of the relations between the railways and the public were reserved to the state.

Periods of Prussian Railway development.-A general notion of the historical development of Prussian railways may be obtained from a presentation of the periods into which the same may be divided. At the outset, a word of comment may be inserted on the somewhat popular impression that in European countries the earliest railways were built largely, if not entirely, by public funds, and that in the United States they were built by private capital. The exact opposite is true. It is a well-known fact that nearly all our early railways received important aid from towns, counties, villages, and cities through which they passed. On the other hand, the earliest English and most continental roads were obliged to pay heavily for the right of way. The same was true in Prussia. Before the year 1843 only private railways existed in that state. From 1843 to 1847, inclusive, the state aided in the construction of railways by guaranteeing a minimum rate of interest on the capital stock or by investing in shares of the company, The period of the founding of state railways is marked off by the years 1848 and 1862; and is followed by an era of speculation from 1863 to 1877, during which numerous private roads were projected. From 1878 to the present time the state railway system has steadily grown in extent and importance, and, in general, it may be said that the dominating administrative influence from that day to the present time has resided in the head of the department of public works.

Constitutional basis of Prussian railway legislation.-The following are the provisions in the imperial constitution of April 16, 1871, upon which the railway legislation of Prussia rests:

ART. IV. 8. The Empire reserves the right of control and of legislation on the subject of railways, highways, etc.

ART. VIII. 5. The Bundesrath is constituted a permanent committee on railways, post, and telegraphs.

ART. XLI. Railways which may be deemed necessary for the defense of Germany or for the interests of the general traffic, may, by virtue of a legal enactment of the Union, even in opposition to members of the Union whose territory may be crossed by such roads, without impairing their right of sovereignty, be built by the Empire or by private undertakers to whom the Empire may have granted a concession and the right of expropriation.

Every existing railway is bound to permit a junction with the newly built roads at the expense of the latter.

Those legal provisions which grant to existing railways the right to control the building of parallel or competitive lines are, without impairing acquired rights, hereby repealed for the entire Empire. And such a right (Widerspruchsrecht) shall be incorporated in any concessions which may be granted

in the future.

ART. XLII. The Federal Government binds itself to cause the German railways to be managed in the interests of the general traffic as a uniform network, and, for this purpose, to cause new roads to be built and equipped according to uniform norms.

ART. XLIII. In accordance with the above, uniform regulations for the operation of roads, expecially uniform railway police regulations, shall be introduced with all practicable dispatch. The federal government shall take care that the railway management, at all times, preserves the roads in such a state of repair and provides them with such an amount of rolling stock as the interests of safety and the public traffic may demand.

ART. XLIV. În consideration of the customary compensation, the railway managements shall be bound to provide for the preparation of mutually supplementary time tables for passenger trains with the requisite speed; likewise to introduce freight trains sufficient for the requirements of the traffic, and to provide for the direct transfer of passengers and goods from one road to another.

ART. XLV. The Federal Government reserves the right to control the tariffs. The same shall strive to effect, (1) the introduction of a uniform system of reglements for the operation of all German railways; (2) the unification and reduction of rates, especially in the long-distance hauls of coal, coke, wood, ores, stone, salt, pig iron, fertilizers, and similar articles supplying the wants of agriculture and industry. (Note.-The constitution further provides for the transportation of these articles, as soon as feasible, at a 1-penny rate, except in Wurttemberg, which, by a treaty of November 25, 1870 (Berlin), with the North German Union, Baden and Hessen is exempted from the 1-penny rate for all the enumerated articles (Art. III, sec. 2 of the treaty) This exception was necessary because of the different conditions under which transportation was carried on in Wurttemberg.)

ART. XLVI. In times of distress, especially with an exceptional rise in the price of the necessaries of life, the railways shall be bound to introduce, temporarily, for the transportation of (especially) grain, flour, leguminous products (Hülsenfrüchte), and potatoes, reduced rates, to be fixed by the Emperor on recommendation of the committee of the Bundesrath; provided that such tariff shall not be reduced below the lowest rate in force on the respective roads for the transportation of raw material.

The above, as well as the provisions contained in articles 42 to 45, shall not be binding on Bavaria, However, the Federal Government reserves the right to exact of Bavaria, by means of legislative enactment, uniform norms for the construction and equipment of such roads as are important in the defense of the Empire. (This provision practically repeats section 8 of Article IV.)

ART. XLVII. The several railway managements shall be obliged to meet unconditionally the demands of the Federal authorities for the use of the railways for the defense of Germany. Especially are troops and all accoutrements of war to be transported at uniformly reduced rates.

It is almost unnecessary to add that all these provisions have been supplemented by rescripts, orders, and statutes. All the rights of the Federal Government over railways may be enumerated under 5 heads:

1. The right to legislate.

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