of $2,053,765 and in net earnings of $931,472 over last year. In the operation of railroads 15,877 persons were employed within the State. During the year 5,089,500 persons were transported within the State.

In the operation of trains 35 employees were killed and 492 injured; 5 passengers were killed and 143 injured; 74 other persons were killed and 152 injured.

Accidents.

of the complaints

against companies.

Three hundred and eighty-seven complaints were made to the Character Commission during the year, the most of which have been disposed of. Some in which it was necessary to make further investigation are still pending. As the records of our office will show, these complaints were of great variety. A great many of them were for alleged failure of railroad companies to render proper service. For example: complaints were made for failure to keep passenger schedules; to bulletin the arrival of trains; to furnish cars for shipment of freight; to transport freight, carload and less than carload, within a reasonable time after same was received; to deliver freight after its arrival at destination. In many cases these complaints were sustained by proof or admission of the carriers.

It was found that the cause of failure to keep passenger schedules Causes of failure as to through trains was, in many instances, that their connections to keep had not been kept; and as to other trains, that they were delayed schedules. on account of failure of through trains to keep their schedules. Passenger service that is rendered by local trains which run upon their own schedule, or such trains as connect with but do not wait an unreasonable time on through trains, is more satisfactory. It may be that upon this idea the passenger service will be improved; if not, there will be a demand for more local trains to be run independent of connections. . . .

important

Complaints in regard to freight service will appear in detail How an in another part of this report. We will therefore only call atten- controversy tion to the following: The furniture manufacturers at High Point was settled. complained that, although often requested to furnish cars for shipment of furniture, the Southern Railway had failed to do so;

Delay in transporting

freight.

that there was at that time a demand for upwards of three hundred furniture cars; that goods had been sold, and unless cars could be had the contracts would be broken and might be cancelled, and that no penalty provided by law or damages which they could recover from the company would be an adequate remedy; that their damage in loss of trade could not enter into damages which they might recover, and yet this would be a great part of the threatened loss. This complaint was filed on the 29th day of July, 1905, and the Commission took the matter up with the Southern Railway Company, and held a session at High Point on the first day of August, 1905, which session was attended by the manufacturers and shippers interested and by the traffic manager and other agents for the Southern Railway Company. At this session complainants succeeded in convincing the railroad officials of their urgent need of cars, and the railroad officials undertook very energetically to procure for complainants necessary cars, and what promised to be a serious car famine was averted. . . .

The other part of the complaint, as to failure to transport freight within a reasonable time, is, we regret to say, not confined to any part of the State, but is frequent on all railroads and at many places. The enforcement of the penalty for this negligence, which would seem to be severe enough, has, we regret to say, not yet had the effect to arouse the railroads to proper diligence, nor does the penalty compensate for the loss sustained in many cases. If the seller cannot have his goods delivered with any regularity or certainty he will lose his customers, and it is in holding the trade rather than the delivery of a particular shipment that the shipper is especially interested. We have taken up each case called to our attention with the railroads and had same investigated, with the hope of placing the blame properly and thereby correcng the evil.

236. Control of State Regulation by the Federal Judiciary

In the control of corporations, the states are restricted by the provisions of the federal Constitution, among which the due

process clause of the Fourteenth Amendment is one of the most effective. The way in which a state statute may be declared invalid by the Supreme Court is illustrated by the opinion in a Minnesota railway case:

Minnesota

The Supreme Court of Minnesota authoritatively declares The that it is the expressed intention of the Legislature of Minnesota, law does not by the statute, that the rates recommended and published by the provide for judicial commission, if it proceeds in the manner pointed out by the Act, review. are not simply advisory, nor merely prima facie equal and reasonable, but final and conclusive as to what are equal and reasonable charges; that the law neither contemplates nor allows an issue to be made or inquiry to be had as to their equality or reasonableness in fact; that, under the statute, the rates published by the commission are the only ones that are lawful, and, therefore, in contemplation of law the only ones that are equal and reasonable; and that, in a proceeding for a mandamus under the statute, there is no fact to traverse except the violation of law in not complying with the recommendations of the commission. In other words, although the railroad company is forbidden to establish rates that are not equal and reasonable, there is no power in the courts to stay the hands of the commission, if it chooses to establish rates that are unequal and unreasonable.

This being the construction of the statute by which we are bound in considering the present case, we are of opinion that, so construed, it conflicts with the Constitution of the United States in the particulars complained of by the railroad company. It deprives the company of its right to a judicial investigation by due process of law, under the forms and with the machinery provided by the wisdom of successive ages for the investigation judicially of the truth of a matter in controversy, and substitutes therefor, as an absolute finality, the action of a railroad commission which, in view of the powers conceded to it by the State court, cannot be regarded as clothed with judicial functions or possessing the machinery of a court of justice.

Under section 8 of the statute, which the Supreme Court of

This is not due process

of law.

The arbitrary power of the commission.

Reasonableness of rate

a matter for judicial determination.

Minnesota says is the only one which relates to the matter of the fixing by the commission of general schedules of rates, and which section, it says, fully and conclusively provides for that subject, and is complete in itself, all that the commission is required to do is, on the filing with it by a railroad company of copies of its schedules of charges, to "find" that any part thereof is in any respect unequal or unreasonable, and then it is authorized and directed to compel the company to change the same and adopt such charge as the commission "shall declare to be equal and reasonable," and, to that end, it is required to inform the company in writing in what respect its charges are unequal and unreasonable. No hearing is provided for, no summons or notice to the company before the commission has found what it is to find and declared what it is to declare, no opportunity provided for the company to introduce witnesses before the commission, in fact, nothing which has the semblance of due process of law; and although, in the present case, it appears that, prior to the decision of the commission, the company appeared before it by its agent, and the commission investigated the rates charged by the company for transporting milk, yet it does not appear what the character of the investigation was or how the result was arrived at.

By the second section of the statute in question, it is provided that all charges made by a common carrier for the transportation of passengers or property shall be equal and reasonable. Under this provision, the carrier has a right to make equal and reasonable charges for such transportation. In the present case, the return alleged that the rate of charge fixed by the commission was not equal or reasonable, and the Supreme Court held that the statute deprived the company of the right to show that judicially. The question of the reasonableness of a rate of charge for transportation by a railroad company, involving as it does the element of reasonableness both as regards the company and as regards the public, is eminently a question for judicial investigation, requiring due process of law for its determination. If the company is deprived of the power of charging reasonable rates for the use of its

property, and such deprivation takes place in the absence of an investigation by judicial machinery, it is deprived of the lawful use of its property and thus, in substance and effect, of the property itself, without due process of law and in violation of the constitution of the United States; and in so far as it is thus deprived, while other persons are permitted to receive reasonable profits upon their invested capital, the company is deprived of the equal protection of the laws.

237. The Supreme Court and Labor Legislation

In making laws in behalf of the working class, the state legislatures are compelled to take into account the principles applied by the federal Supreme Court in protecting private rights. For example, the court recently held that a section of the New York labor law, providing that no employees should be required or permitted to work in bakeries more than sixty hours a week or ten hours a day, was not "a legitimate exercise of the police power of the state, but an unreasonable, unnecessary, and arbitrary interference with the right and liberty of the individual to contract, in relation to labor." The reasoning of Mr. Justice Peckham for, and Mr. Justice Holmes against, this position is thus summed up:

:

contract

MR. JUSTICE PECKHAM. The statute necessarily interferes Liberty of with the right of contract between the employer and the employés, and the concerning the number of hours in which the latter may labor in police the bakery of the employer. The general right to make a contract power. in relation to his business is part of the liberty of the individual protected by the Fourteenth Amendment of the Federal Constitution. Allgeyer v. Louisiana, 165 U. S. 578. Under that provision no State can deprive any person of life, liberty or property without due process of law. The right to purchase or to sell labor is part of the liberty protected by this amendment, unless there are circumstances which exclude the right. There are, however, certain powers, existing in the sovereignty of each State in the Union, somewhat vaguely termed police powers, the exact description and limitation of which have not been attempted by the courts.