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PART V.-FOREIGN RAILWAY CHARTERS AND IMPORTANT LAWS.
Introductory.-In these times of commercial expansion and the establishment of more far-reaching and complex international relations a survey of foreign experience is especially appropriate. The railway as an institution is everywhere the same. As an industry it presents characteristics which are in many respects different from those common to other industries. These peculiarities of the railway business have been so often pointed out that it is not necessary to repeat them here. Railway legislation, like legislation in other domains of the industrial world, must bear definite relations to the business treated in such laws, and the fact being indisputable that the intrinsic nature of railway enterprise is everywhere the same, the corollary must go unchallenged that railway legislation must, in its essential features, bear the same degree of similarity and identity. It is only in secondary and local characteristics that we find differences of importance in a study of railways of different countries; hence it follows that only in such secondary matters should laws aiming at the control of railways differ in the substantial elements of their contents. The experiences of foreign countries have frequently been brushed aside on the assumption that whatever success or failure may have characterized foreign effort, nothing of vital importance to American States could possibly be discerned therein because of differences in conditions which, it is alleged, exist between the United States and the respective foreign countries. No one will be inclined to deny that certain important differences do exist, but the position can be successfully maintained that, so far as railways are concerned, these differences do not, as a rule, touch upon the essential features of the railway problem, and that along the large lines of industrial growth and development every important modern nation is cosmopolitan; that is, modern, social, and economic conditions have the world over become more and more alike, and as this similarity increases the need for similar legislation in all the different countries becomes increasingly urgent.
Railway charters-using this term in the sense of special legislation as well as grants of railway charters under general laws-are essentially alike the world over so far as the great nations are concerned. In all the different countries railway charters bear upon them the marks of lineal descent from early English charters, which in turn were copied directly from the charters granted to canal and road companies. This similarity between railway and macadam or plank road charters can be readily detected in our laws. Many common road charters are identical in language with contemporary railway charters, the only differences lying in a few things peculiar to road companies, such as the smaller size of shares, provisions on toll gates, the use of the road by drovers, etc. Were one to take out of a railway charter and a common road charter clauses relating directly to these topics, it would probably be impossible to determine whether a certain charter had originally been granted to a common road or a railway company. Certain archaic features which were embodied in the Liverpool-Manchester charter, reference to which will be made later, may be discerned in charters of different States in the United States, as well as in those of foreign countries. One of the most common of these is the right of different shippers to use the same track. One of the most serious objections brought against some of the early railway projects was the impossibility of using ordinary coaches and vehicles in the transportation of persons and property over railways. Inventors during the earlier decades of the nineteenth century devised contrivances by which carriages could be used on both common and rail roads. These provisions were inserted in some cases for the purpose of reserving to the State certain rights which it might otherwise find difficult to assert. It was thought that the State, or a person or persons authorized to do so by the State, could become active competitors over
the same tracks, and thus enforce rules of justice. The fallacy of this theory was soon discovered, but the archaic clauses continued to find their way into charters.
In surveying the legislation of foreign countries one is impressed with the promptness with which Japan apparently adopted many of the more advanced ideas, as expressed in legislation of other countries, and for this reason the laws of Japan will be considered first. England naturally takes its place at the head, or very near to it, because of the vital relations existing between the laws of our own and the mother country. For obvious reasons some attention is also paid to English colonial history. Prussia deserves to be dwelt upon at some length, because in that country the most successful system of State railways that the world has thus far known has been in operation for nearly a quarter century. For the sake of completeness, as well as for the sake of the interest which attaches to leading features of railway legislation of other countries, France, Austria, Switzerland, Norway, and other foreign States will be considered. Students of railway affairs feel the need of a thorough study of foreign systems. They have the feeling that the experiences of foreign countries have not yet been adequately brought before us, and that, in order that we may proît by whatever lessons such experience may convey, a much fuller presentation of the subject of foreign railways should be made. It is needless to assert that this paper makes no such attempt. All that the writer hopes to accomplish in these paragraphs is to point out the most important features of foreign charters and laws in their bearing upon practical questions of regulation and control.
Classification of foreign railways.-In connection with the discussion of foreign railway legislation it will be necessary to refer to the different kinds of railways recognized in the laws of other countries; and, as a matter of convenience, it may be well to bring together here the classifications of the leading countries. In the United States we are accustomed to speak of trunk and branch lines only. In England no real classification exists. However, a law of 1868 imposes less onerous duties on "light railways," this term implying railways the speed of which does not exceed 25 miles per hour and whose burden is not greater than 8 tons per axle. Prussia has from the first recognized primary and secondary railways; but not until 1892 were narrow gauge and other local railways included in the term "railway" at all. French law formally recognizes only 2 classes, but a very rigid administrative division of the first class into 2 subclasses, really creates a third class of roads. These 3 classes are, the primary network of railways of general interest, the secondary network of railways of general interest,and railways of local interest. The particular class to which a railway shall belong depends upon the place which is assigned to it by the authorities of the State in the declaration of public utility." Belgium recognizes 3 classes-railways of general interest, parochial, and urban railways. In Holland 3 classes also exist-primary, secondary, and regional. The Austrian and Hungarian classifications are essentially like that of Prussia, including main and local roads. The Italian law of 1879 distinguishes between 4 classes, based upon the proportion of the total cost of the railways borne respectively by the Federal Government and by subordinate politial unities. Secondary railways are divided into 5 classes, depending upon the width of tracks, speed, curves, grades, etc.
The convenience of classifications of this kind is apparent; and, furthermore, such classifications are in themselves a recognition of varying degrees of importance attached to different kinds of railways. Under the laws of the different States in the Union, except for purposes of taxation, all railroads are practically put into the same category and treated, so far as the law is concerned, as if they all stood upon a plane of intrinsic equality. A short and insignificant road in an isolated corner of the State is governed by the same laws through which an attempt is made to control and regulate the most extensive system embracing thousands of miles of double, triple, and quadruple tracks. Along this line, foreign legislation may teach us a valuable lesson in that it points out to us the imperative necessity of recognizing in the law decisive differences in the social and economic importance of different railway systems.
Japan.-Apart from the important changes which have been made in the laws bearing upon administrative organs, the fundamental railway law of Japan is "the act for a private railway," passed in May, 1887. Under this law 5 or more persons desiring to build a railway for the transportation of passengers and goods are required to hand in an "estimation" of their project to the central government through the provincial authorities. The estimation is similar to the American articles of incorporation, and is divided into the following 5 sections:
Section I: Name of company; place of main offices.
Section II: Names of termini and of places through which railway is to pass; also a general map of the route.
Section III: The total amount of capital stock and the number and size of the shares.
Section IV: Estimated expense of building road, together with an estimate of the probable volume of business.
Section V: Names and addresses of incorporators; also the number of shares for which each is responsible; but the number of shares held by the incorporators must exceed 20 per cent of the whole amount of the capital stock.
After examining the estimation, if the central government approves of the project, a preliminary charter may be granted and the provincial administration may be ordered to permit the incorporators to make an exact statement regarding the lines, work, means, probable cost, and rules of the company. The Government shall reject the proposal if it considers that the new railway interferes with other railways already in existence, and that the necessity of the construction of the proposed railway can not be fully demonstrated.
If, after a careful investigation, the Government recognizes the project as a desirable one, a permanent charter shall be granted. Until the permanent charter is granted the incorporators can not receive subscriptions as a company; neither can they begin constructing the road.
When authority to do so has been granted, the company must start within 6 months after registration in the work of construction, and must finish the road within the term indicated within the charter. If sufficient reason exists, an extension of the charter time may be granted on application to the provincial government at least 2 months before the expiration of the time limit, but under no circumstances shall this extension in time exceed one-half of the charter period.
The sections on eminent domain, right of way, and the amount of land which the company may hold are almost identical with similar sections in American charters, with the very important difference that all land is purchased through governmental authorities. In case the railway runs through public lands, such lands must be bought from the Government for an agreed price; but if it is private land which the company proposes to cross or use, the Government is empowered to purchase the same, according to the provisions of such laws governing such transactions, and then to sell the acquired land to the company. Provisions on crossing public roads, bridges, and canals, as well as on the construction of bridges, crossings, fences, gates, embankments, and the like, are much like similar parts of American charters.
As soon as the company desires to open a part or the whole of the road for traffic, a communication must be addressed to the head of the national or central railway department, now the department of communication. The department of communication, having received such notice of the intention of the company to open its new line to traffic, shall order an inspection of the road, with respect of gauge, bridges, rolling stock, buildings, etc., in accordance with the provisions of the estimation. If the inspection is satisfactory, then a business charter or "grant to begin business" is given to the company. This charter finally authorizes the corporation to do business. It will be noticed that under the Japanese system the entire grant of franchise to the company is divided into 3 parts, beginning with the preliminary charter, continuing through the permanent charter for construction and equipment, and culminating in the business charter. The first or the preliminary charter, which merely gives to the company the right to make detailed estimates and surveys, is open to competition. In the nature of the case, no competition can be permitted after the permanent or construction charter has been granted.
The department of communication is required under the law to send inspectors, not only during the period of construction, but also after the road has been completed; and if at any time such inspection reveals defects, or prejudices public safety and comfort, repairs and even rebuilding may be ordered.
The Government reserves the right to construct telegraph lines on the right of way of a company; and the company may use, on payment of the proper price, such telegraph posts. (In Japan the telegraph is owned by the Government). The company must give up the use of a part of its land and station houses, without charge, for the postal and telegraph service. In case rebuilding is necessary in order to accommodate the Government the latter shall pay the actual costs of construction. Regulations relating to pay for the mail service are also contained in the law, as well as provisions governing free transportation of postal and other officials. Prisoners and police officers may travel at half price, and in time of war the use of railways may be determined by special decree. At any time, if army or naval officers desire improvements or changes in construction, such may
be ordered on paying the actual cost. In addition, the department of communication may order all private railway companies to do those things which are required of State railways for the purpose of insuring public safety and promoting the public good. All regulations of State railways apply to private railways, unless specially ordered otherwise. If a company desires to make changes in the operation of its road, it must first secure permission from the Government. Rates are established and changed under the direction of the department of communication, and maximum rates are established in the law. All changes in train schedules must be reported to the central Government. A semiannual report is required of each company, which must be sent to the central department within 40 days after the expiration of the term for which the report is made.
A railway company may mortgage a part of or the entire plant, but the amount of such indebtedness shall never exceed five-tenths of the total amount paid by subscribers; no dividends can be declared before the debt for that term has been paid. Other provisions govern systems of accounting, intersections, and junctions.
The Government reserves the right to purchase railways after 25 years of chartered existence, and the purchase price may be fixed on the basis of the average price of shares during the 5 years immediately preceding the time of the purchase. Upon any violation of the act on the part of railway companies, or upon any violation of the proper use of railways, the Government may order the election of a new set of officers or authorize the State railway bureau to operate the road; but in case the State continues the operation of a railway the profits accrue to the company.
The department of communication, which has been mentioned a number of times, is divided into 2 bureaus, the railway bureau and the bureau of operation and accounting. The latter has charge of all State railways, comprising about one-fourth of the entire network. The railway bureau supervises and controls private railways and is virtually the authority which grants charters, provided such charters do not unduly interfere with existing railways, and when real need for the construction of a new line can be shown to exist. The bureau may establish and alter rates and time-tables in accordance with the provisions of the law discussed above.
The notable features of the Japanese law, connected with the grant of the franchise and the purchase of land, have already been discussed. A third provision deserves especial attention. This relates to the advisory council, in the establishment of which the Japanese seem to have followed in the wake of the most progressive European countries. The Japanese advisory council is composed of not more than 20 persons, representing the cabinet departments, both houses of the Legislature and, for special purposes, members with limited tenure, who serve as experts in the council. The powers of the council are only advisory, and relate to questions of location, construction, financiering, and operation. While the department of communication and other branches of the Government may direct inquiries to the council, the latter may also act on its own initiative and bring its conclusions and findings before the proper officials. A comparison of the Japanese with the Prussian councils shows important differences in their composition. Under the Prussian law bureaucracy is guarded against by the exclusion from the council of all immediate State officials. In Japan, on the other hand, the law specifically provides for the inclusion, in the council, of cabinet officers and members of the Legislature. In this respect the Japanese council system is probably inferior to the Prussian. Bureaucratic influence is said not to have made itself felt up to the present, but that there exists a real danger of an undue influence in an advisory body of this kind, when its members are so closely connected with the Government, is too obvious to require argument. However, Japan deserves credit for having incorporated in her laws so many of the most desirable features of epoch-making laws of foreign countries.
England. The history of English railway charters is not essentially different from that of the charters granted in the United States, except that the process of mutilation by which, during succeeding years, numerous important provisions were eliminated from them, never, developed so far in England as it did in our own country. It is an error, however, to suppose that the great crops of railway charters which marked the legislative activity of our numerous States did not find their counterpart in England. In the year 1825, Parliament granted no less than 59 charters, and during several of the years from 1840 to 1850 more than 200 charters were granted in each year. These were nearly all for short railways, just as in our own country numerous local lines, projected, constructed, and for a while also operated, under separate charters, were the material out of which the present systems have been constructed. The Stockton and Darlington was chartered in 1820, and on May 5, 1826, Parliament granted the epoch-making
Liverpool and Manchester charter. The latter is a long and cumbersome document of 200 sections, many of which are archaic, and bear the impress of turnpike and canal charters. It is unnecessary to specify in detail the provisions of this important charter, for these do not differ materially from those found in the best charters granted by our States. In another place1 the writer has traced this similarity between the Liverpool and Manchester charter and charters granted in the United States through the provisions bearing upon a number of the essential points of a charter; and, as result of this parallel study, the fact has been firmly established that many American charters embody, literally, sections of English charters, and that probably all the American charters found in English legislation their form and content.
Early attempts were made in England to legislate through general laws. The first general bill for railways was introduced in 1836, and provided that "dividends be limited to a certain rate,” and that Parliament reserve to itself the power to fix periodically the tolls on passengers and goods. During the same year a distinguished member of the House of Lords advocated a forfeiture clause in railway charters; and another member of that House submitted a plan under which the elaboration of the English railway system was to be intrusted to a technical board approved by the Peers. A resolution in the House of Lords, excluding members of that House from railway projects in which they themselves were interested, indicates another phase of English public opinion at that time. Following the example of the earlier turnpike charters, a prominent member of the House of Commons demanded a periodical revision of maximumrate schedules every 21 years. Although none of these resolutions and bills brought about immediate changes, they are important in that they show a recognition, on the part of Parliamentary leaders, of some of the peculiarities of this new means of transportation, out of which were later to grow some of the most complex problems with which administrative authority has ever had to deal. In 1842, the board of trade was empowered to appoint inspectors of railways, with sufficient authority to postpone the opening of railways, to pass upon by-laws of railway corporations and to bring legal proceedings against companies for violating existing statutes. The board of trade also had power to compel railway companies to report accidents and to furnish information with respect to railway traffic and rates. The first commission was established in 1846. It was empowered to do essentially those things which the board of trade had previously been authorized to do. Other experiments were made with a different type of commission, and also with a retransference of power to the board; but administrative control was not placed upon a permanent footing until the regulation of railways act of 1873. This act established a new tribunal, known as the "railway commissioners," composed of 3 members, 1 experienced in law and 1 in railway matters. The principal duty of these commissioners was to enforce the observance of the "reasonable facility section," of the act of 1854, the exact text of which is here inserted:
"Every railway company, canal company, and railway or canal company shall, according to their respective powers, afford all reasonable facilities for the receiving and forwarding and delivering of traffic upon and from the several railways and canals belonging to or worked by such companies. respectively, and for the return carriages, trucks, boats, and other vehicles, and no such company shall make or give any undue or unreasonable preference or advantage to or in favor of any particular person or company, or any particular description of traffic, in any respect whatsoever, nor shall any such company subject any particular persons or company or any particular description of traffic to an undue or unreasonable prejudice or advantage in any respect whatsoever; and every railway company and canal company and railway and canal company having or working railways or canals which form part of a continuous line of railway or canal or railway and canal communication, or which have the terminus, station, or wharf of the one near the terminus, station, or wharf of the other, shall afford all due and reasonable facilities for receiving and forwarding all the traffic arriving by one of such railways or canals by the other, without any unreasonable delay, and without any such preference or advantage or prejudice or disadvantage as aforesaid, and so that no obstruction may be offered to the public desirous of using such railways or canals or railways and canals as a continuous line of communication, and so that all reasonable accommodation may, by means of railways and canals of the several companies, be at all times afforded to the public in that behalf."
The commissioners also had power to enjoin the forwarding of the traffic of other roads on request of railway companies, and were, furthermore, empowered to act as a board of arbitration.
1 Meyer, Early Railroad History of Wisconsin, Wis. Hist. Col., XIV.