THIRD ANNUAL REPORT OFFICE OF THE RAILROAD COMMISSION OF NEVADA, HON. T. L. ODDIE, Governor of the State of Nevada. SIR: In conformity with the law, the Railroad Commission of Nevada, submits this, its third annual report, which is for the calendar year ending on the 31st day of December, 1910. The work of the commission during the year covered by this report has been laborious, and the matters dealt with have been in the highest degree important, as will be seen by a glance at the detailed statements. of the action of the commission with reference to complaints filed by patrons of the various railroads in the State, and the matters which have been taken up by the commission upon its own initiative. It goes without saying that by far the most important feature of the work of regulating the railroads operating in this State, as thus far developed, is that of passenger fares and freight charges. The character of the service as it may affect the comfort and safety of passengers and employees, and the prompt carriage and delivery of freight, is also very important, but it does not, as a rule, involve the strenuous and expensive contests, either before the Interstate Commerce Commission or in the courts, which usually follow a determined effort by the commission to reduce fares or freight rates. It is quite clear that railroads will generally submit to almost anything in the way of regulation of service, methods of transportation, use of safety appliances, time schedules, etc., much more readily than to reductions of rates which at first blush appear to mean a cut in the revenue. In fact, the railroads are themselves deeply interested in handling their trains in conformity with the very best methods known in order to meet competition, secure business and avoid accidents and damage suits. But it is generally assumed that a reduction of rates means, of necessity, a reduction of revenues, and any effort by a commission to that end is stoutly resisted if the railroad company feels that it has a fighting chance to win. The fact that a lowering of rates usually brings increased business is, to a great extent, ignored by the railroad affected, although it is very generally accepted as a truism by the commercial world. This may be well illustrated by the legal controversies between this commission and the Southern Pacific Company. That company with others first challenged the constitutionality of the law creating this commission, mainly upon the ground that the freight rates as originally fixed by the law were so low as to be confiscatory. In that contest the railroads were unsuccessful, with the sole exception that the rates prescribed were held to be confiscatory as to the business of the Nevada and California Railway. Next came the great, and now famous, case before the Interstate Commerce Commission, in which this commission sought to obtain terminal rates or better for Reno and other points upon the main line of the Central Pacific Railway in Nevada. As far as this case has gone, the Southern Pacific Company has lost, and it has persistently assumed that it means a large reduction of revenue with nothing in the way of offset or compensation. A third issue has arisen with this great company over local rates upon its main line in the State of Nevada. The commission ordered reductions upon the first six classes of freight, and the Southern Pacific Company promptly brought an injunction suit against the commission in the United States Circuit Court for the District of Nevada, which suit is now pending. In all of its work affecting this great corporation, the commission has been actuated by no feeling of hostility, no desire or purpose to do the smallest injustice to the railroad, the fine service of which and its great value to the State of Nevada have been and are fully recognized. But the commission cannot be blind to the grave injustice of the transcontinental charges which have been in effect upon this road for so many long years. These charges have had the effect of retarding the progress and upbuilding of our State to an extent that can hardly be measured or expressed in terms of money. Nor can any approximation be given of the effect upon the State's growth in population. All that we can affirm with certainty is that both in wealth and in people the growth of the State has been checked most seriously by the excessive charges complained of. The members of this commission are united in the belief that a general system of freight charges based upon the class-rates order made by the Interstate Commerce Commission, put into effect by the Southern Pacific Company, will do more for the growth and prosperity of our Commonwealth, than has any one thing entering into our industrial situation during the last forty years. If this view is correct, it follows inexorably that the railroads will get their full share of the benefits, by the very great increase of local traffic which must, in the nature of things, accompany the general growth and increased prosperity of the State. Not only this, but the producers of the State of California will also be largely benefited by the increased demand in Nevada for all or nearly all of their products. It is difficult to see how even the jobbing interests of the coast cities can be permanently benefited by retarding the growth of Nevada. On the contrary their best interests should and doubtless will be promoted by Nevada's increase in wealth and population, because, while losing what is popularly called the "back-haul trade, they would soon find the Nevada commercial field greatly enlarged and the market which this State affords for nearly all classes of goods produced in California. very much improved. The enlarged demand in Nevada for California products, agricultural, horticultural and manufactured, will necessarily increase the distributing trade of the coast merchants, both in California. and Nevada. Of course, these results cannot be expected to follow immediately upon a reduction of rates, but they are none the less a natural and almost certain sequence. From this it will be seen that lower transcontinental rates into Nevada do not mean a dead loss to the Southern Pacific Company, but ultimately a very great advantage to that company as well as to the people of Nevada and California. It is to be regretted that in every community there are always some individuals who take a very narrow view of the business situation in general, and their own interests in particular, seeing nothing but the dollar with which they are already in touch, and overlooking completely the larger things beyond. Nothing tends more strongly than does this spirit to check the wheels of progress in any community, State or Nation. In every step taken, this commission has had in view the rights of the railroads as well as those of the people and has endeavored to ask for nothing but even-handed justice to both. The recent action of the Interstate Commerce Commission (by a unanimous vote, be it remarked in passing) is very strong and persuasive evidence that the views of this commission upon transcontinental freight rates are both sound and conservative, because, as explained later on, the order relative to class rates by the new method adopted of territorial division actually gives us a little more than we directly asked for, although our complaint was so framed that the Interstate Commerce Commission was in position to give us whatever our evidence showed that we were justly entitled to. From time to time complaint has been made in a loose general way, but not to this commission, because no action, or insufficient action, has been taken for the reduction of rates upon local roads. Among these may be mentioned the Nevada Northern Railway. With reference to this road it is proper to say that in proportion to its business the reductions in passenger fares and freight rates brought about by this commission has been greater than upon any other road operating in Nevada. It is true that, to begin with, the rates were among the highest, but it is equally true that the road is the newest of any of considerable length within the State; so new, in fact, that the Railroad Commission law, when originally enacted, did not apply to it at all, because it had not been in operation two years. The commission felt that, in dealing with such a road, extreme care should be taken in the matter of reducing rates lest injustice might be done to the investors in a new and more or less uncertain enterprise, thereby discouraging other capitalists from engaging in similar ventures within the borders of our State. It may be further remarked in this connection that the reductions made upon this road have been by the initiative of the commission itself, and not upon the basis of a complaint by any shipper; and still · further that this commission is ready at all times to consider any complaint from a responsible source against any road operating within the State. The commission desires to express its appreciation of the very great kindliness and consideration with which it has been treated by the business men of the State, the commercial organizations, the newspapers, and by the platform speakers of both parties throughout the recent campaign. Such service as the commission has been able to give to the State has been very far from coming up to the standard of service that is possible, but it must be borne in mind that the business of this commission is necessarily hedged about with many restrictions. The evidence upon which it is obliged to act lacks very much of being absolutely conclusive of the questions involved. The commission must always keep well above the lines of confiscatory rates, and have proper consideration for the rights and interests of investors in railroad securities. A failure to do this is certain to provoke long-drawn-out and expensive litigation, with the chances strongly in favor of the commission's order being declared |