Annual Address by the President. 
7 
to oppress the railroads is upheld by Ex-Governor Larrabee of Iowa, 
wdio in his book, “The Railroad Question,” says: “The American peo- 
ple have never ceased to be mindful of the conveniences afforded them 
by the modern mode of transportation. On the contrary, they have 
been too prone to credit railroad men with being benefactors instead of 
beneficiaries, and this spirit made them overlook, at least tolerate, the 
a buses that grew proportionately with the wealth and power of the com- 
panies.” 
However, the impertinent attempts at interference with the manage- 
ment of the affairs of the railroad companies by the “Grangers” were 
naturally resented and the laws passed were strenuously and bitterly 
contested in all the courts of the country. The final triumph of the 
“Grangers” came in 1877 when the Supreme Court declared the consti- 
tutionality of a law which delegated to the State the power of regulat- 
ing the freight rates of railroads within its borders. Following this 
decision, laws were passed in a number of States placing the authority 
to prescribe and regulate freight rates in boards of Railroad Commis- 
sioners, but the enforcement of their rules, in the nature of things, was 
attended with varying degrees of success. The powerful railroad com- 
panies contested their rulings at every point and in many cases, aided 
by a friendly judiciary, greatly impaired their efficiency. Every means 
were exhausted in heaping opprobrium on the Commissioners and 
upholding their actions as futile and contemptuous to the public gaze. 
When rates were lowered, refuge was had by injunction in the courts — 
Federal, as a rule — the railroads declaring that the enforcement of such 
reductions would result in the practical confiscation of their property. 
These contests between the railroads and the people virtually forced 
the courts to recognize some basis for rate-making, to lay down some 
rule that would serve for the guidance of the boards of commission in 
establishing and promulgating such schedules of rates as would enable 
the railroads to earn the necessary revenues. In 1888 Judge Brewer 
of the United States Federal Court handed down a decision, in effect, 
that the transportation rates promulgated by a Railroad Commission or 
a State Legislature that did not admit of the railroad companies paying 
their operatating expenses, fixed charges and some return on capital 
stock, would be set aside by the court. 
Thus was the principle established by the Supreme Courts of the coun- 
try that railroad companies were to be permitted to make such charges 
for the transportation of freight and passengers as would enable them 
to earn, in addition to all expenses of maintenance and operation, a 
reasonable rate of interest on all bonds outstanding and a fair dividend 
on all stock, no matter how they were issued. It was required that the 
people be taxed to pay returns on securities which they never had any 
