bursements. To this end it is important that the following con. ditions should be fulfilled: (1) They must be kept on correct principles, all receipts being honestly credited to their real sources, and all expenditures charged to the proper account, care being taken, where there is room for doubt, that the capital account, especially, be not unduly increased. (2) They should be kept so as to be separable for the different lines, where more than one line is operated by one company. This especially where, as in this state at present, the companies pay a state tax proportioned to the earnings of lines within the state. It is also important as enabling the state and the public to know to what extent new lines-sometimes lying in other states-are a burden upon the old ones; and also enabling the managers themselves to know what the interests of the company demand. (3) The freight account should be so kept as to make a full showing of every shipment of freight, with the class to which it belongs, weight in pounds, stations from which and to which shipped, and the amount actually received and charged to the company thereon; the freight account of each station showing for itself, and the accounts at the general freight office showing the exact business and freight receipts at all the stations on each and every line. Such keeping of accounts is essential to the proper management of the roads, and to the state important as furnishing correct data for a full understanding of the company's condition. (4) The accounts kept by all the railway companies of the state should be uniform as to method, in order that the working of different roads may be compared, and that uniform reports may also be possible. (5) They should be closed and accessible to the stockholders both before and after the regular meetings at which they are presented for approval, and should be published in full abstract, with balance sheet, for the use of the stockholders and the state authorities. FULL AND COMPLETE REPORTS. Regarding the possibility of secrecy as affording encouragement to fraud and mismanagement, on the one hand, and, on the other, as being a frequent occasion for unwarrantable suspicion on the part of the public, we are strong in the conviction that it is of great importance to both railway companies and people, that the reports made by such companies should be very much more full and thor ough than they have been heretofore. There may be cases in which an honest corporation, struggling through financial straits, would prefer that its exact condition should not be known to the world; and yet, even in such cases, the policy of concealment is one of very doubtful propriety or advantage, while the amount of injury that may be done to the public and to the credit of the state by encouraging less honorable corporations in the practice of secret frauds, may be very great. The fact must not be lost sight of that the state, to the extent of its power to prevent the practice of wrongs upon the public by the corporations of its own creation, is bound to regard the general welfare, future as well as present, rather than the tottering credit of one or more unfortunate corporations. If publicity through full reports should bring embarrassment in some cases for the present, it will also have a strong tendency to correct abuses and to induce a more healthy condition of bodies corporate in the time to come. A proper report to stockholders will do more than make a showing of business done, earnings and liabilities. It will also give the reasons influencing the management to the course it has pursued and the principles which govern its action. These views find ample confirmation in the very able report of the investigating committee of the Pennsylvania Railroad Company, recently published. In accounting for the existing distrust in the value of railway stocks and securities, the committee say: "And we suggest, as the first, the meagre and incomplete reports of the directors of railroads made to the stockholders. Railway directors, in their reports, seem guided by the old adage-that 'the least said is soonest mended.' There is a tendency to limit their reports to the general results of a year's work, giving financial results and the economic workings, while the stock. holders are left in great ignorance of the value of their own property. There should be, in every respect, the fullest detail of these items, enabling each stockholder, at the end of a year, to make his own estimate of the value of his stock. But these reports should go further and give the most ample information as to the position of the road in its relations with other roads, and state fully all the facts that might influence its policy, its plans for the future, or its finances." MORE FREQUENT REPORTS. Much importance is justly attached by many authorities on railway matters to a greater frequency of reports to stockholders than is now common. It is manifestly proper that stockholders, where they have a veritable existence, should be correctly informed as to the condition of their property, and as to the transactions and general policy of those who, as railway managers are entrusted with the guardianship of their interests. Just what should be required of the corporations in this regard is now receiving the careful consideration of your commissioners. PUBLICITY OF CONTRACTS. (1) Publicity of working and traffic contracts.-As a further means to the end of fair and efficient management, it is important that the state should be in possession of authenticated copies of all contracts between companies for the working of their lines respectively, and for the interchange of traffic; that the traffic arrangements made in pursuance of such contracts should also be made public at the several stations where they would be of use; and that the commission, or other state authority should be empowered to procure their amendment, or, if necessary, their supervision by due process of law. There should also be: (2) Publicity, through the commission, of all contracts between railroad companies, whether with one another, with express and telegraph companies, or with companies operating colored freight lines, or water lines. (3) Publicity, through the commission, of all agreements, leases, purchases and conveyances. FINAL LIMITATIONS UPON CORPORATE POWER. In the suggestion of remedial measures thus far, we have purposely advanced from the more palpable and less serious remedies to the more unusual; holding in reserve such as deal directly with the fundamental questions relating to chartered powers, organization, the prerogatives of members and officers, the issue of stock, and the creation of debt. THE RELATION OF STOCKHOLDERS TO MANAGERS. The progress of railroad enterprise in England has been characterized by the same features that have been shown in this country, and is thus described in a late journal: "The railway system thus extended with unhealthy rapidity, until the in evitable result was at length experienced. Extravagance led to financial embarrassment; concealment was necessary to the maintenance of credit; capital accounts were unduly increased; revenue expenses were not sufficiently incurred or not properly charged; accounts were falsified; the balance sheet made to suit the dividend, in place of profits (or losses) being calculated from its figures." This kind of experience has led them in England to look more closely after the management of their railroad corporations, and thus regulate the governing conditions which determine proper limitations in charges as between capital and the public, and at the the same time correct abuses of reposed trusts in the management. Great advances have been made in this direction in England, and the strict accountability of managers, both to stockholders and the public, is becoming incorporated in their railroad system. The following article from the Railroad Gazette of Nov. 28th, is to the point: * * "Now we do not here wish to discuss particularly the question at issue in this case, * but only the closeness of the relations of the shareholders of English companies to their directors, which in this case forced the latter to submit a question concerning the conduct of the traffic of the road, on which they had not only made but announced their determination, to the approval of the shareholders, and to call a meeting for that pur. pose. It would astonish American shareholders to be consulted on such a matter almost as much as it seems to have astonished the English public to have their favorite second class cars abolished. American shareholders hardly expect to be consulted about anything, unless it may be a proposition to consolidate or lease. Indeed, the English corporations are incomparably the more democratic of the two, in effect, if not in form. Perhaps the most striking illustration of this is the English half yearly meeting, at which the report of the working of the road and the action of the directors for the half year next proceeding are presented and offered for adoption or rejection, and at one of which directors and auditors are chosen. Now we have yearly meetings of shareholders here, but for the most part they are meetings in name rather than fact. Usually one or two directors are there with proxies for all the shares which offers to vote in their pockets, and often some clerk who happens to be near has to be called on to serve as secretary. In many, perhaps most cases, the annual report is not presented until after the meeting anp election; and only two or three companies, so far as we can remember, have an address from the President or any discussion from shareholders. Generally the only business done is the election of a board of directors, and the report, if one is published, passes without comment or criticism. The directors sometimes ask the shraeholders to authorize new loans, issues of shares, leases, consolidations, etc.; but in such cases no considerable attendance is expected at the meeting, and the spectacle of a hundred or two share holders attending an annual meeting, asking explanation of matters contain. ed in the report (or not contained in it); finding fault with this, that and the other; proposing resolutions about one matter or another, would, we imagine, utterly amaze most of our veteran railroad directors. No that shareholders here always put up with the policies of their directors; they get tired of them and turn them out quite as frequently as any other shareholders, probably, bnt they do it, and are expected to do it quietly, almost secretly, giving no reasons that the public ever have for their action, and asking no explanation or defense from those who they displace or seek to displace. "Now in England, the directors publish and send to the shareholders a report for the preceding half-year, at least a week before the half-yearly meeting. The shareholders, therefore, come to this meeting with a knowledge of what their directors have done, and of the results of the working of their railroad. They have time to study the returns and compare them with those for previous half-years, and the results with those anticipated by the directors. Then at the meeting the chairman, apparently invariably, makes a speech, usually much longer than the report itself, in which he explains the report, sets forth the policy pursued and that proposed for the future, and usually submits some questions to the shareholders for their decision. Almost always some shareholders have remarks to make, often in approval and often in criticism of some action of the board or statement of the report, and oftener still in the way of inquiry for explanation of something in the report or the president's speech; or perhaps it is a request for entirely new information. Frequently there are a great many speakers and a long debate-perhaps a hot one-and the chairman holds himself bound to answer all inquiries and make all explanations. Thus the meetings often draw out a great deal of valuable information regarding the company's affairs. They make it possible for any shareholder, not absolutely stupid, to understand the affairs of his company, the policies which control it, and the different courses recommended by different parties. The very institution by which he maintains his close control of his company keeps him informed concerning it, makes him interested in it, and does much to qualify him for the part which he takes in directing its affairs. Another good result is that the public can, if it chooses, keep informed of the motives which determine changes in the management of the corporate property, feel the pulses of the shareholding public, and realize the importance of the corporate interest and the reasonableness of its efforts to secure a good income on its investment. Civilized people—Anglo-Saxons, at least—have a hearty, honest sympathy with people who are trying to get an honest living. When they see and hear the army of shareholders struggling to make their property as efficient and as valuable as possible, they are likely to wish them success; but when they hear only of the Boston and Albany Company, the Central Pacific Company, they hardly associate the corporation with human beings with rights and wants like themselves, but rather imagine it as a cold-blooded abstraction—a modern monster which devours the substance which ought to support good warm flesh and blood. "The tendency of the past eight or ten years, in this country, has been to |