by far the most common limit placed upon the discretionary powers of legislatures over railway rates in all the states in which such chartered provisions are found. In a few instances the rate of net profits permitted under the law is very much larger. For instance, in Indiana1 charters were granted permitting the legislature to regulate rates whenever the profits exceeded fifteen per cent, and any excess above fifteen per cent was to be paid into the common school fund.

Another right reserved to the state in a considerable number of charters is the power to purchase the railway after a certain number of years. This power was frequently reserved in the charters of the New England States, the significance of which was perhaps illustrated in the agitation accompanying the recent leasing of the Boston and Albany Railway. A number of early Massachusetts charters reserved to the state the power to purchase after a period of twenty years. In Vermont this period of discretionary power of the state varied from twenty to fifty years. New Hampshire followed Massachusetts, fixing it at twenty. An Illinois 2 charter of 1850 gives the state the right to purchase, after twenty-five years, by refunding to the company the cost of the entire plant, with interest at the rate of six per cent per annum. In New Jersey 3 similar right was reserved after thirty years. An early Michigan * 8 Laws, 1832, p. 376, § 17. 4 Laws, 1836, p. 267, § 19.

1 Laws, 1832, ch. 144, § 24. 2 Laws, 1850, p. 150.

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charter contains a provision which is typical of isolated charters in all of the Northwestern States, "The state shall have the right, at any time after the expiration of fifteen years from the completion of said road, to purchase and hold the same for the use of the state at a price not exceeding the original cost of said road, exclusive of repairs thereof, and fourteen per cent thereon, of which cost an accurate account shall be kept and submitted annually, on the first Monday in January, to the legislature, duly attested by the oath of the officers of said company, and at such other times as the legislature shall require the same." In Missouri1 a charter granted in 1837 reserved to the general assembly the right to purchase the railway by giving notice in writing four years in advance. This charter also provided for the appointment of valuers whose function it was to fix the price of the transfer.

Limitations on the Life of Charters. The preceding paragraph illustrates one class of limitations placed upon some charters in all parts of the United States. While a majority of the charters are silent upon this point, now and then charters were granted which were limited in their existence to a certain period of years, varying all the way from ten and twenty to ninety-nine or more years. One of the powers granted in the charters which do not contain provisions directly limiting their life was that which gave to the board of directors " perpetual succession," which means, of course, a fran1 Laws, 1837, p. 253, § 22.

chise unlimited in the period of its existence. In the Northwestern States a few charters were granted limiting the life of the corporation to fifty and sixty years. Florida granted a few which were to lapse after a period of twenty years; Louisiana, after forty and fifty, and, in one instance, twentyfive. In one charter, a provision is found that after a certain number of years the same shall expire, and the assets of the corporation shall be distributed among the stockholders. The session laws of the different states contain numerous acts extending the charter period in those cases where the original act contained time limits; and it is obvious that in all those instances in which the charter reserved to the legislature the right to purchase, no time limit whatever was necessary.

Limitations on the Power of Taxation. After the country at large had begun to realize the necessity and importance of railway transportation, various means were resorted to in order to encourage the construction of railways. American manufacturers were unable to provide the necessary material. This had to be imported from abroad, hence it was but natural that legislators should have resorted to the expediency of exempting from import duties materials to be used in the construction of railways. But the railways, after they had been constructed, represented valuable property, and to that extent increased the taxable resources of the territory in which they lay. To provide against the imposition of taxes which might become bur

densome or even discourage the construction of railways, legislatures of states in all parts of the Union incorporated, in some charters, a provision limiting the power of the respective states to tax railway property, and, in a considerable number of instances, exempting such property altogether from taxation, usually for a limited period of years. "That the capital stock of said corporation shall be and remain free from taxation until the profits collected by said railroad corporation shall be sufficient to afford a dividend of five per cent per annum on the capital stock." This is from a Connecticut charter of 1833, and represents analogous provisions found in New England charters of that period. In Massachusetts some charters exempted railway property from taxation for one or more years, after which the legislature had the right to levy a tax not exceeding a certain sum, frequently twenty-five cents per annum, on each share of the stock. In the Northwestern States isolated charters limit the power of taxation to a certain per cent on the capital stock; others to a certain per cent on the net income. Then, again, other charters make railway property liable to taxation like all other property; and late laws in a few of the Western states specifically state that no railway property shall be exempted from taxation. State Participation. To a limited extent the individual states participated in the construction

1 Hartford and New Haven, passed in 1833. Pr. Laws, 183536, p. 1002, § 14.

of railways, either by becoming stockholders and lending the credit of the state, or by giving direct financial aid. The well-known illustrations of the railways owned by the states of Georgia and South Carolina and the city of Cincinnati stand quite alone in the contemporary railway history of the United States. The history of internal improvements had been such as to discourage the active participation of our commonwealths in the construction of railways. Works of internal improvement, greatly exceeding both the capacity to construct and to utilize them, had been projected by many states.

The inevitable failure of these gigantic projects brought these states into disrepute as active economic agents; hence we find, in constitutions and charters granted after this period of disaster in state works of internal improvement, direct prohibitions of state participation. As a matter of historical interest, however, it may be well to notice a few typical instances of direct or indirect participation of the state in building up our railway system. It should be noted that the term "state" is here used in the specific rather than the generic sense, for even after constitutional prohibitions and statutory restrictions had become common, the smaller political units — county, town, village, and city - freely participated in railway enterprises. Large numbers of illustration can be found in nearly every state. An act of the legislature of Maryland,1 in 1827, authorized subscrip1 Laws, 1827, ch. 104.