A Decade of Federal Railway Regulation
THE federal Act to Regulate Commerce went into effect April 5, 1887. A decade in the life of a law, especially if it has been the subject of administrative and legal discussion, is a sufficiently long period to warrant an examination of the principles upon which it rests, in the light of the experience that it has encountered.
To insure a proper understanding of the purpose of this law, and of its place in industrial development, it may be well to say a word about the peculiar character of the business of transportation by rail, and to explain why, in 1887, it became necessary that a federal law for the control of railways should be enacted.
The merchant, the manufacturer, and the farmer, working under conditions of industrial liberty, do not seem to require any peculiar supervision on the part of the state; for competition is adequate to insure relative justice as between customers, as well as to insure the sale of goods at a fair price. But in the railway industry competition does not work so beneficent a result. On the contrary, such is its nature that it imposes upon railway managers the necessity of disregarding equity between customers, and of fixing rates without considering their fairness, whether judged from the point of view of cost or of social results. Were this not true, there would be no railway problem.
But what, it will be asked, is there peculiar about the business of transportation which renders it superior to the satisfactory control of competition ? Even at the risk of raising a larger number of inquiries than can be satisfied by my reply, I venture to submit a categorical answer. The railway industry is an extensive, and not an intensive industry. It conforms to the law of “ increasing ” returns rather than to the law of constant ” or of 舠 diminishing ” returns. This being the case, ability to perform a unit of service cheaply depends more upon the quantity of business transacted than upon attention to minute details. Another way of saying the same thing is, that the expenses incident to the operations of a railway do not increase in proportion to the increase in the volume of traffic. As an industrial fact, this does not pertain to the business of the manufacturer, the merchant, or the farmer, but is peculiar to the business of transportation ; and it is adequate, when properly understood, to explain why all advanced peoples, without regard to the form of government they may have adopted or the social theories they may entertain, have surrounded the administration of railways with peculiar legal restrictions. The necessity of some sort of government control lies in the nature of the business itself.
Before the first federal law designed to control the business of transportation went into effect, most of the states had already made legal expression of the conditions under which those railways lying within their respective jurisdictions might follow the business of common carriers. Speaking broadly, this legislation had been either restrictive or constructive in its character. As an illustration of restrictive legislation, mention may be made of those laws, so common in the statutory records of the states, which forbid the consolidation of parallel lines, or which deny the right of association to railway corporations.
It was not along this avenue, however, that railway legislation found its most easy and natural development, and a moment’s consideration will make it evident that such a development would have been illogical and ill advised. For if it be true that the source of the difficulty in the railway industry lies in the abnormal manner in which competition works, or, as it is sometimes expressed, in the excess of competition between railways bidding for the same traffic, it must follow that laws which have for their purpose the stimulation of an already overactive struggle for commercial supremacy cannot be approved. Not only do such laws tend, as their first result, to aggravate the evil of which complaint is made, but, in the long run, they lend their influence to that consolidation of interests the fear of which was the chief reason for their enactment.
One cannot say that the sentiment in favor of restrictive railway legislation is entirely a thing of the past; it is true, however, that greater reliance is placed at the present time upon what I have termed constructive legislation. This sentiment expressed itself among the states in the creation of railway commissions, entrusted with a more or less complete jurisdiction over the administration of railway affairs ; and the strength of this sentiment, no less than the trust placed in it by the public, is shown by the fact that when, in 1887, it became necessary for the federal government to take official notice of the public evils incident to the manner in which the business of inland transportation was carried on, the law framed by Congress incorporated the essential principles of the stronger state commissions, and established the Interstate Commerce Commission.
To explain fully the occasion of a federal law in 1887 would demand a general study of the evolution of industry in the United States, so far, at least, as to show why, about 1870, through traffic came to be of relatively greater importance to railway managers than local traffic. In accounting for this result, it would be necessary to refer to such facts as the development of agricultural machinery which followed the withdrawal of adult labor from the farms during the war of the rebellion, to the substitution of steel for iron in railway construction which enabled the railways to compete with water-routes in the carriage of grain and other heavy freight, and to many more facts of the same sort. But we cannot follow this line of investigation, and must content ourselves with a technical answer to the question. Technically, then, the reason for the federal law of 1887 was a decision of the Supreme Court in 1886 which expressly limited the jurisdiction of the states to local or infra-state traffic. This was but an affirmation of a principle clearly expressed in the Constitution ; but so anxious had the courts been to assist the legislators of the several states in their endeavor to solve the railway problem, that they had stretched a point and supported the states in their claim that state governments had the right to regulate through traffic as well as local traffic so long as Congress refrained from definite action. In the decision referred to, this ruling was reversed. The jurisdiction of the states was limited to traffic within their respective territories, and it was clearly shown that, should the states be granted jurisdiction over traffic from or to other states, the result would be inextricable confusion and the absence of all efficient control. Such being the condition of affairs, the necessity was presented to Congress to undertake the formal regulation of interstate commerce, or to allow the most important and the most troublesome portion of railway traffic to develop without regard to the rights of shippers or the interests of the public. It could hardly fail to choose the former alternative.
The chief aim of the law, as indeed of all efforts to regulate transportation when regarded from the public point of view, is to guard against invidious discrimination in the administration of railway property. It lies in the theory of modern society that men should succeed or fail according to their abilities. As a matter of fact, a railway manager has it within his power, through the manipulation of rates, to make or to destroy; to determine which persons in the community, and which communities in the state, shall attain commercial success, and which shall struggle in vain for its attainment. Such unusual powers cannot be safely entrusted to the guidance of private advantage, but must be brought under the direction of the public interest. Public control over railways, at least so far as may be necessary to eliminate from their administration invidious discrimination, is essential to the permanency of a democratic society ; and those sections of the law of 1887 which are designed to secure the same service for the same price to all persons and places must meet with universal approval.
Three classes of discrimination are specially mentioned as under the condemnation of the law : these are, discrimination between persons, discrimination between carriers, and discrimination between places. It has been said that discriminations of the sort referred to, falling under the heading of an unjust price, are misdemeanors at common law, and, therefore, that no necessity existed for special legislation. It is not designed to discuss this question, but rather to call attention to the fact that common law methods of procedure are not adequate to secure for a shipper or a community suffering under an invidious discrimination in the matter of rates that speedy relief essential to the preservation of an established business. Suppose, for example, that one cattle-dealer in Chicago is selected by a pool of railways to control the shipment of meats from Chicago to the seaboard, and that, in order to secure him this control, he receives a rate ten per cent less than the rates charged other dealers : it is evident that the favored shipper will quickly destroy the business of other shippers by bidding more for cattle than they can afford to bid. Even if it be true that the discrimination is not approved by common law, what remedy has the small shipper that is speedy enough in its action to rescue the business which he observes to be slipping from him ? He has no remedy, and for this reason it is essential that discriminations of the sort referred to should be made statutory misdemeanors, and that some special method of procedure, more rapid in its operations than an ordinary court, should be established to cause the railways to desist from their wrong-doings.
In this line of reasoning there is presented the defense not only of a formal law by which certain acts common to railway management are declared to be “ unlawful,” but of the establishment of a special bureau or tribunal whose duty it shall be to cause all unlawful discrimination speedily to cease. Such is the aim and spirit of the Act to Regulate Commerce ; and in so far as it has failed to grant relief to commerce and industry from invidious discriminations in railway charges, it has fallen short of the high hopes that were entertained when the act was passed.
Before inquiring what the interstate commerce act has accomplished, it is essential to explain something of the method of procedure which the framers of the act contemplated in its execution ; for most of the difficulties have arisen from the rules laid down which are strange to the established character and usual practices of the courts. It is evident that a body of men charged with the duty of protecting the public from the maladministration of railway officials must be provided with some means of exerting an authoritative influence upon the manner in which railways are administered. It is equally evident, to one familiar with the rôle played by the courts in the political organization of the United States, that this authority must in some way rest upon the powers granted by the Constitution to the judiciary. However this purpose might have been accomplished in other ways, the method which approved itself to Congress was (to put the case concisely) to grant the commission the liberty of appealing to the courts for the exercise in its favor of such authority as might be necessary to the performance of the duties imposed.
According to the act, the commission may invoke the aid of the courts to compel the attendance of witnesses, and to secure from them all lawful information. In case a carrier shall refuse or neglect to obey any lawful order of the commission, the commission may resort in a summary way to the court, whose right it shall be to select and apply such process as may be necessary to secure compliance with the order. When the court is called upon to act, the record submitted by the commission must be accepted as prima facie evidence of the matters therein stated. One is scarcely at liberty to say, without the consent of the Supreme Court, what the intention of Congress was in creating the Interstate Commerce Commission. If, however, we accept the language of the act as the only basis of interpretation, it seems clear that the ability of the commission to perform its duties was made dependent upon the coöperation of the courts. Had it been possible for the courts to accept the spirit of the act, and to render their assistance heartily and without reserve, there is reason to believe that the pernicious discrimination in railway service and the unjust charges for transportation would now be in large measure things of the past. As it is, the most significant chapter in the history of the commission pertains to its persistent endeavors to work out some modus vivendi without disturbing the dignity of the judiciary.
Two lines of action were open to the commission : it might institute investigations on its own account, or it might sit as a tribunal to hear complaints. Neither of these modes of procedure has been followed to the exclusion of the other, but the chief reliance seems to have been placed upon the latter. This policy, on the whole, must be regarded as wise, and for two reasons. It is not possible for five men, with a limited amount of money at their disposal, to exercise an efficient visitorial supervision over so vast an organization as the American railway system. It must be remembered that the railway industry employs between eight and nine hundred thousand men, not counting the shippers, who, if Mr. Albert Fink be correct, are the persons who make the rates. While it was undoubtedly wise for Congress to bestow upon the commission the right to initiate cases, it would have been a mistake for the commission to make such use of this right as to take upon itself the character of a detective agency. A second reason why it was wise for the commission to sit as a tribunal for the investigation of complaints is found in the fact that the commercial and social principles which govern the business of transportation by rail are as yet undeveloped. In the first report of the commission attention was called to the fact that the modern railway system is without precedent in the experience of the world, and the implication was carried throughout that a permanent system of administrative rules could be developed only by the crystallization of opinions passed upon an extended series of cases. The idea seemed to be that authoritative principles of railway transportation should be developed very much as legal principles attain their growth. It was necessary that a large variety of cases should be presented, and this result the commission hoped to secure by offering to adjudicate cases of discrimination and unjust rates that shippers or others might bring before it. This is certainly a broad and comprehensive view of the subject, and one which in some way must be realized if the control of railways through commissions is to prove a permanent part of our political organization. The fact that the commission entertained this opinion at the outset, and has consistently held to it in the face of most serious difficulties, is to its credit. While I refrain from expressing an opinion upon any of the points of law raised in connection with the act, I must confess to the impression that, had the courts been willing to grant the law the interpretation that Congress assumed for it when it was passed, the railway problem would by this time have approached more nearly its final solution.
In calling attention to what might have been done under circumstances different from those which really existed, there is some danger of overlooking the important work that has been accomplished. That the Interstate Commerce Commission has been the centre of a most decided influence for reform in railway administration during the ten years of its existence cannot be doubted by one who has followed its persistent efforts to execute the law. The record of this influence, as found in the commission’s published reports, gives ample testimony to the usefulness of the law; but the formal “ opinions ” rendered upon cases brought for trial have, perhaps, exerted an influence less potent than what, for want of a better phrase, may be termed the private correspondence of the commission. Never in the history of American railways has there been such a marked movement toward uniformity in administration as during the last ten years. It is not claimed that this has been accomplished by the commission against the wish of the railways, — indeed, the formal steps have not infrequently been taken upon the orders of railway managers; but no one who knows the situation can for a moment believe that they, of their own motion, would have interested themselves in establishing uniformity of administration to the extent that it has been established. The chief merit of a public body to which has been granted an authoritative voice in the administration of a quasi-public business consigned to private ownership is, that such a body is able to focalize the varied experiences of independent managers upon a particular question, and to select a rule of uniformity the best adapted to the aggregate of industries considered as a unit; and in this manner the systemization of the business will proceed under the guidance of the public interest, and will not be moulded exclusively by the hope of personal gain. This merit the Interstate Commerce Commission has ; and while I shall make no attempt to separate its influence from the spontaneous purpose of railway managers, in the tendency toward uniformity of administration, it is right to affirm that the influence of the commission has been decided and aggressive.
To appreciate the work of the commission, one must consider again the law as it was left by Congress. It is easy to say, as the law says, that “ all charges . . . shall be reasonable and just,舡 but who can tell what a reasonable or just charge is ? For industries that are subject to the control of normal commercial forces, the competitive price is assumed to be the just price; but were this true of railway charges, there would be no railway problem, and no need of a tribunal to determine authoritatively the justice or injustice of established charges. It is easy, also, to say, as the law says, that “ it shall be unlawful ... to give any undue or unreasonable preference or advantage to any particular person, company, firm, corporation, or locality, or any particular description of traffic,” and to enumerate certain sorts of discrimination peculiarly repugnant to the sense of common fairness ; but it is by no means a simple task to discover any general principle, either commercial or sociologic, by which one may say with precision under what conditions a discrimination is undue or unreasonable. The commission has approached the formation of an opinion upon these questions, not by philosophic generalization, but by the investigation and adjudication of such cases as have been submitted to it. This, then, is the significant fact in the life of the commission: that out of the opinions expressed upon cases there has begun to develop a system of authoritative rules and established interpretations, which, sooner or later, will come to be recognized as a body of administrative law for inland transportation.
I have dwelt thus long upon the theory of the law by which the deliberations of the commission have been guided, because it is not possible to enter into that detailed study of conditions, precedents, principles, and results which alone can make an investigation of cases intelligent or interesting. Between eight and nine hundred points have been decided by the commission since its establishment in 1887. Its opinions make five volumes of reports, which look down from the shelves of every well-equipped law office with all the dignity of law reports. We must therefore content ourselves, in this rapid sketch, with a simple statement of a few of the principles laid down; and these, it must be remembered, are given as illustrations of the crystallizing influence of the work that is in progress. There is no attempt to present an exhaustive or a classified statement, but of the opinions of the commission the following may be mentioned as fairly typical.
It has been decided that a just schedule of rates will not tend to destroy the natural advantages for the production and sale of goods possessed by localities ; but in judging of local advantages, care must be taken not to confound those that are artificial with those that are natural.
Not only must a just schedule of rates rest on a just base, but the relative rates on competitive articles must be such as not to disturb the natural order of competition.
A just schedule of rates will conform to the competitive equities that exist between goods shipped at different stages in the process of their manufacture.
All shippers should have at their disposal equal facilities of transportation ; and when the same commodity is transported by two or more different modes of carriage, the charge should be uniform for the unit of commodity.
“ Group rates,” by which a given commodity produced at different points within a prescribed territory is rated as though shipped from a single point, do not constitute a discrimination repugnant to the law ; but this opinion is limited to the cases presented, and is not set forth as a general principle.
A rate on one commodity in a class, or on one class of commodities, cannot be justly depressed so as to become a burden on the transportation of other commodities or classes of commodities.
The law does not impose upon the carrier the duty of providing such a rate that goods may be sold at a profit to their producers.
The car-load, and not the train-load, is the proper transportation unit, but higher charges may be made for goods in less than car-load lots : with this exception, the decisions of the commission have been consistently against the application of the “wholesale” principle in the adjustment of railway charges.
Many other principles have been arrived at through the opinions rendered by the commission, bearing upon the question of justifiable discrimination, upon the classification of freight, upon the relation that exists between the employees of one corporation and the management of another, upon the responsibilities of carriers to those who purchase tickets, and upon under-billing, through-billing, the acceptance of foreign freight, and similar questions of an administrative and legal nature; but a sufficient number have been presented to show how the railway problem is in process of solution in the United States, and to indicate the important work that is being accomplished by the Interstate Commerce Commission.
The work of the commission has not been confined to the enforcement and interpretation of the Act to Regulate Commerce. Considerable attention has been given also to the creation of those conditions under which the law may become what, for want of a better phrase, we may term self-executory. All laws depend for their execution upon the surveillance of the police or upon the initiative of interested parties. The Act to Regulate Commerce can never be effectively administered on the lines of criminal procedure. Not to mention the administrative difficulties of such an endeavor, public opinion would never sanction the severity that such procedure necessitates, for the crime contemplated by the act lies in the situation rather than in the evil intent of the individual. Moreover, the solution of the railway problem demands above all else the application of scientific analysis, a mental process that cannot be well sustained in connection with punishment for crime. What has criminal procedure to do with the practical interpretation of a reasonable rate, or with tracing the effect of a schedule of rates upon the evolution of industrial and social relations ? The law to regulate commerce finds its true theory of administration in the fact that the principles of transportation must evolve themselves out of its execution, and it is essential that all varieties of cases be brought before the commission, and that the energy of the commission be devoted to their classification and adjudication under the crystallizing influence of a desire for uniformity of rule. This means the bringing about of such a state of affairs that a shipper will be anxious to use his knowledge of discrimination by a carrier in such manner as to cause the discrimination under which he is suffering to cease, rather than, as is now too frequently the case, as a means of blackmail upon the carrier to force in his own favor a yet more flagrant discrimination. It means also that a railway must be willing to testify against another railway, and, by making use of the machinery that Congress has established, to secure for itself the possibility of a right administration of its property.
Now this state of affairs, the only conceivable one under which the theory of commissions can succeed, can come about only as the result of easy access to authoritative evidence. One reason why a shipper makes complaint to the general manager of a railway rather than to the commission, when he observes his business slipping from him through no fault of his own, is that he is not sure of his evidence. With the manager, the more indefinite the information, the more effective it may be; with a court, or a commission whose findings may be reviewed by a court, indefinite testimony is worthless. This is clearly recognized by the members of the commission, and explains why so considerable a portion of the small amount of money placed at their disposal for the execution of the law has been devoted to the development of a statistical service. That the law may become automatic in its execution, that it may be comprehensive in its influence and may work with dispatch and efficiency, the commission must possess the means of arriving without embarrassment at the fact in every case. Were this condition attained, not only would shippers readily lay their complaints before the commission, but the carriers would be reluctant to give just cause for complaint. The development of a division of statistics and accounts which, so far as information is concerned, would place the commission on the same footing as the management itself, may be regarded as the groundwork upon which the successful control of railways in the United States rests.
The central aim of such a purpose is undoubtedly the development of a uniform system of accounts for the railways themselves. There are many thousands of active accounts of which the commission is at any time liable to take notice, and so long as it continues necessary to inquire respecting the theory of bookkeeping and the classification of items in every case, it will not be possible speedily to appreciate the merits of a controversy. On the other hand, if there be but one system of accounts for all corporations subject to the jurisdiction of the commission, it is necessary only to master the principles, rules, and classifications of one system in order to gain a mastery of all. I am reminded of a remark of the late President Francis A. Walker, who, in response to an expression of astonishment that he was willing to undertake so vast a work as the administration of the United States census, replied, “ It is no more difficult to take the census of a nation than of a village ; the questions to be decided would be the same in both cases.” Congress certainly appreciated the importance of a uniform system of railway accounting, or it would not have given the commission power “ to prescribe a period of time within which all carriers . . . shall have ... a uniform system of accounts, and the manner in which such accounts shall be kept.”
The first step in the direction of establishing uniformity of accounts was to secure the coöperation of the state railway commissioners in working out a common form for annual report. These officials were more than willing to render their assistance, and no small part of the deliberation of the annual conventions of railroad commissioners has been devoted to a consideration of questions of statistics and accounts. The result is practical uniformity in the form of report demanded by all public bodies. In this way the carriers are relieved of the unnecessary work of making out three or four different kinds of reports for the same operations, and the student is relieved of the confusion incident to many different classifications of the same items. Among the results of this step toward uniformity may be mentioned the fact that railway reports are now made out with greater care than they were formerly, and in many cases the reports to stockholders have been remodeled so as to conform to the reports made to commissioners. He who compares the railway reports of 1897 with those of 1887 will appreciate that one step, at least, has been taken toward the establishment of intelligent reports.
Uniformity in the structure of accounts having been attained through the coöperation of federal and state commissioners, the second step toward uniformity resulted in a revised “ classification of operating expenses.” This was the joint work of the convention of railroad commissioners and the Association of American Accounting Officers. The most significant account which a railway keeps is its income account, and the most significant ratio in railway statistics is the ratio of operating expenses to operating income. From the point of view of every interest involved, whether of the public, of the management, or of the investor, it is important that each road should enter items of income and expenditure in the same manner as every other road, and that no road should be allowed arbitrary charges in connection therewith. In 1887 there were two general systems of operating accounts, and numerous modifications in each to meet the whims of local officers; there is now but one classification of operating expenses, — the classification approved by the accounting officers’ association, and authorized by the federal and state commissioners. It is not claimed that this is the work of the Interstate Commerce Commission ; to suggest such a claim shows a failure to appreciate the character of that body and the manner in which it exerts its influence. The classification was the product of three years’ careful study on the part of many men. Every railway auditor in the country was appealed to for advice. But it is true that the work would never have been accomplished had there been no commission to take the initiative and to authorize it and put it in force when accomplished.
Any question touching the interpretation of the classification of operating expenses, respecting which a railway official may be in doubt, may be referred to the statistician of the Interstate Commerce Commission, to which he makes reply, after consultation with the executive committee of the auditors’ association. His replies are reported every year to the convention of railroad commissioners through a standing committee of that body, and to the auditors’ association through the report of its executive committee; if the actions of their respective committees are approved by these bodies, the decisions are authoritatively promulgated by the Interstate Commerce Commission, and they thus become a part of the original classification. I have dwelt upon this at length to show the manner in which the evolution of uniformity in railway accounting is taking place.
By reason of the success of the efforts to attain uniformity in operating accounts, other subjects equally important have been taken up: for example, the compilation of train-mileage, the classification of railway employees, the rules for arriving at daily wages, and the adjustment of a balance-sheet. These matters cannot be decided arbitrarily or in accordance with the practice of any particular road, for the commission is obliged to remember, what railway auditors so frequently forget, that the accounts to which it gives approval must contemplate the railways of the country as a system. Whether or not all that is needed in this direction can be secured without a more strenuous exercise of authority than as yet it has seemed wise to call into play is doubtful. Such, at least, is the opinion of the federal commission, as may be seen by an argument contained in one of its recent reports to Congress in favor of the establishment of a Bureau of Statistics and Accounts, more comprehensive in its scope, and clothed with greater authority, than the statistical division of the commission service as at present organized. This project approves itself to state commissioners also, as is shown by the fact that it received formal approval at their last annual convention. The influence that has been exerted upon the railway situation during the past ten years is perhaps nowhere more clearly manifest than in this : that a plan for the establishment of a Bureau of Statistics and Accounts, with authority to prescribe the manner in which books shall be kept and to enforce its own rules, which in 1887 would have been regarded as bizarre and ill-advised, is now contemplated by conservative men as not only a practicable but even a necessary scheme. It is a definite part of the programme of the Interstate Commerce Commission, as laid down in the reports which it has presented to Congress.
This statement cannot be closed without referring, at least, to three important decisions of the courts. These are the Brown case, the Kentucky and Indiana Bridge case, and the Social Circle case. No attempt will be made to discuss legal principles.
The Brown case pertains to the right of the commission to procure evidence. In 1882 it was decided, in what is known as the Counselman case, that a witness need not testify should his testimony be of such sort as to incriminate himself. Under this decision, the propriety of which is not questioned, any reluctant witness could evade giving testimony. Nothing could be more embarrassing to the commission, or could prove a greater obstacle to the work it had undertaken. It is the evidence of a gentleman, who from his professional position should know, that at the time of the Counselman decision there were but ninety per cent of the discriminations that existed in 1887, but that within a few months thereafter the practice of special rates and rebates, with all their social evils and personal injustices, was as pronounced as before the passage of the act. This of course is the impression of a single observer, but it is beyond question that the effect of the decision in the Counselman case was to cripple the work of the commission.
In 1893, Congress endeavored to remove the embarrassment caused by the Counselman decision, by enacting that no person should be excused from testifying on the ground referred to, but adding that a person testifying should not be prosecuted on account of his testimony. The legality of this act also was contested, and the uncertainty respecting it continued to embarrass the commission, until, in 1896, the Supreme Court declared the act to be constitutional. It thus appears that for something over six years of the ten under review, the Act to Regulate Commerce was confined, for all practical purposes, within the range of voluntary testimony. Should one consider that the commission needs an apology for its record, it is found in this statement.
The second case referred to need not be so fully presented. It has already been remarked that the law did not contemplate that a court should review a case passed upon by the commission, except so far as points of law may be involved. The effect of the Kentucky and Indiana Bridge case was to assert that the court might take up a case referred to it for enforcement as though it were an original case. Now it is clear that such an attitude on the part of the court must defeat the purpose of the act. The purpose of that act is to cause discrimination and unjust rates to cease, and to open to the shipper a way by which he may secure speedy relief ; and unless all sorts and kinds of cases are brought to the commission, that body cannot be expected to exert a very decided or enduring influence upon railway administration. If, however, the investigations of the commission are not final as regards matters of fact, to say nothing of there being a presumption in favor of the orders of the commission where transportation principles are concerned, it is evident that shippers will not seek relief from the unjust acts of carriers in the manner contemplated by the act. The attitude of the court in this regard, and the advantage taken of it by the carriers in refusing fully to open their cases before the commission, are the chief reasons why after ten years the law has brought the problem of railway control in the United States no nearer to solution than it has. Congress has on several occasions been petitioned for relief. In the report of December, 1896, nine amendments were proposed, in order “ to make the substance of the law mean what it was supposed to mean at the time of its passage,” and the first of these was, “ to confine the procedure in the courts for enforcement of orders of the commission to the record made before the commission, and to provide that the order of the commission shall be enforced, unless the court shall find in the proceeding some material error which furnishes sufficient reason for refusing to enforce it.” Should Congress act on this suggestion and give the commission a clearly defined power, there is no reason why the theory of the act could not be realized for the benefit of the public.
The third case referred to is the Social Circle case. The question raised was, whether the commission has the right to prescribe a rate that it believes to be reasonable as well as to say that a rate fixed by a carrier is unreasonable. To discuss this question would be to pass beyond the limits of established conditions, and would lead to speculations respecting future adjustments. The denial to the commission of the right to fix a rate that shall be just under conditions presented by a case — provided this is what the court means — throws the entire subject of railway regulation upon a new footing. That the commission can adjust itself to this interpretation of the law is certain ; whether such an adjustment is wise is quite another question.
What conclusion is warranted by this rapid review of ten years’ experience with the federal Act to Regulate Commerce ? We cannot hope to give an answer to so vital a question that will commend itself to all the interests and prejudices, to say nothing of the sociological theories, that centre in this problem of inland transportation. We may, however, venture upon a single observation. The record of the Interstate Commerce Commission during the past ten years, as it bears upon the theory of public control over monopolistic industries through the agency of commissions, cannot be accepted as in any sense final. It may ultimately prove to be the case, as Ulrich declares, that there is no compromise between public ownership and management on the one hand and private ownership and management on the other ; but one has no right to quote the ten years’ experience of the Interstate Commerce Commission in support of such a declaration. This is true because the law itself scarcely proceeded beyond the limit of suggesting certain principles and indicating certain processes, and Congress has not, by the amendments passed since 1887, shown much solicitude respecting the efficiency of the act. It is true, also, because the courts have thought it necessary to deny certain authorities claimed by the commission, and again Congress has not shown itself jealous for the dignity of the administrative body which it created. And finally, it is true because the duty of administering the act was imposed upon the commission without adequate provision in the way of administrative machinery, and ten years is too short a time to create that machinery, when every step is to be contested by all the processes known to corporation lawyers. For the public the case stands where it stood ten years ago. Now as then, it is necessary to decide on the basis of theory, and in the light of political, social, and industrial consideration, rather than on the basis of a satisfactory test, whether the railways shall be controlled by the government without being owned, or controlled through governmental ownership. The danger is that the country will drift into an answer of this question without an appreciation of its tremendous significance.
Henry C. Adams.